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Sales Pipeline Analysis: Get From Lead to Cash Faster

Sales pipeline analysis is a great opportunity for selling organizations to improve results. According to the Aberdeen Group, 33% of Best-in-Class organizations report having high proficiency at “taking the guesswork out of selling by providing analytics or data to support proven best sales practices,” compared with only 19% of under-performing organizations. In addition, the number one challenge for companies is lengthening sales cycles and deals getting stuck in the pipeline.

Analyzing your sales pipeline on an ongoing basis and identifying problem areas can lead to significant improvements in sales performance. Let’s take a closer look at what sales pipeline analysis is and at what metrics you should consider.

Sales pipeline analysis

Sales pipeline analysis tracks sales opportunities as they move through your sales process from first contact to closed sale and identifies where there is room for improvement. Using these analytics, organizations can invest in increasing sales effectiveness, monitor the sales process to identify individual opportunities that need attention, and support sales reps in achieving their objectives.

Before performing this analysis, identify the pipeline stages in your particular selling process. These stages should flow in a logical manner, naturally leading prospects through the sales process. As part of stage identification, you should also analyze data. Data analysis helps establish which stages are key moments in the buyer’s journey, offering insight into their propensity to buy. Here are some key metrics for pipeline analysis:

Number of deals in the pipeline lets you know how many deals are in each pipeline stage at any given moment. Combine it with historical win rates to set realistic expectations for sales results. Look at this metric for each salesperson to identify who may be over or under-utilized.

Average sales cycle shows you how long it takes for reps to close sales. Best-in-Class sales organizations report a 16% shorter average sales cycle relative to under-performing companies, according to the Aberdeen Group. Research benchmarks for your industry to estimate if your average sales cycle is beating the competition. Also look at historical insights. Is the cycle getting longer? If so, what is causing delays and where exactly in the pipeline are deals getting stuck?

Sales pipeline analysis

Read an interesting recent article on How To Compress the Sales Cycle by Anthony Iannarino.

Average pipeline stage time measures how long leads spend in each stage of the pipeline. If leads spend too much time in one of the stages, take a closer look to understand why. Identify coaching opportunities for reps based on which stage seems most problematic.

Win rate of deals indicates reps’ ability to close sales. From a total of 100 leads, how many make it to the end of the pipeline? If win rate is low, look at conversion rates are every stage of the pipeline to identify problems. If rates are low in the early stages, you might need to train reps to build better rapport with clients, improve handoff of leads, or improve their knowledge of the product. If rates are low at later stages, reps might need to improve their negotiation and closing skills.

Average deal size represents the average value of deals in your pipeline. If you notice a downward trend, reps might be taking the easy way out, seeking out smaller, easier to close deals, or they could be offering too many discounts.

Stagnant opportunities tracks the number of deals stuck in the pipeline and at what stage. You can potentially revive these opportunities by providing alerts to the sales reps, or by identifying why they are stuck. While some delays might be justified, too many stagnant opportunities can be a red flag.

Sales pipeline analysis can provide a lot of metrics. While it might be tempting to consider them all, don’t let data analysis become a waste of time and resources. Focus only on metrics that are relevant to your business and provide you with valuable insights. Track these over time to ensure that you continually improve sales execution and give the reps the information they need to be more effective.

If you’d like more insights on how to use analytics to optimize your sales organization, read our guide “Better, Faster, Stronger: How to Use Sales Ops Analytics to Improve Sales Performance.” Also, if you have questions regarding sales analytics, comment below or feel free to drop me a line. I’d be happy to discuss!

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