Measuring success in sales is difficult because of the subjective nature of the buying process (i.e., the involvement of people and their feelings).
Using these 6 Most Useful Sales Funnel Metrics, you can see how customers move through the sales process and pinpoint any weak spots in your sales strategy that may be preventing you from generating as many qualified leads.
Research conducted by Outreach indicates that top-of-funnel inefficiency is responsible for a 37% gap between what is expected and what is actually achieved by sales teams.
An optimized sales funnel generates a return on investment by putting emphasis on the caliber of the sales activities that determine the effectiveness and speed with which the funnel moves.
You, therefore, can’t afford to ignore these quantitative indicators. Long-term, effective success can be achieved through cautious analysis and the subsequent actions driven by data.
Don’t worry if you have no idea how to analyze your Sales Funnel Metrics or if you just want to make some tweaks to your current method; this article has practical advice to help you get started.
Reasons Why Sales Funnel Metrics Help Bring Together Marketing and Sales
A drop in conversion rates, for instance, can indicate that your sales and marketing strategies aren’t cohesive. According to studies conducted by the Aberdeen Group, coordinating these groups can increase revenue growth by 32% yearly.
Once you’ve established and measured superior sales funnel metrics, you’ll have the objective insights you need to drive alignment. You could, for instance, use lead data to help you find the right personas for better positioning.
There may be other Sales Funnel Metrics that would be more helpful in confirming the success of your inbound marketing efforts or zeroing in on the efficiency of each individual division.
Success can be measured with the help of a data-driven strategy, which also lays out a path toward enhanced cooperation and coordination. But it’s not just about making things better on the inside of your company.
Better communication and coordination between sales and marketing should lead to more uniform messaging and fewer bumps in the sales journey. An increase in sales and marketing performance through analysis of sales funnel data.
7 Best Useful Sales Funnel Metrics
It is time to select your metrics and begin tracking them if you want to learn as much as you can about your customers and how they interact with your sales funnel.
This is the first step in the right direction. From the very beginning of the sales funnel (lead generation) all the way to the very end, there are seven Sales Funnel Metrics that are the most informative to look at, and a list of those metrics can be found below.
This was something that should have been anticipated. It is essential to keep detailed records of lead information because the viability of your sales funnel is contingent on the quality of the leads you generate.
The insights that can be gleaned from tracking leads as they move through the sales funnel can be used to improve and inform a wide variety of aspects of how your sales and marketing teams function.
When it comes to tracking the number of leads entering the funnel, conducting a more in-depth lead analysis will provide you with even more specific data than doing so. Do not let yourself become overwhelmed by the sheer number of opportunities.
It is important to pay close attention to qualified leads and investigate their cycle time, which can be defined as the amount of time it takes for a lead to progress from one stage of the customer journey to the next.
It is impossible to overstate how important it is to know where leads are coming from. Where did they come from originally? How many were brought about as a direct result of your efforts in marketing, and how many were made a sale as a direct result of your efforts in sales?
The findings of this research will shed light on ways in which top-of-the-funnel initiatives can be improved upon in the future.
2. Conversion Rate
Every single lead generation campaign should have the ultimate objective of turning leads into sales. To determine the rate of conversion, simply divide the total number of sales by the total number of leads in the process.
This indicator will tell you how successful your team is at closing new prospects as they enter your sales funnel by revealing the degree to which they do so.
Example: Conversion Rate = Number Of Leads Won ÷ Number Of Total Leads
If your conversion rate is lower than what it should be, you may need to investigate different aspects of your sales process in order to identify the point at which the leak is occurring.
Master the Art of Analyzing Your Own Closed and Lost Causes To what extent do the leads at the top of the funnel genuinely fit the criteria we use to qualify customers?
Do we require additional sales personnel training, new sales methods, or new sales personnel altogether? Using this information, you will be able to determine which members of your sales team are thriving and which are floundering.
