How to Measure Sales Team Metrics Without Micromanaging | John Sherer

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1. 5:27

   I wanna see it by rep. I wanna see it by segment. I wanna see deals that entered late stage. How many deals are actually becoming real? We have very nicely defined deal stages. So that is trustworthy information, that information is useless if you have not defined your deal stages. So those two things are super core to me. And then I wanna see win rates. “Inbound pipeline versus outbound pipeline.” And then I wanna see outbound activity. You always wanna look quarterly. But for me, I've spent a lot of my career with at least one SMB team. SMB is a monthly business. It's a fully monthly business. Like I think about SMB and enterprise, like rugby and the NFL, they're different sports. SMB is its own thing.

   In Inbound and outbound attribution

2. 13:55

   It's also known as deal velocity or pipeline velocity. Sales velocity is calculated using four metrics, number of opportunities, average deal value, win rate, and average length of sales cycle. The formula is sales velocity equals number of opportunities “times the average deal size times the win rate percentage” divided by your sales cycle length, right? So you're basically taking how many opportunities do I have, multiply that by my average deal size, so number of opportunities, how big they are, that gets you like the total number, and then times your win rate percentages, which is like how many of those actually turn into revenue. And then you're taking that and you're dividing it

   In Funnel scenario modeling

3. 18:26

   Otherwise, you will create meaningless numbers. You'll go to your board and say, our win rate was 57% this month. We crushed it. The next month it'll be 12% and really neither number was accurate. So if someone asks you guys, what's your win rate? How do you answer that question? I'm going to give them like an averaged cohorted win rate. “The first thing you got to understand is your sales cycle.” How long it takes for a cohort of leads to become mature. So say I have a 90 day sales cycle, right? So that means we're in October, September, November. So basically you're telling me the July deals I have are mature. So what I'm going to go do is I'm going to go look at my like Q1, Q2 win rates.

   In Win rates

4. 19:27

   But that's not a close rate. That's a signal that close rate might be going up. So if it's Q3 today and you had a 90 day sales cycle, you can safely assume that you can look at Q1 and like most of those deals should be quote unquote seasoned or matured. And so for any deals that were created in Q1, “the way you calculate win rates would be close one divided by close one plus close loss.” Or are you including all the deals that remain open? I include the things that would be considered still open in that case. So it's close one divided by all opportunities generated in Q1. Yeah. And normally I think this is a place where there can be nuance and it's important to define what is an opportunity.

   In Win rates

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