When the Selling Gets Tough, the Tough Get Data-Driven
Collin Stewart, CEO
June 22, 2017
The following is a guest post by Base CRM – a growing sales and data platform based in Mountain View, California.
At Base, we are salespeople selling to salespeople in one of the most competitive industries out there: CRM. Getting by on a smile and a shoeshine just won’t do the trick – but we’re not afraid of a challenge.
That’s because we practice what we preach, and we firmly believe that data is the key to a productive, highly effective sales machine. If you run your sales cycles based on gut feelings and educated guesses, how will you ever quantify, scale or refine your results? (That was a rhetorical question if you couldn’t tell.)
While there is a number of data points and reports that our team at Base relies on a regular basis, there are two metrics in particular that we simply can’t live without the Sales Formula and lead yield.
The Sales Formula
The basic math behind sales is simple: revenue is equal to the number of deals you have won, times the average value of these deals. But as we all know, real sales is much, much more complex than that. That’s why we at Base use something called the Sales Formula.
Although every company, including Base, has its own unique version of the Sales Formula that reflects its sales processes and pipeline stages, the standard, baseline version of the formula is as follows:
The Sales Formula makes it possible to consistently evaluate your sales strategy, no matter how much it changes over time, by measuring each of the key conversion points needed to turn leads into sales revenue. Which is much more insightful than just knowing how much revenue your business has made, right?
By looking at the percentages that mark each key conversion point, you can quickly spot areas for additional investigation and improvement. For example, if you notice that only a small percentage of leads is actually being worked, you may have a rep capacity or prioritization issue.
But where it gets really interesting is when you start segmenting your sales by different dimensions, like rep, sales process, price, deal size or stage duration. Running these various segments through the Sales Formula reveals actionable insights. For instance, by running each reps’ deals through the formula, you can see the differences in where reps may be struggling at different stages of the sales pipeline and then coach appropriately.
For step-by-step instructions on how to define and leverage your company’s own Sales Formula equation, download this free resource.
“The Sales Formula makes it possible to consistently evaluate your sales strategy, no matter how much it changes over time, by measuring each of the key conversion points needed to turn leads into sales revenue.”
Your team is constantly receiving new leads, and, as you know, no two of them are exactly the same. But when these leads are just a name in a list of hundreds or even thousands of other businesses, it’s hard to know what you’re going to get, resulting in wasted time and energy spent on fruitless outreach.
Lead yield enables you to identify and prioritize the types of leads driving the most value for your business. In doing so, it also enables you to forecast more accurately and more strategically invest in growth. Best yet, the equation for lead yield is simple: Sales Revenue / # of Leads Generated. You can see a sample breakdown of this equation below.
In this scenario, the yield for all leads, or “aggregate lead yield,” is $101.77. This means that, with conversion rates and lead quality held constant, we can forecast $101.77 of revenue for every
But just like the Sales Formula, lead yield becomes most valuable when you segment your leads by dimensions like source, industry, and title. For example, knowing which sources generate the highest yielding leads enables your team to prioritize these leads first when marketing hands them a list. It also lets marketing know which channels they should be investing in most heavily to achieve results.
You could further splice these segments by industry to discover which lead
Think about it – inside your sales data lies the secret to a shorter sales cycle, higher-value customers, more productive reps and so much more. What are some of the metrics that your sales team finds the most insightful? Leave a comment and let us know!
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