How to Analyze Sales Performance: Find Those Dangerous Cracks In Your Sales Funnel

The one number any salesperson knows and can tell you instantly is the amount of their commission.

You need to know how much revenue you booked this month. Did you hit quota? Did you make your number for the year?

Bookings are a very important business metric. They’re the number one goal your CEO has, what investors care about, and make you successful in sales.

But it is a lagging indicator, meaning that your hard work won’t be realized for weeks or months.

There is a set of leading indicators that can tell you how much sales funnel hit rate you will have in the future.

This post will explore why you may be over or under-performing, and how to analyze sales performance for sure. The equation is simple.

The Important Equation

Revenue = Opportunities * ASP (Average Sale Price) * Win Rate

The easiest way to visualize this is a sales funnel – revenue being the bottom, opportunities at the top and ASP + win rate as two components of it.

These metrics are not only essential to generating new revenue – they’re also linked to the sales process.

In knowing how to analyze sales performance, it’s important to find new opportunities and generate demand for products or services.

Win Rate is a measure of how much you sell to potential buyers.

ASP is about the level of decision maker you’re selling to, how much time and effort they need for their project, and what discounting you offer.

If you sell a product, the above formula will let you know what metrics are most important to your business.

For those of us with longer sales cycles, you want to take your average sales cycle into account when analyzing our numbers.

With the new update, we’re just looking for how many sales people sell each day instead of their commission rate.

The (More Important) Equation – Sales Velocity

Sales Velocity = Opportunities * ASP (Average Sale Price) * Win Rate / Sales Cycle Length

This equation is useful on how to analyze sales performance, especially for thinking about the ramp time of your reps, how many deals they can handle at a given point in time (and what kind of new leads they need each week to stay busy), and particularly when it comes to building out your sales staffing model.

But this article isn’t about how to build a hiring model. It is for more of an overall understanding of what makes up the money and why some salespeople are over or under-performing.

Metrics in Action – Recognize Excellence and Missed Objectives

Segment has three leaders who all excel at a different leading metric.

Commander High Price is a very high-end product.

One of my salespeople is really good at working with big companies, and they have a knack for getting to the top decision makers.

Rep 2: Qualification Master

Another rep at the company does well because she is especially good at turning casual interest into a compelling need and progressing opportunities from stage 1 → stage 2.

Rep 3: Crafty Prospector

Then we found a salesperson who was really good at prospecting and would spend one hour of his day making targeted outbound calls to companies he had successfully sold too. This person always generated the highest number of new opportunities, which led to more sales.

How to Analyze Missed Quotas Using Sales Metrics

It’s important to hire the right person for your company. If you’ve hired well, they should have drive and be data-driven but if there are any gaps in what is needed to self-correct or achieve quota then this will not work.

Another way on how to analyze sales performance is using a metric like ASP, Win Rate and Opportunities lets you see where the problem lies.

If they’re behind on their pipeline, work on outbound techniques and set aside time each day to generate more opportunities.

If it’s an issue with the ASP, focus on negotiation techniques and value selling. If they’re having a hard time getting their win rate up, then you can give them more coaching or have them work on closing deals that are active at your company.

If your salesperson is doing well by Win Rate, Opportunities, and ASP – it’s likely an issue with the Sales Cycle.

Your sales cycle should be looked at after you’ve ascertained that the other 3 metrics are all where they need to be.

The solution on how to analyze sales performance is typically to adjust your sales model so that reps have more time for ramping up and opportunities are created early on.

If your average sales cycle is 180 days, and it takes 2 months for a rep to learn the product before they can be comfortable selling it, then that reps won’t be fully ramped until at least 8 months.

What are the most critical takeaways?

  • Revenue is the sum of all your opportunities multiplied by your sales funnel hit rate and then divided by the average sale price.
  • In knowing how to analyze sales performance, you should make sure every member of your team knows these metrics by heart!
  • You can use these numbers to forecast future sales funnel hit rate and see where your sales funnel needs improvement.
  • When you give your employees this information, they can use it to focus on what is most important for them and their company.

Need Help Automating Your Sales Prospecting Process?

LeadFuze gives you all the data you need to find ideal leads, including full contact information.

Go through a variety of filters to zero in on the leads you want to reach. This is crazy specific, but you could find all the people that match the following: 

  • A company in the Financial Services or Banking industry
  • Who have more than 10 employees
  • That spend money on Adwords
  • Who use Hubspot
  • Who currently have job openings for marketing help
  • With the role of HR Manager
  • That has only been in this role for less than 1 year
Just to give you an idea. 😀
Editors Note:

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Justin McGill
About Author: Justin McGill
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