Why sales pipeline metrics are meaningless—when numbers mislead salespeople
“We increased year-over-year sales by 150%!”
“Our newsletter averages a 75% open rate!”
“I doubled the monthly views on our blog!”
“This marketing bot boosts engagement over 17x!”
I hear breathless claims like this all the time. You probably do, too. When it comes to sales funnels and sales reporting, people like to share big numbers. They think it makes them look successful.
Don’t buy it.
Let me put that differently. Don’t buy it until you’ve gotten the full context for the claim.
Numbers like this can be misleading. In some cases, they’re completely meaningless. And it’s impossible to know until you get the whole story.
But let’s take a step back. Let’s talk about the real problem with metrics like these, and how to really get a good understanding of your sales pipeline.
Context matters (a lot) in sales metrics
If I told you that I doubled my company’s product sales in the past two months, that would sound pretty impressive, right?
What if I then told you that I started with 10 sales, and I’m now up to 20? That doesn’t sound nearly as good. That’s why sharing numbers without context is problematic.
You see it in marketing, too. “We have an 80% open rate on our emails!” That’s great. But it doesn’t tell me anything about why you have an 80% open rate. If your subject lines say “I have your parents in my basement with a gun to their heads,” you’re going to get a lot of opens. But you’re going to get zero sales.
Even if you aren’t using an intentionally misleading (and alarming) subject line, I need more information to make a judgment about whether your email marketing is working.
Let’s take a look at another sales example: “We’ve doubled the closing rate since I took over the sales team.” Seems like a claim that’s hard to argue with—an increase in closing rate is always good, isn’t it?
Again, you need more context.
Or was there another factor? Maybe marketing is generating better leads. Or the product team released a new version of your product that’s notably better. There are lots of reasons why your close rate could have gone up. If you want me to be impressed, you need to show me the context that proves your actions caused the increase.
And that means you need to give me more information.
The information you need to assess sales numbers
If any sales metric can be misleading, what are you to do? Not trust anyone?
You should be skeptical—but not so cynical that you don’t believe any numbers you hear. Instead, understand the information you need to properly assess the metrics you’ve been told.
Valuable insight into your sales process comes from understanding three sales metrics:
This is called the AQC framework.
Let’s look at an example. Let’s go back to when I told you that I doubled my company’s product sales in the past two months. We’ll break it down using the AQC framework:
- Activity: In January, the team made 2,000 sales calls. By the end of March, I increased that to 5,000.
- Conversions: In January, the team converted 500 (25%) prospects to customers. In March, they converted 1,000 (20%).
Using those two facts, we can see that the quality of the prospects (or the sales calls) has decreased. While the number of conversions doubled, the conversion rate actually went down.
Now you see the whole story. On one hand, sales doubled. And that’s good. On the other, the conversion rate went down by a fifth. That’s not so good, and it warrants some investigation. If you can find a way to get the conversion rate back up, this sales team would be doing even better.
As you can see, it’s not always a matter of numbers being true or false, good or bad. There’s a lot of gray area in between. But more information is always better.
That information might come from sales funnel metrics, activity reports, sales reports, or any other sources that give you insight into your sales process. Those pieces of information tell you whether the growth being reported is sustainable and healthy.
In the example above, it’s probably not. You’d need to figure out why the closing rate has gone down.
But this skepticism isn’t only important when other people bring you numbers. It’s important when you’re looking at your own numbers, too.
Use the AQC framework to check yourself
You hear claims about sales and marketing all the time. And if you do any hiring, you probably hear them from candidates, too. (We request further information from job seekers all the time, and we usually find that they were trying to make themselves look better.)
Using this framework helps you get the most useful information out of those claims. But there’s another important place to use this information: in your own claims.
When you see that you’ve made a big improvement in a KPI, you might get excited and decide that your campaign has been a success. But you need more context. Maybe you significantly shortened your sales cycle. That’s a victory, right?
In most cases, yes. But if you had to decrease the quality of your pitches or reduce your conversion rate, you’re making a tradeoff that might not be worth it.
It’s easy to see a big gain and skip over the rest of the work you should be doing. We all want to post great numbers. But those numbers aren’t as important as getting the real story about what you’ve accomplished.
Whether you’re a front-line rep, a manager, or a sales executive, you need to use context and the AQC framework to measure your success. Falling back on meaningless vanity metrics isn’t going to help you, and it’s not going to help your company.
The one question to remember when you’re talking about metrics
Want a shortcut that will help you figure out if a metric actually has meaning?
Whenever you hear a number related to sales, ask yourself this: “Does that metric drive revenue?”
If the answer is “yes,” you’re golden. You’ve learned something useful.
But you’ll often find that the answer is “I don’t know.” Do increased blog views actually drive more revenue? There’s no way to tell without more information. Does a higher calling volume translate to more sales? There’s no inherent connection.
It’s not always easy to remember that. Many times a higher calling volume will be correlated with increased sales. But it’s crucial to remember that making more calls is only one part of the AQC framework: that’s the action your team has taken. You still need to find out about quality and conversions.
This goes for your CRM, too
Unfortunately, misleading sales numbers come from many sources. Including CRMs. It’s not really the CRM’s fault—we don’t (yet) have artificially intelligent CRMs that can provide you with all the context you need.
But some CRMs don’t try to hide useful information from you. We built Close to provide you with as much context as possible. You’ll still see single metrics, but it’s easy to dig deeper to find the related numbers you need to see what’s really happening.
Then you can turn that information into increased productivity. If your current CRM doesn’t make it easy to get this information, it’s time to make the switch.
So let's say Gob at The Bluth Company said that we doubled our opportunities created in Q1 of 2019 and announced it to the whole company as a huge success.
But his CEO finds that surprising, based on the work he’s seen from the sales team recently. Here’s how he can put these claims to the test with Close:
Step 1: Go to Activity comparison reports and select opportunities created by the sales team
Step 2: Dive deeper and see the number of opportunities closed in Q1 of 2019 and compare the two in different time periods
He might see that in Q1 2019, total opportunities created were 1000 and opportunities closed were 20 and Q1 2018, total opportunities created were 500 and opportunities closed were 50. While Gob’s team really had created a lot more opportunities, it’s now obvious that this wasn’t a successful quarter. The more meaningful number would have been that they closed 30 less opportunities in Q1 2019.
Or the CEO might be surprised to find that Gob’s claim holds up. And the doubling of opportunities is mostly because of this one sales rep’s hard work—James. Now James gets acknowledged for his great work. Maybe he can share some of his own tips that enabled him to create these great results, and those can be implemented into the sales team’s documentation. This will lift the performance of the entire sales team.
The fact that all the sales data flows through Close and the reports allow us to see the full story, makes it easier to show the real impact of the sales team on a team level and on an individual sales person level.
Curious about how this could work for your sales team? Try out Close for free today!
Think carefully about metrics
Most people don’t share metrics with the intent to mislead you. In most cases, they just forget to give you the context or don’t have it themselves.
But whether they’re purposely leaving out information or not, you need to be aware of it. Keep an eye out for metrics that could be misleading, and you’ll soon find that they’re all over the place. Don’t be mislead by them.
And be sure to check out our guide to the five metrics B2B need to focus on to scale from 100 to 1,000 customers. These are the kinds of metrics you should be paying attention to!
Want more tips on making your sales metrics matter? Download a free copy of The Sales Hiring Formula, which includes chapters on metrics-driven sales team management!