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4 Sales Metrics That SaaS Companies Should Religiously Track

Let’s face it. While tracking revenue metrics can be a pain, they are an absolute necessity for any company, especially SaaS companies whose success lies in their ability to build a high performance revenue engine.

While there are dozens of metrics that can flag issues or identify new revenue opportunities, here are four that can significantly boost sales when monitored and addressed properly. As a sales leader, you better know how your company is performing across these key metrics.

 

Metric #1: Win Rate

Question you should be asking: What percentage of opportunities do we win?

Difficulty to track: Easy

Why this metric is important: Knowing the percentage of opportunities that you win helps you to gauge whether you are generating too many or too few opportunities, whether you are on track to hit your revenue targets, and how many opportunities you will need to create each month or quarter to hit your goals. The win rate metric assists you in your long-term operational planning more than any other metric.

How to accurately track win rates: There are a few common methods SaaS companies use to calculate win rates (we will write about these in more detail shortly), but a cohort analysis of conversion rates gives the most accurate view of how many opportunities you sales organization can effectively close.

If you have Corvana, this is a core metric that we set up and track for you continuously.

If you don’t have Corvana, you could track this metric by creating a segmented column report in salesforce.com. More specifically: create an Opportunity report, summarize by “Won” and “Created Date”, and then add a column chart and group by “Won”.

In Excel, you can calculate this metric by exporting Opportunity data, pivoting into rows by quarter created, and then setting columns to count the total number of opportunities created in the period and the number of that total that have since been closed.

Most SaaS companies should target a win rate of 20-25%. If your ratio is higher, you either (a) aren’t creating enough opportunities and need to work on top of funnel or (b) reps might be doing a poor job of entering or tracking opportunities. If your ratio is lower, then investigate why your opportunities are stalling or failing to convert, starting with the next topic below.

 

Metric #2: Accurate Conversion Ratios

Question you should be asking: Where are my deals most likely to fail?

Difficulty to track: Very difficult.

Why this metric is important: Knowing your conversion rates between key events in your customer acquisition process is incredibly helpful. It can help you to spot bottlenecks that are either slowing down deals or causing you to lose them altogether. It forces you to think like your customers to unblock your funnel. There is really no better metric for helping you to identify the right levers to pull to drive revenue gains.

You should also track conversions by lead source, company size and sales rep. These insights arm your marketing and sales leaders to better execute on campaigns and close more customers.

Unfortunately, generating accurate conversion metrics can be incredibly hard and frustratingly tedious. The desire to automate the delivery of conversion metrics was actually a huge reason why Corvana was created.

How to accurately track conversion metrics: Trying to do this in salesforce.com is definitely a challenge. Funnel reports are notoriously poor – mostly because they can only provide a current snapshot of currently open Opportunities. Salesforce.com doesn’t provide cohort analysis. It also doesn’t provide historical reporting, necessary for trending purposes.

In Excel, you will need to access the Opportunity History object and then export data on stage changes. From there it gets more difficult, involving multiple layers of pivoting to obtain these metrics. It’s technically possible, but incredibly difficult and time-consuming.

If you have Corvana, this is a core metric that we set up and track for you continuously.

If you haven’t already, we welcome you to register for Corvana’s free funnel assessment. This no strings program delivers a detailed analysis of your revenue funnel, including all of your important conversion metrics. Unlike the full Corvana product, the free funnel assessment is only a snapshot in time, but many of the companies that have participated have found tremendous value in the report.

Sample Corvana Funnel Conversion Diagram

 

Metric #3: Sales Rep Productivity

Question you should be asking: How productive are my sales reps?

Difficulty to track: Medium.

Why this metric is important: From a macro perspective, knowing both how productive your average rep is and how long it takes your average new rep to ramp to full quota, allows you to build more accurate operational models for your business. Closely following how your rep productivity metrics are trending also allows you to identify and address issues sooner (e.g. sales training issues, region-specific saturation, etc.).

How to track sales productivity metrics: Within salesforce.com, you will have to eyeball the results and guesstimate the size and significance of variance, but it’s a good place to start if you have the time and lack other automation tools to do this for you. Start by creating an Opportunities report. Switch it to ‘matrix’ style, group Close Data at the top, group Owner on the left, and drop Amount (or your preferred productivity measure, like ARR) into the center and select ‘Sum’. The sorting might be difficult, compounding the amount of time and guesswork needed.

In Excel, you can create a pivot table from your Opportunity data that looks the same, but is more sortable (close date in column, owner in rows, amount summarized in cells). You can then take some of the guesswork out with conditional formatting and formulas. The drawback here is the need to maintain this table by exporting, updating, and monitoring it consistently.

In Corvana, this is a default report provided to all customers. The standard anomaly detection monitors this report and sends insight alerts whenever something abnormal occurs (good or bad). That way, you can address any negative changes with plan adjustments and/or replicate the positives across your sales organization.

 

Metric #4: Sales Cycle Time

Question you should be asking: How long does it take to close a deal from start to finish?

Difficulty to track: Relatively easy.

Why this metric is important: Your operational plan, including rep ramp time and sales forecasting, require you to know the reality of your sales cycle. Don’t leave this to your gut or a handful of data points. Get the truth on how long sales opportunities take to close and plan accordingly.

How to track sales cycle time: Calculating sales cycle time is straightforward if you have already completed the cohort analysis necessary for calculating your win rate (metric #1 above). Simply filter the data to only show wins and then average the Age field within the cohorts. This will give you the overall sales cycle time.

Where it gets more difficult is if you want to calculate your sales cycle time trends and/or identify the specific stages within your funnel that are taking longer to convert. To accomplish this, you’ll need to create multiple reports/tables in salesforce.com and/or Excel and monitor them at regular intervals.

If you have Corvana, all of these metrics calculations are automated. Additionally, anomalies are automatically identified and presented to you instantly via insight alerts.

 

Take action

These metrics are far more than just fancy diagrams for your board presentation – they are significant indicators of the overall health of your revenue machine. If you regularly revisit these metrics, you will be in a much better position to identify bottlenecks sooner, uncover new trends sooner, and put yourself in a much better position to grow your revenue faster.

Corvana was created on the belief that there had to be a better way to run a metrics-driven sales organization. We built the Corvana revenue analyzer to automate the tedious process of tracking and analyzing the many thousands of daily revenue events that occur and apply next generation AI techniques to determine the business impact that each event, or group of events, had on our customer’s ability to achieve their revenue targets.

If you would like to learn more about Corvana, please consider any of the following:

  • Free Funnel Assessment – a no-strings, detailed analysis of your current funnel metrics.
  • Free Trial (select free trial from menu) – a hands-on trial of Corvana, pre-configured by Corvana to answer a few important but challenging metric questions for your business.
  • Short Demo – schedule a 30-minute call and demo to learn more about Corvana.

Have any questions about these metrics or other key SaaS revenue metrics? Please feel free to contact me directly at hank@corvana.com.

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