sales pipeline metrics

The Complete Sales Pipeline Metrics Glossary for Measuring Selling Power

08 September 2020

To measure success in sales you have to walk a fine line. 

Your sales pipeline metrics often teeter between quantity (too many data points tracked) and quality (not enough good data points tracked).

If management is still gauging your team’s capabilities by talk time, there’s a problem.

If management is still gauging your team’s capabilities by the number of activities logged in your client relationship manager (CRM), there’s a problem.

If management regularly says, “We’ve increased sales by (x) percent year-over-year,” with no follow-up as to how, then why are you still at this hypothetical company? 

In sales, context matters.

But hey, we’re not here to point out problems and wish you the best — not when there are solutions just begging to be implemented.

While we’re at it, one solution for improving your analysis is getting a better understanding of the sales pipeline metrics at your disposal. 

Here’s a sales pipeline metrics glossary to get you started:

Note: Want to rake up qualified leads in your sales pipeline? Try Leadfeeder free for 14 days to identify where in the buyer journey your leads are.

Number of qualified leads

With this sales pipeline metric, the keyword is qualified

Your inbound marketing and sales efforts might be generating a large number of potential leads. 

However, if they’re unlikely to go anywhere or irrelevant to your ideal customer profile, where’s the value?

To get those qualified leads, sales prospecting software is a tool worth exploring early on. 

When paired with proper lead scoring, you should be able to easily track and pull the total number of high-potential leads from your CRM.

If you have a large percentage of qualified leads, it’s typically a positive indicator of alignment between sales and marketing. If not, both teams might need to go back to the drawing board.

Win rate

The win rate measures what percentage of your total qualified leads actually convert into customers. You could also think of it as your sales success rate — what are you achieving with what you’re given?

Keep in mind the importance of context again. Win rate shouldn’t be the only sales pipeline metric you’re relying on for a “sales health status check.”

If the deals created aren’t qualified to begin with, closing will inevitably be a struggle.

lead win rate

Average deal size

The average deal size can be calculated by adding the deal value across your won accounts and dividing it by the total number of accounts. 

This sales pipeline metric can help you in a number of ways.

First, there’s forecasting. Teams can better project gains and set realistic goals when they have an idea of how much revenue they bring in monthly, quarterly, or annually.

Additionally, knowing the average deal size across sales reps provides insight into your ideal customer. You can start off targeting high-revenue, qualified leads, and lead score accordingly so you can spend your time where it counts. 

Total pipeline value

If average deal size offers a realistic understanding of what you’re likely to bring in with closed deals during any given point in time, think of total pipeline value as the reach goal. 

Total pipeline value is calculated by adding up potential revenue across every open lead.

While you probably won’t close every opportunity you’re pursuing, it helps to take both a macro and micro look at the pipeline when forecasting.

Total pipeline value also helps you easily identify ebbs and flows in the sales cycle based on factors like seasonality or campaign launches.

Customer acquisition cost

Think of customer acquisition cost (CAC) as a relevant business-to-business (B2B) funnel metric for both sales and marketing. 

It looks at how much money you’re spending on the front-end to generate qualified leads and divides that by the total number of deals closed.

A “good” CAC is relative to the revenue you’re generating (i.e. average deal size). But generally, the lower your CAC is, the better your teams’ return on investment (ROI) is.

You want to spend the least amount of money possible closing the content loop from website visitors to leads to deals.

Average sales cycle length

To determine average sales cycle length, sum up the total length of time to close deals across accounts and divide it by the total number of accounts. 

This should help your team forecast incoming revenue.

Additionally, when you know how long the average sales cycle is, you can better time out when and what to send to leads throughout the sales process.

You want to provide relevant sales content that speaks to common pain points at a regular cadence.

MQL to SQL conversion rate

Just because a lead has subscribed to a newsletter doesn’t mean they’re ready for one-on-one sales attention

This is where developing a marketing qualified lead (MQL) to sales qualified lead (SQL) process can make all the difference.

sales qualified lead

Total up all of your SQLs during a given time and divide them by the MQLs. This should give you a feel for the quality of your inbound leads and let you know if there’s a potential disconnect between your sales and marketing teams.

Customer lifetime value

You’ll see this sales pipeline metric appear a lot in reference to e-commerce companies dependent on recurring sales.

However, for the B2B sales funnel customer lifetime value can be equally as important relative to retention.

B2B customer lifetime value involves multiplying the deal size by total transactions in a year and the total number of years as a customer.

If you want to improve whatever number you’re presented with, then work with your marketing team on retention-based nurturing tactics.

Close ratio

A close ratio is a sales pipeline metric that analyzes the total number of deals you’re closing relative to the total number of open opportunities. 

While the number of deals closed is not nearly as important as the quality of deals closed, this ratio can shine a light on potential disconnects.

For example, if reps are consistently struggling to close deals at a particular stage, the content or proposition they’re using might not reflect what the customer is actually looking for. 

Use it as a gut check for what you’re saying and how you’re saying it.

Lead response time

It can take upwards of five calls after a sales meeting to close 80 percent of deals. And if you’re not responding to a potential lead fast enough, chances are someone else is.

Analyze the average time it takes a rep to respond to inbound leads. 

You can use this sales pipeline metric as a training tool when onboarding new team members and to help pinpoint where issues in the sales process might be surfacing.

Sales velocity

Sales velocity is essentially a measure of how quickly deals are moving through your pipeline in the form of dollar signs. 

It’s a great way to understand how various one-off metrics work together to create a pipeline that’s healthy and thriving.

As HubSpot explains, the formula for sales velocity looks like this: 

(Number of deals in your pipeline) x (overall win rate percentage) x (average deal size in $) / (length of sales cycle in days) 

In sales, money talks, right? This is why it can be easier to look at the picture of many metrics as a whole to gauge just how well you’re doing.

Customer retention rate

Closed deals are great and all, but if you fail to keep customers around, you’re constantly playing catch-up. 

Most people know it’s more expensive to acquire new customers than it is to retain current ones.

To calculate the customer retention rate, subtract the total number of customers acquired during a specific timeframe by the number of customers that remain at the end of it. 

You’ll then divide this by the number of customers you had at the start of the timeframe.

If you’re struggling to retain customers, this could be an indicator of a poor product, support, fit, or all of the above. 

Make sure your sales team is in line with the operations team to ensure what they’re selling meets expectations at the time of signing and beyond.

Final thoughts: The complete sales pipeline metrics glossary

Meaningful sales pipeline analysis starts with the right sales pipeline metrics — and it ends with ongoing review in the context of your organization’s specific processes and tactics.

Use what’s been achieved up to this point as the benchmark. 

The more you measure and use those measurements to drive change, the more likely you are to continuously raise the bar as time goes on.

Note: Want to rake up qualified leads in your sales pipeline? Try Leadfeeder free for 14 days to identify where in the buyer journey your leads are.

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