How do you do sales analytics?
Sales analytics is the field that studies how to get new ideas, rate sales success, and watch how customers act. It’s used to find out how well each salesperson is doing, find ways to make sales processes better, and set key performance indicators (KPIs) for a company or team.
The main goal of sales analytics is to make sales data more accessible to understand and study so that predictions are more accurate, the needs of customers are predicted, and ways to improve the sales process can be found. This helps businesses make better decisions.
There are four main groups that you can put sales data into:
1. Descriptive (What’s going on?): The marketing and sales teams use past sales data (like how well salespeople did and how often customers bought things) to figure out what happened in the past and to understand how sales work now and what the significant market trends are.
Diagnostic (Why did it happen?): Diagnostic analytics find links between market segments or customer tastes and how well a business does in sales. When companies do this, they can figure out why certain things happen, like losing customers or not meeting sales goals.
Based on descriptive data, sales leaders and directors use predictive analytics to make sales projections. Predictive analytics asks, “What will happen next?” Most of the time, this is done with software, like sales planning tools that AI powers.
4. Prescriptive (How should we act?): Prescriptive analytics look at all the available data and tell the sales team what they should do. They help people decide whether to enter a new market, try a new way of selling, or bring out a new product.
Sales data tells you a lot about how customers act, how well your sales are doing, and where you can improve your processes. It helps organizations make better choices about their strategies and ensure that their resources are used best.
Like words
- Looking at sales data
- Looking at sales data
- Analysis of sales success
Why sales analysis is important
Businesses can learn more about their customers, how they make sales, and how well they might do in the future by analyzing sales data. It helps everyone in the company choose which goods to focus on, when and where to sell them, and how to contact customers.
Sales research is essential for both present and future success in several areas, including:
Looking at the number of sales, Businesses can tell if they are growing or shrinking by looking at how much money they have made over a certain period. The number of sales for each product can also show deeper patterns in how customers act, like which goods are the most popular and which markets are doing well.
We are putting a number on income growth. Businesses can get a better idea of how healthy their business is by looking at the percentage change in sales volume from one time to the next.
Finding out how involved customers are. Companies can learn a lot about how customers interact with their brand and goods by tracking how they use different channels, like email, social media, and website visits, and measuring conversion rates.
They are pointing out places to improve. Companies can see where they need to put more resources to get better results by looking at how well their sales reps, marketing efforts, and new products do.
They are assessing the work of employees. Sales analytics can track the success of each sales rep, giving managers helpful information about which reps are doing a great job and which ones need more training or help.
Ways to Look at Sales Data
Different sales analytics include performance, pipeline, predictive sales, churn, and study analytics.
Analyses of Product Sales
Product sales data show how well a product does in its market as a whole. When businesses look at product sales, they need to:
Total amount of sales
- Sales velocity (how fast things sell)
- The most common deal size
Mix of products
Businesses need to check out how well various goods work on both a large and small scale.
One way for a business to do this is to compare its products’ performance to industry standards and its own sales goals. It could then look at how well complementary products sold together do.
Analytics for Sales Performance
Sales success analytics are directly related to the work of each sales rep. This includes keeping an eye on essential measures like
How many meetings have been set?
- The net extra money made.
- Rate of lead conversion
- Reaching sales goals
- The average amount of time to end
- Win rate (the number of deals closed compared to all the chances)
APU stands for “average revenue per user.”
During a sales QBR (quarterly business review) or performance review, sales performance analytics are generally looked at one-on-one.
For sales managers, sales performance analytics help them talk about how the team is doing, figure out the strengths and flaws of each sales rep, and make decisions about how to assign leads or set goals.
Analytics for the sales pipeline
Businesses can see how well their sales process works by looking at sales pipeline data. These show how well prospects are qualified and turned into customers.
Keeping an eye on pipeline data helps businesses evaluate their work processes and spot possible issues.
Pipeline statistics give us essential information about:
- Rate of lead conversion
- When the deal ends
- The number of contact points needed to make a sale
- Criteria for qualification
- Length of the sales cycle
The sales pipeline study helps managers set challenging (but doable) sales goals for their teams and see how well new ideas work.
