This blog’s focus on “What sales and marketing metrics are key to knowing you’re on track for Q4?” is based on a recent webinar we did entitled “Tips for Crushing your Q4 quota” featuring two fantastic thought leaders, Nancy Nardin of Smart Selling Tools and Matt Heinz of Heinz Marketing.
In part 1 of this series, we covered general insights from Nardin and Heinz about the most important thing to know going into Q4 and answered the question: “What are the warning signs that you are not ready for Q4?”
In part 2 of this series, we cover “What sales and marketing metrics are key to knowing you’re on track for Q4?” If you would like to listen to the full audio for each section of this series, please click on the movie at the top of each section.
What sales and marketing metrics are key to knowing you’re on track?
Some of the most important metrics to understand at the start of Q4 are sales pipeline size and what the sales cycle length typically is. If your sales cycle is four to six months, then at the start of Q4, it is crucial that you already have the leads and opportunities in hand that you think are going to close by year end. Only if your sales cycle is shorter than that will you still have time to go out and generate new opportunities and new leads that can actually convert to deals in time.
- Know the size of your pipeline
- Work it against in benchmark metrics
- Understanding your sales cycle length
- Determine whether you still have time to go and add new opportunities to the pipeline
If you’re a sales rep and if you’re a manager, you want to look across your entire team to understand:
- What is the quota attainment to date?
- What the is the quota target?
Then identify the gap and have multiples of that gap in your pipeline in order to be able to hit your target. Figure out how many deals you have in hand of those that are in the forecast right now. Then multiply those by your typical win rate and that’ll give you a feel for what is likely to close. Then you can identify any risks and figure out together with marketing how you can mitigate those risks.
For example, if you have a 20% win rate, and you’re closing one out of five deals across your team, and if you need ten deals to close by the end of Q4, then you’re going to need 50 deals in the pipeline that you’re actively working. Sometimes, if you have lighter qualification criteria, you may want to have a 4x to 5x pipeline, versus a 3x or 4x pipeline.
It’s also good for marketing to look at the dollar value that maps to your ideal customer profile. You should know what makes up your ideal customer profile. Sometimes it has to do with the industry or the job title, or it could be the company size. It gets harder if you’re trying to map things like who is more likely to have a compelling event or some trigger event happen.
Presumably the deals that are in your ideal customer profile, where you’re working with the right personas in the right companies, are going to have the highest close rate. You can’t necessarily bank on those, but your close rate is probably much higher than those that are not in your ideal customer profile.
What systems or tools help sales and marketing analyze pipeline metrics, win rate, coverage ratio, quota attainment to date? Where is an easy place to go see this information?
Smart Selling Tools has a landscape that categorizes technology tools for sales and marketing and some of these tools will help you identify risks in the forecast. There are also account planning and deal planning solutions you can leverage. Those solutions will tell you if you’re missing any steps and what has to be done in order to bring a deal in.
But for most companies, the basics can be seen in your CRM. In most CRM systems you can see Closed / Won deals and you can see Closed / Lost deals. So you can see historically what your conversion rate is. There is an aging tract in most CRMs, so you can see how long each deal has actually been an opportunity.
This blog will be followed by 3 more blogs covering the following topics, below. If you would like to listen to the full audio for each section of this blog, please click on the movie at the top of each section.
- Part 3 “What are the pitfalls to avoid in attempting to crush your Q4 number?”
- Part 4 “How do you ensure a healthy pipeline so you’re closing the right deals?”
- Part 5 “How do marketing and sales stay aligned during the crushing process?”
If you missed Part 1 of this series, we covered general insights from Nardin and Heinz about “What are the warning signs that you are not ready for Q4?”
View Part 1 of Tips for crushing your Q4 quota here.