The One Sales Metric to Rule Them All

You can’t manage what you don’t measure—but measuring the wrong things is worse.

Don't forget to check out last week's top tip: In Praise of Your CRM!

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If you prefer to read - here is the transcript:

I was on a call with the prospect today, and he asked me about vanity metrics. And I got thinking about the video that I recorded last week on using your CRM as a mission control center. And it dawned on me that we really should talk about what metrics we should be tracking in our CRM to make sure that it is an effective mission control and profitable productivity partner in sales.

Simply, I believe that sales velocity is the core metrics that you need to be tracking, and velocity is simply that measure of the number of opportunities in your pipeline, the closing ratio of those opportunities, the average value of those opportunities, and the number of days it takes in order to close those opportunities. And when you multiply the first three together and divide by the number of days, it gives you a number. That number is actually your value to the company for the entire year. But the formula isn't as important as the metrics. Those four metrics are the only metrics that you need that you must that you were required to manage for any size of business, hundreds of millions or billions all the way down to a startup.

Sure, you might want to track things like deals over $100,000 if you're trying to grow your average deal size or number of opportunities created in a new market if you're trying to enter a new market, or a number of opportunities created by your marketing team or your BDS team, if you have that. You might even want to track the number of opportunities or clients that you haven't had any contact with in the last 30 days. And those are all fine metrics. Everyone's going to have a few of those different, but they're not okay if you're not managing the four core metrics number of opportunities in the pipeline, closing ratio, average value, and the number of days it takes to close. When you're measuring those, you can create a predictable index of whether you'll hit your goal or not, and where the problem is that you need to solve.