Predictive Analytics for Sales
Predictive sales analytics look at past data to guess what will happen in the future. Predicting expected income, the rate customers leave, and market trends are all part of this.
Businesses use predictive analytics to learn more about their customers’ shopping habits and guess what they will need in the future.
Companies can use this data to decide how to use their resources, make better marketing plans, and fight off competition.
Analytics for Churn
Churn analytics help companies figure out why customers are leaving and improve their strategies for keeping customers.
They can also help companies find places where money leaks out and fix problems that cause people to leave without their choice, like carelessness or lousy customer service.
Some pieces of information that can help you understand why customers leave are
- The average value of a customer over their whole life
- Not able to follow up on leads
- Rate of customer retention
- Rate of cross-sells and up-sells
- Involuntary churn rate and reasons for it
Churn analytics helps businesses keep customers longer, determine which customers are worth the most, and guess how different tactics for keeping customers will work.
Analytics for Market Research
Businesses can find out what their customers think about them and see market trends by using research analytics. This includes keeping track of:
- Customer polls
- How people feel on social media
- Look at the reviews
- Groups of focus
- Tests of products
A look at the competition
Businesses use research analytics to determine how customers and the market feel about their brand. This information helps them make decisions about new products and marketing efforts.
10 Common Metrics for Sales Analytics
There are many sales measures to look at, but these ten are the ones that almost all companies use as a starting point for their sales analytics.
1. More sales
The most important thing to watch is bottom-line growth, which shows how well a business does.
Looking at short-term and long-term trends to understand sales growth is essential.
Seasonal factors, marketing efforts, or other short-term factors could cause changes. Long-term trends give a more accurate picture of a business’s overall performance.
To figure out how much sales have grown, do these things:
- Take the sales revenue from last year (or any other period you choose) and subtract it from the sales revenue from this year.
- Split the total by the amount made from sales the year before.
- To find the percentage of sales rise, multiply the result by 100.
Consider a company that made $1,000,000 in sales last year and $1,200,000 this year. The sales rise percentage would be:
1. $1,200,000 minus $1,000,000 = $200,000
2.$200,000 / $1,000,000 = 0.20
3.0.20 x 100 = 20%
In this case, the business saw a 20% rise in sales.
Monitoring sales growth and comparing it to benchmarks in your business or your competitors’ performance is essential.
In some situations, 5 to 10 percent sales growth may suit large companies. On the other hand, mid-cap and small-cap businesses may want to see growth of over 10 percent over the last twelve months (TTM).
2. Speed and Value of the Sales Pipeline
The speed at which chances move through the stages of a sales pipeline and end up as closed deals is measured by sales pipeline velocity.
As prospects quickly become paid customers, a high pipeline velocity shows that sales are going well and that the product is a good fit for the market.
Use this method to figure out the speed of the sales pipeline:
Rate of Sales Growth = (Number of Chances x Average Deal Size x Win Rate) / Number of Days in the Sales Cycle
Let’s say a business has 50 opportunities in its pipeline, the average deal size is $10,000, the win rate is 30%, and the sales cycle lasts 60 days. The sales pipeline velocity would be:
Sales Speed = (50 x $10,000 x 0.30) / 60 = $25,000 / 60 = $416.67 per day
A high pipeline velocity is usually a good sign, but it’s also essential to look at CLV, which stands for customer lifetime value. This is the total amount of money a business can expect from a single client.
If a company has a high pipeline velocity but a low CLV, it could mean that the sales team isn’t correctly screening leads.
They might close deals quickly, but those users might not bring in a lot of money in the long run.
3. Number of Sales So Far
Sales-to-date shows how much money a company has made over a certain length of time, usually its year-over-year (YoY) growth. To find it, just add up all the money you made from sales during the chosen period, from the beginning of the year to now.
Businesses can find patterns and tell if their sales are increasing, decreasing, or staying the same by comparing current sales numbers to those from earlier periods.
Also, sales-to-date numbers give you a good idea of your business’s financial health, even when demand changes with the seasons or the economy.
