Hand drawing Lead Generation Business Funnel concept with white chalk on blackboard.
August 14, 2017
Sales Process  |  5 min read

7 Metrics that Guide a Healthy Sales Funnel

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Clare Tyrrell-Morin

The sales funnel is a key tool for small business owners to have complete visibility into sales performance and encourage growth. The funnel is your guide for organizing your sales process—turning it into a well-oiled machine that is predictable and high in converting power.

The funnel is visually represented as an upside down pyramid and depicts the journey from a prospect first making contact with your company, to becoming a bonafide customer. Here are seven key metrics that guide a healthy sales funnel, beginning with the most important metric of them all—identifying and defining the sales-ready lead, aka the qualified lead: 

  1. Qualified leads: A qualified lead is when someone has been nurtured by your marketing content and is expressing an interest in your product. How you define a qualified lead varies from company to company, and it’s something your sales and marketing team need to agree on—as you sit down together and map out the buyer journey. In the best cases it isn’t just someone who randomly reaches out to you, but a lead who has an intent to buy. Marketing automation platforms like Infusionsoft help you define these leads with lead scoring. It’s also important to check how quickly your qualified leads are being helped as soon as they enter your funnel. Leads are nine times more likely to convert if you follow up within the first five minutes of their expressing interest—so you need to automate processes so that personalized messages can be sent as soon as they reach out.

  1. Win rates: This is the percentage of opportunities pitched that were won. To calculate it, you divide closed-won opportunities by total opportunities that were closed-won plus closed-lost. If a sales rep has 25 opportunities and closes 12 of them, her win rate is 48 percent. Tracking this number helps you gauge the overall health of your sales team and funnel, and allows you to assess performance over time.

  1. Average deal size: The average deal size is calculated from all your closed-won deals and it’s a metric that helps you project a number of sales you should be bringing in and the amount of work you should be doing to pull in those sales. It’s also a tool for risk mitigation: if your sales teams’ average deal size is $150,000 and one rep is working on a deal for $500,000, you’ll need to decide whether to give them the resources to follow it through or point them to more reliable smaller sales instead. And if you spot a general upswing in average deal sizes, you may need to rework your business strategy.

  1. Sales funnel leakage: When I moved into my house in New England, we found a house littered with leaks: there was a gaping hole behind the oven fan where hot air was being sucked out into the deep northern winter, while the stairwell to the unfinished attic had a door that wasn’t winterized and acted like a de facto heat suction device. It was incredibly easy to block these holes, and instantly make big savings on heat bills—but you have to first see the leaks that were apparently invisible to the previous occupants. The same applies to your business. Map out the key milestones along the buyer journey, and study the numbers to identify exactly where you are losing people. Why are they not following through? Go granular into your processes and by fixing those, you’ll be able to greatly improve efficiencies.

  1. Average sales cycle: This is another crucial metric: the average amount of time from an initial contact by the customer to the transaction or a won deal. If your cycle is swift, you’re operating healthily. If you’re lagging, check for leaks. Also, check your numbers by industry standards and your own historical data. According to SiriusDecisions, the average sales cycle for B2B companies has increased by 22 percent over the past five years—so it’s more important than ever before to streamline processes. Platforms like Infusionsoft allow you to run reports to get all these numbers in an instant.

  1. New leads per month: The healthiest of funnels—once they’re airtight—have a continuous flow of interest pouring into the top, which is filtered beautifully all the way down to closes. New qualified leads generated per month helps you track the success of your inbound marketing. Check out industry averages of new leads per month and set goals.

  1. Employee morale: Amid all this talk of numbers, don’t lose sight of the humans who stand at the heart of your business. Check metrics like staff retention and run them by industry numbers, but ultimately this metric is all about getting up from your devices and making the effort to speak to people across your sales and marketing teams to find out how they’re feeling. Do they have the right tools, the right direction, and marketing materials? Implement employee-centric practices to keep morale high, celebrate successes, and implement funnel-building processes. With a healthy funnel and a clear sense of direction, you’re creating the conditions that will allow your team to fully thrive.

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