Great sales leaders need excellent communication skills, a passion for their work, and the ability to persevere through challenges. But being a great sales leader is also about understanding and working with data. Here are three data points sales managers should understand and monitor in order to consistently hit or exceed their new business targets at the top of the funnel:
1. Total Addressable Market (TAM)
The total addressable market is total potential market demand for a product or service and the revenue opportunity available for that product. Sales leaders should understand the total market available in their industry, because metrics, reports and projections will all be based on the TAM. You should know whether the TAM is growing or shrinking, and you should also understand the firmographics of your TAM – characteristics used to segment prospect organizations. This could include things like industry segments, employee size and revenue size.
Understand the difference between inbound leads and outbound leads. Inbound leads are leads that come to you, through your company’s website, social media, online content, etc. As a sales leader, you should know the average number of inbound leads you are getting per week and per month, how often these deals progress to later stages in the sales cycle, and how often they close. You should also know the Average Contract Value (ACV) of the inbound leads.
Outbounds leads are prospects you reach out to through phone calls, emails, and social media. Like inbound leads, you should know the average number per week/month, how often they progress to later stages, how often they close, and the ACV of the leads.
For both inbound and outbound leads, a good sales leader will know what percent increase you will need in order to hit your forecasted quota, and what the cost will be to do so.
3. New Opportunity Creation
Managers should analyze new opportunity data to determine trends. These trends can be used to determine your marketing and lead generation budget, and they can also be used to coach new reps.
For all opportunities, you should record the answers to these questions:
- Was the opportunity an inbound lead or an outbound lead?
- What industry is the new opportunity?
- What is the company size?
- How many touchpoints were needed to convert the lead?
- What stage was the opportunity in when/if it fell off?
- What was the mechanism of engagement (phone, email, LinkedIn, advertising, networking, etc.)?
Once you have this data recorded, it’s time to look at the bigger picture. Consider these questions:
- What stage do you need to reach to ensure that new business is likely?
- What percentage of your opportunities convert to business?
- How many deals do we need in our pipeline (and at what stage) to hit our numbers (monthly/quarterly/annually)?
- At what stage do opportunities typically fall out, and what is the attrition rate? Note: knowing this can help you find out why opportunities aren’t closing, enable you to coach your reps to improve their sales tactics, and find a solution to any problems.
You should also know how many deals one fully ramped rep can close on a weekly/monthly/quarterly basis, which will help you determine quotas and comp plans. Conversely, how long does it take a new rep to ramp to full quota? This is one of the most important pieces of knowledge for companies that are growing quickly and hiring new salespeople often, or dealing with rep churn.
All of these metrics, if monitored closely and managed, can help you improve your team’s success rate, find solutions to obstacles, and create new opportunities at the top of the funnel.
For some more insight on processes at the ‘top of the funnel’, take a look at I Built a Successful BDR Team From Scratch and This is What I Learned