4. Rate of conversion of leads
A key metric for determining how well a business is selling is the lead conversion rate, which shows what percentage of sales leads become customers or move through the different sales funnel steps.
A higher lead-turn rate means the sales process works well, and marketing and sales work together better.
Lead conversion rate can be found in two main ways:
Change from Lead to Customer
This method figures out what number of leads turn into actual customers.
To get this rate, divide the number of leads turned into customers by the total number of leads produced during a specific period.
To get the lead-turn rate as a percentage, multiply the number by 100.
As an example, if a business gets 200 leads and 40 of them become buyers, the lead conversion rate is:
(40 / 200) x 100 = 20%
Getting people to buy in the sales funnel
This method checks the conversion rate at different sales funnel stages, like the share of meetings set up through cold outreach efforts.
Divide the sales at a particular stage by the total number of leads at that stage’s start to get this rate.
In the same way as above, increase the result by 100 to get the conversion percentage.
In this case, if a business starts an outreach effort with 100 leads and 25 of them agree to meet, the conversion rate for that stage would be:
(25 / 100) x 100 = 25%
5. Close with a quote
When you look at the quote-to-close ratio, you can see how many buyers got a price and how many bought something.
This metric tells you how good sales reps are at closing deals and which items, services, or pricing methods get the best results.
Divide the number of closed deals by the overall number of quotes sent out during a specific period to get the quote-to-close ratio.
Let’s say a business puts out 100 quotes and closes 30 deals. The quote-to-close ratio is then:
(30 / 100) x 100 = 30%
The best quote-to-close number for a business depends on the type of business it is. Quote-to-close rates are usually higher for companies selling food and entertainment than those selling cars, appliances, or business software.
If a company’s quote-to-close ratio is low compared to others in the same industry, they should look into what might be wrong with their quoting process, like how accurate their quotes are, how quickly they close deals, or how complicated their products are.
6. Average Cost to Buy
Figure out customers’ average money on a product or service in a single transaction. This is called the average buy value.
Businesses can determine how well their marketing increases the number of high-value deals by knowing how much the average first-time order is worth.
Use the following method to find your average purchase value:
The average purchase value is found by dividing the total sales value by the number of sales over a specific period.
If your business mostly makes money from one-time sales, average buy value is an excellent measure of your success.
If your business is based on subscriptions, an average revenue per user (ARPU) number would be a better measure of success.
7. Sales by Area
Regional sales metrics are helpful because they show investors and the top executives where the money-making possibilities are.
Expanding companies can use sales by region to plan their strategic growth, guess how much they will sell in new or emerging areas, and put their resources where they will be most effective.
Companies that use predictive sales analytics can also use these metrics to find and target possible customers and guess how customers will act in different parts of the world.
8. Demo calls are set up.
Seeing how many test calls each SDR sets up is a simple way to determine how productive your sales team is.
If they’re with qualified leads, sales demos are the key to finishing deals and breaking into new markets. Keeping track of them helps an organization see how its sales process works.
A CRM like Salesforce or HubSpot is often used to keep track of demo calls. It will show the date of the call, how long it lasted, and any follow-up tasks that need to be done.
9. The value of a customer over their lifetime
CLV helps companies set sales goals by letting them know precisely how many sales they need to keep making money.
A company’s CLV is relative; a low lifetime value can be made up for by high speed, low overhead costs, or a lot of sales, and the other way around.
One of the best ways for a business to get healthy is to raise CLV by keeping customers, making them happier, or making more sales.
10. Regular Monthly Income
Monthly regular revenue (MRR) is a more stable and expandable type of income than one-time sales. MRR is a monthly subscription statistic that shows how much money its customers make in monthly sales.
By keeping an eye on this measure, businesses can learn more about their growth, subscription churn rate, CLV, and ARPU. Then, this data can be used to predict future sales and improve marketing.
MRR also helps businesses decide what new goods or services to invest in based on how customers react to different pricing or offer models.
Pros of Using Sales Analytics
Look for new sales opportunities.
A business with the right sales analytics and KPIs can find new sales trends that point to good chances.
This is best shown by predictive analytics, which helps businesses guess how customers will act and find leads who are more likely to buy.
