Top Ten Metrics For Tracking SaaS Sales Team Success
Performance reporting is the cornerstone of managing an effective sales team. Plus, a key determinant in demonstrating marketing/product strategy success and growth projections for any business.
Over the years, having run numerous sales teams, consulted on performance or joining as a new staff member I have come to rely on a few 'go-to' base metrics as my preferred set for reporting to the board and for my own sense of wellbeing.
When running a SaaS sales team there are a huge number of metrics that are often reported on, but sometimes too much reporting can mask the underlying performance of the sales team. To my mind, reporting needs to be kept simple and easily digestible.
So, here are some thoughts on the key sales metrics. Whilst these derive from experience in SaaS sales, where human intervention in the sales process is required, they are valid for many sales environments:
1. Lead Generation
A lead is a 'sales opportunity', whereby contact has been made and purchase interest shown. Reporting is divisible by leads generated by outbound activity (such as cold calling, networking or referral) and those generated by marketing campaigns. It's useful to track via type/campaign as it helps to determine the success of the product in the marketplace. For example, a high number of referrals typically indicates that the product is being well received. For campaigns, the number of leads needs to be tracked against the marketing spend.
2. Lead Velocity
How are the team doing in generating new leads, ideally you want to see the number of leads growing month-by-month as that will give a strong indication of success in the marketplace. Equally, you need to track how long a lead takes to move through the various funnel stages (initial interest/demo/proposal/negotiation) to conversion, as with lead generation this should be reported on by deal size, so you can predict likely future revenue and ensure sales momentum.
3. Deal Size
Each lead should have a projected deal size. For example; hospitality SaaS sales might be tracked by the number of venues and modules that the client will wrap into the contract. As larger deals invariably take longer to convert (typically due to increased levels of decision-makers) it is useful to have a mix of deal sizes to ensure a steady stream of conversions.
4. Place In The Funnel
Where is the lead in the funnel, starting from initial interest, through a demo, to pitch, to contract negotiation? Tracking progress through the funnel, and monitoring the length of time it usually takes by deal size provides a good indication of likely future revenue.
5. Why Are Sales Not Converting?
This can be tricky to determine as pitches may be reluctant to provide accurate details on why they chose not to proceed. However, if you are able to track against competitors it will provide good insight into how your offering stands up and can provide a trigger to review price/service offerings to match competitor challenges.
6. Conversion Rate (Time In Funnel)
Tracking conversions is perhaps the most critical sales metric. It's all very well having loads of leads in the funnel but success is based on getting them over the line (and keeping them there). Tracking against deal size/length of time in the funnel and by source will provide good signposts to what's going right/wrong.
7. Customer Acquisition Cost
For each deal, it's helpful to track how much it has cost to acquire the business, whether it be by campaign spend, time spent, entertainment etc.
8. Life Time Value
It can be difficult to accurately predict the lifetime value of a contract, especially in turbulent economic times. However, based on contract negotiation (i.e. signing a 3-year contract rather than a 1 year one), contract length of comparable clients and overall median of client contracts then you can make a fair assumption of the likely total value of the deal over time.
9. Renewal Conversion Rate (Churn Rate)
An effective salesperson doesn't depart the client relationship once the initial contract is signed, but remains integral, supporting the partnership between the business and client, helping to ensure the lifetime value of the relationship is maximised. Tracking renewal rates, and reasons for leaving, by deal size/tenure, provides useful insights into competitor activity and product performance.
10. Monthly Average Recurring Revenue
Last, but not least, is MARR, which is used to track the average revenue per measurable unit across the business. Using the example of hospitality SaaS, this could be based on average revenue per client venue using the software across the business. Ideally, you want to see an upward trajectory over time as an indicator that you're doing things right. If you're offering multiple tiers of licence then these should be reported on both separately and as a whole.
The views expressed here are solely those of Chris Johns. Undoubtedly other sales professionals will have additional reporting preferences but the ones listed here are Chris’s personal preference and deliver what I believe to be, the necessary information without overloading the reporting process. After all, sales is principally about making rain, not reporting on it.
