Sales reps always know their quota – but ask the same sales reps how many calls or emails will help them hit their number, and only a few will be able to tell you. Similarly, most sales reps don’t know their Average Contract Value over the trailing two quarters.
Some of the responsibility belongs to the sales manager, who should be ensuring that sales reps know, and hit, their numbers – and what it will take to achieve that. However, it’s also important for every sales rep to know exactly what their basic sales numbers look like and what activities they need to do in order to hit their quota target.
Here’s a quick guide to help reps and sales managers calculate these numbers:
Average Contract Value (ACV):
Add together the value of the contracts the rep (or team) has signed over a given period of time. Next, divide the total by the number of individual deals, and this will give you an ACV.
Contract 1: $7,000
Contract 2: $15,000
Contract 3: $20,000
ACV = $14,000 ($42,000 / 3)
This is an easy one. Using your ACV, how many deals does a given rep need to sign in order to hit his or her number? Quota is usually attained on monthly, quarterly or annual basis.
Activities (Calls/Emails) to Meetings:
This is an important statistic that is critical for managing top of the sales funnel activity. How many touchpoints (calls, emails, social media, texts, etc.) does it take before a prospect agrees to engage with your team? Knowing the average number of activities necessary for engagement will help sales reps know if they’re on track, or motivate them to be persistent.
If you don’t have the right CRM, systems or processes in place, this number will be difficult to determine. It’s a good idea to implement these processes early in your GTM so these statistics can be calculated.
Meeting Conversion – Meeting to Opportunities:
How many meetings turn into opportunities? Many reps think that any meeting equals a forecastable opportunity, but it doesn’t; meetings can often lead nowhere. Another way to track this stat is by determining how many meetings end up hitting a certain stage in your opportunity funnel.
Opportunity Conversion – Opportunities to Deals:
This is the most important number for any sales rep or manager to know. Out of all the opportunities created, how many do you end up winning? This stat is important to calculate a rep’s overall win percentage, but it’s also important to know if any one rep is underachieving or overachieving. Good managers use this data to dig in and determine why a certain rep may be struggling.
Here’s how the data comes together:
- If your Quota is $50,000/month and your ACV is $10,000, you have to bring in 5 deals to hit your quota.
- If your Opportunity Conversion is 3 Opportunities equals 1 deal, then you will need 15 opportunities to hit your number.
- If your Meeting Conversion is 2 meetings equals 1 opportunity, then you will need 30 meetings to hit your number.
- If your Activity Conversion is 15 activities equals 1 meeting, then you will need 450 activities to hit your number.