This lets them focus on the most successful possible deals and make the most of how they get leads.
Getting accurate sales forecasts
Analytics take sales reports and turn them into data-driven insights that companies can use to find problems, set goals that can be reached, and find ways to make things better.
It’s also easier to talk about the sales team’s success with investors and shareholders (or potential investors and shareholders) when you have better sales forecasts.
Set goals for sales.
Research from Sales Insights Lab shows that only 24.3% of reps exceeded their quota, even though healthy sales organizations usually aim for around 60% target attainment.
There are many reasons for this, such as the fact that the limit can be met.
If managers don’t have the correct sales data, they can’t guess how their reps will do and ensure they have everything they need to succeed.
Better ways to get customers
Without sales analytics to help the process, getting new customers is hard and costs a lot.
By looking at sales data, sellers can improve their ideal customer profile (ICP), zero in on the most valuable customers, and figure out the best ways to connect with new prospects.
Teams can make better choices about their marketing and sales campaigns to make sure they get the best return on their efforts if they have better data on how to get new customers.
Give sales teams incentives.
Giving salespeople incentives is always a good idea, but you must ensure they’re rewarding the right things.
Using sales analytics, managers can set incentives that reward reps for meeting specific goals and finishing deals by a specific date.
This helps ensure that sales teams are focused on activities that will make a difference and reward behavior that leads to the best results.
Keep customers longer by
Keeping customers returning is the easiest way to improve your business’s bottom line.
Businesses save a lot of time, effort, and money they would have spent on getting new customers when they use sales analytics to keep the ones they already have.
Analytics can help businesses keep track of their customers’ paths and find trends in their behavior, which helps sellers guess when a customer might leave.
This lets them offer quick intervention and retention strategies to keep customers interested and boost loyalty.
Where to Get Data for Sales Analytics
CRM
Once a company needs sales intelligence reports, it should check its customer relationship management (CRM) software.
CRMs store important customer data like contact information, purchase history, and notes of all sales interactions. Sellers can use this data to create buyer personas, look for customer behavior patterns, and measure success against critical KPIs.
Get Lead Intelligence
The leads come from different places and are shown on one side by lead intelligence systems, an automated tool.
By putting all lead data in one place, sales teams can track how customers interact with them across all platforms, see how healthy campaigns are working, and sort leads by their ICP.
This helps them choose the best chances to get the best return on investment.
Automation in Marketing
Sales analytics shouldn’t be used alone; they should be connected to marketing automation platforms so that you can see how well your sales and marketing efforts are doing.
Companies can keep track of their customers through more buying process steps with marketing automation analytics.
Buyers are almost three-quarters of the way through the customer journey before they talk to sales. Marketing tools that provide extra sales analytics fill the blanks for sales teams and help them determine the best time to start the process.
CPQ
CPQ software, which stands for “configure, price, quote,” helps buyers handle a big part of the sales cycle: setting up products, making proposals, and managing quotes.
CPQ is responsible for quoting the correct goods and services for each customer. Its analytics can tell you a lot about what customers are interested in, the quote-to-close ratio, the average purchase value, and the speed of the sales pipeline.
Software for billing
Billing software makes it easier for businesses to bill, invoice, draft, and extend contracts.
It’s a great place to find data like CLV, ARPU, and customer retention after a purchase.
By using billing data, companies can learn more about profitable customers and develop ways to make the most of their sales.
Why sales analytics platforms are useful
Sales analytics tools are essential to modern businesses because they give valuable information about how healthy sales are going, how customers act, and how the market is changing.
They help businesses make choices based on data, improve their sales strategy, and make more money by giving them more sales intelligence.
Let’s say a business has slow sales growth,h an many of customers are leaving. By adding analytics to its sales stack, its leaders can look at past sales data, find trends, and get to the bottom of these problems.
The company learns from this study that a particular group of customers leaves the company much more often than others.
The software for sales tracking also shows that customers in this group make less expensive purchases and stay with the company for less time.
With this knowledge, the company goes after higher-value customer groups with longer lifetimes. This brings in more long-term revenue and lowers the cost of getting a new customer.