3. Acquisition Costs
The vast majority of the data that you examine from your sales funnel should be geared toward increasing revenues, and this should include an examination of and control over expenses. Do you have any idea how much money it takes for you to get something that you want?
This metric is one of the ones that are more difficult to quantify in comparison to the others. To phrase this another way, acquisition costs include all of the marketing and sales expenses that are incurred in order to bring in new customers. In other words, these costs are necessary in order to grow a business.
To determine how much it costs to generate leads, take the total amount of money spent on lead generation and divide it by the total number of leads produced.
This will give you the cost per lead. To determine how much it costs to acquire a customer, simply divide your total cost of acquisition by the number of new customers that are generated. This will give you the cost per customer.
Lead Acquisition Cost = Acquisition Cost ÷ Number Of Leads Generated
Customer Acquisition Cost = Total Acquisition Cost ÷ Number Of Customers Generated
4. Customer Lifetime Value
The Lifetime Value, or LTV, of your customers, is an important metric that can be used to evaluate the long-term viability of your company’s strategy. This metric looks at how much money a customer spends on your product in relation to the typical amount it costs to acquire a new customer.
To arrive at an accurate evaluation of your acquisition cost goals, you must first determine the value that a new customer will bring to your business over their entire lifetime.
In addition, it is an essential metric for companies that generate revenue through the upselling and cross-selling of additional products to their existing customers.
To calculate the value of a customer over their entire lifetime, simply divide the current value of the customer (in terms of money spent) by the typical lifespan of the customer.
Example: LTV = Customer Value x Average Customer Lifespan
5. Total Sales
The total amount of money you made from the orders placed by customers is equal to the sum of your sales for a given period of time. One single number can represent the entirety of the activity that occurs within your sales funnel, from the generation of leads to the conversion of those leads.
Simply add up the total amount of money made from sales over the relevant time period for an easy calculation. Are you able to affirm that the sales that have resulted from these conversions are exactly what you had hoped for?
6. Cycle Time
The term “Cycle Time” refers to the amount of time it takes for a potential customer to progress from one level of the sales funnel to the next.
By following this metric from the point of entry into the sales funnel all the way through to the point where the sale is completed, you will be able to determine how effectively your team manages sales.
Is there anything that is preventing you from moving forward that more money or new methods couldn’t fix?
7. Average Deal Size
To determine the size of an average deal, take the total dollar amount of all of your transactions and divide that number by the total number of transactions.
If you monitor this metric on a regular basis, it will be easy for you to determine whether your deals are getting bigger, getting smaller, or staying the same size; are your average deal sizes in line with your goals?
Example: Average Deal Size = Total Dollar Amount ÷ Number Of Feals
How to use sales funnel metrics
- By focusing on a small number of key, performance-driven KPIs, sales funnel analytics can help you assess your progress and identify areas for improvement. Always consider the entire sales process instead of just one or two signs.
- By looking at the entire sales funnel, you can see where you’re succeeding and where you might be losing leads. After noticing these patterns, you can deliberately fill the voids by focusing your efforts on where they are lacking the most.
- You can learn a lot about your sales funnel’s effectiveness by analyzing metrics like the length of your sales cycle. The goal of increasing your return on investment (ROI) can be optimized with the use of sales funnel analytics.
- Be sure to maximize each stage of your funnel to get the most out of your investment. Monitoring these Sales Funnel Metrics will help you fine-tune your process for increased conversion consistency and return on investment.
- Once everything is in place, you can check your funnel statistics to see how people are responding to your efforts. Does your website get a lot of clicks? Is the size of your email list growing?
- These are great signs that the content you’re making is engaging your audience. If not, then it’s clear what needs to be adjusted to get the desired response.
Identifying your sales funnel analytics and drawing the right conclusions can be a time-consuming process. However, if you’ve got it down, reviewing your sales funnel analytics regularly can do wonders for your business.
