Do you know which is the single number every salesperson remember by heart? It is that one which they can reveal any time within first some minutes of asking, no matter which day or month it is?

What is the amount of revenue booked by me? Is quota hit by me? Have I achieved my number?

That number is known as the bookings, which can be defined as one of the most wonderful and useful business metrics. It is on the top of your CEO’s priority list and the investors cared about this most. In addition, it is the main thing that makes anyone a successful salesperson.

But it is also the same thing that we define a lagging indicator, which is a metric that takes hours, days, weeks or even months to see your hard work.

We live in a lucky world where there are lots of leading indicators through the amount of revenue you need to book in the future can be determined.

In this post, we will find out some main parts of revenue and the way you can use them for understanding why you are under or over performing with the help of a simple question.

The Big Equation

Revenue= Opportunities* Win Rate* Average Sale Price

An incredible method for featuring this is by thinking about the sales funnel- The bottom of the funnel should be revenue whereas the opportunities should locate at the top. The components of the funnel should be Average Sales Price + Win Rate.

These are not only the main components of new revenue, but each of them is also directly related to the characteristics of your sales motion.

Opportunities can be created from Prospecting and Demand Generation.

Win Rate depends on your effectiveness to sell the product to the potential buyers.

Average Sales Price can be defined as the decision maker’s level whom you are selling products, the amount you initially quote them and the amount of discount you give to them.

If we talk about a very transactional sale, then the process finishes here. You will be informed about the majority of the important metrics that results in new bookings with the above-mentioned formula.

However, for the people who deal with longer sales cycles, you should have added one more thing in the equation, which will be your Average Sales Cycle, i.e. the time taken for signing a new customer.

The equation will be transformed into Sales Velocity with this update.

Now we will talk about some bigger equation- Sales Velocity

Sales Velocity: Opportunities* Average Sale Price (ASP) * Win Rate/ Sales Cycle Length

The above-written velocity equation can be utilized while calculating the ramp time of your reps and the number of deals that can be worked by a rep at a given time. In addition to that, it can be used to determine the number of new deals they require every week for staying at the capacity and developing sales staffing model.

However, the main goal of this post isn’t assisting you in creating a staffing model, but to help your team in closing more and more deals by dividing the whole revenue number into its small parts. It will allow you in seeing what is the uniqueness of each rep and why they are under or over-performing.

Metrics in Action- Knowing excellence and missed targets

While segment, each of the top three reps on our leaderboard excels at a different leading metric.

Rep One: Commander High Price (Very High Price)

A Very High ASP is one of our reps commands as they are perfect for focusing on the companies having bigger budgets and navigate through the company to a high-level decision maker for buying costly objects.

Rep Two: Qualification Master

These reps become successful due to a wonderful win rate. It works incredibly while turning casual interest into a comprehensive pain point and progress from the opportunities from the first stage to the second one.

Reps Three: Crafty Prospector

At last, we have this rap that is ideal for prospecting and beginning every day with an hour of targeted outbound to the organization in the market he attains success in selling it. It results in getting a great number of new chances and these chances results directly to better sales.

How to utilize sales metrics to dissect missed quotas

At the last of the spectrum, there are chances that some of you may have a rep that doesn’t have the ability to reach the quota but doesn’t know what the reason is. The rep will likely to drive and have a data-driven mentality if you hired it perfectly, but you may be not able to access the details they require to self-correct.

Looking at opportunities, ASP and Win Rate, check out where the problem really is.

You should work out on the outbound techniques and fix some time every day for creating an additional pipeline if they don’t reach where they need to be on Opportunities.

If there is an issue in ASP, then target negotiation techniques and value selling. However, if you find something wrong in Win Rate, then get some guidance about active deals or have some better focus on meeting your sales methodology.

If your rep is working perfectly with the Opportunities, ASP, and Win Rate, then there is likely an issue in Sales Cycle.

Sales Cycle can be defined as a thing that should be looked when you find that the remaining three metrics are everything where you want to reach.

The solution is generally modifying your sales model for ensuring that opportunities are developing early enough and there should be adequate ramp times in the reps.

For example, if the average sales cycle is 150 days and you consider it takes 1 month by a rep for learning the product and selling it comfortably, then it will require at least 4 months prior to the rep in getting fully ramped and it should be reflected by the expectations of your team.

What are the main takeaways?

  • Revenue= Opportunities* Average Sale Price* Win Rate
  • All the members of the team should be aware of these metrics by heart.
  • Your future earnings will be forecasted accurately with these numbers and help you to check which component of your sales funnel require attention.
  • Giving these details to your team will assist in self-correcting and identifying where they require targeting for making more money.

Now, we have given enough information about which of the metrics is important for staying on the top. We will continue posting this type of helpful articles on the sales industry.