Remember the following crucial points
- The sales funnel is a visual representation of the customer’s path from initial awareness of your brand to an educated decision to buy.
- It doesn’t matter what you’re selling or what kind of business you run, a sales funnel can help. If you are selling something, you have a sales funnel.
- Four stages comprise the e-commerce sales funnel: consideration, research, consideration, and purchase.
- Ultimately, you want to lead the customer to a successful conversion at the end of the sales funnel.
- The KPIs of a sales funnel includes the number of visitors, the percentage of visitors that convert, the total revenue, and the average order value.
- It’s crucial to look at the entire sales funnel instead of just one or two KPIs when conducting a funnel analysis.
- Finding the weak points in your sales process might help you focus your efforts and boost conversions.
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Access to Valuable Sales Funnel Data in a Convenient Format
As we’ve seen, keeping tabs on these potent sales funnel metrics is a great way to improve the overall quality of your sales efforts and pave the way for a smooth customer journey from the product’s discovery phase all the way through to the point where they become a successful customer.
By integrating our sales engagement platform with your marketing automation tools, we can hone our approaches at the top of the sales funnel to increase our effectiveness at the bottom.
To better automate sales, analyze leads, and report on team performance, your business can use outreach. Contact us to learn more about how a partnership with Outreach can turn your sales funnel metrics into useful information at any stage of the buying process.
Conclusion: Sales Funnel Metrics
One of the most important functions of any marketing department is managing the sales funnel.
To ensure that a prospect’s experience is both positive and productive, businesses must regularly review key performance indicators and sales data. If you want to know whether or not your business strategies are successful, you need numbers.
Hop on the video bandwagon to learn how to increase your company’s conversion rates; using Hippo Video, your business can attract three times as many customers and boost sales simply by displaying content and information on a more engaging platform.
Sales Funnel Metrics: frequently asked questions (FAQs)
What are the 5 stages of sales funnels?
These are the five stages of a sales funnel:
What are sales funnel metrics?
The human-driven, emotionally-charged, and decision-filled buying process can be difficult to quantify, but sales metrics can help. With these figures, you can see exactly how your customers move through your sales funnel and pinpoint any weak spots in your sales activities that may be preventing you from converting as many prospects into paying customers.
What are top of funnel metrics?
Top-of-funnel metrics track the actions of potential customers at the beginning of the sales process. Neither the decisions made during the lead stage nor the final results found there can be said to be significantly impacted by these metrics.
What Are B2B sales funnel metrics?
A B2B sales funnel is focused on acquiring customers through three stages –
First Stage – Sales lead generation
Stage two – lead generation (MQL & SQL, explained further in this article)
The third and final stage – completing deals and keeping customers for future business and word-of-mouth
what Are The B2B sales funnel metrics
Every B2B sales team should track sales productivity KPIs.
1) Tracking revenue.
3) New leads by source.
4) Lead-to-opportunity ratio.
5) Average lead response time.
6) Cost of customer acquisition.
7) Closed monthly deals.
8) Average follow-up attempt.
what are Sales funnel KPIs?
You should particularly keep note of the number of leads. The number of qualifying leads. Response time from the sales team. Closing percentages. The average time it takes for a lead to progress through the funnel and become a paying customer.
What Are Sales funnel conversion rate benchmarks?
The sales funnel conversion rate benchmark you should aim for is primarily determined by your business and the products you sell. According to one report published in May 2022, typical eCommerce conversion rates ranged from 0.6% to 5.5% depending on the industry.
What Is A Good B2B sales funnel conversion rate?
The average exchange rate should be somewhere in the 2-5% range. In some fields, a conversion rate of 10% or higher may be ideal. Conversion rates are conditional on the business and the product or service being sold.
What Are SaaS funnel metrics?
Performance and expansion indicators for businesses are SaaS (software as a service) metrics. They let companies evaluate their progress, prepare for the future, and adjust their strategies as necessary.