Sales Metrics for Startups
Sales Metrics for Startups

Sales Metrics for Startups

Kosta Kolev
Kosta Kolev

February 23, 2024

Building a successful sales pipeline is hard to get right at any company, let alone a startup where things are just getting off the ground. It’s not just about defining the right stages and processes, it’s also deciding what metrics should be tracked and how they can be used to improve sales processes.

In this post, we'll explore how startups should think about sales metrics.

Why startups should care about sales metrics

When you want to improve any process you first have to diagnose what is working and where you need to iron out the kinks. In a sales pipeline that often means asking questions like:

  1. Do we generate enough leads?
  2. Are our demos converting well?
  3. Why are we really losing leads?
  4. Why are some deals moving faster than others?
  5. Who in my sales team is performing well and who need help?
  6. How good is our win rate?
  7. How likely are we to hit our targets?

Obviously data isn’t going to give you all the answers. You need to collaborate with your sales team to get more context on the deals and metrics. Also, you should spend time with your customers to enrich these insights and gain a deeper understanding of customer expectations and needs.

But where data really does help is choosing the right part of the process to focus on. Your pipeline is changing all the time as deals are moving through the different stages, so sales metrics enable you to keep your finger on the pulse.

Often for founders, this ends up feeling like a game of wack-a-mole. You fix the top of the pipeline issue with a great campaign that fills your funnel with leads but now you struggle with the volume and everything slows down…

Let’s face it, you’ll never have time to fix everything. This is why sales metric matter, they get your sales team to focus on the areas that will make the biggest impact.

Hubspot's co-founder Dharmesh Shah literally wrote the book on why sales metrics matter. He argues that tracking how potential customers interact with products, as well as how current customers use and renew them, is the key to sustained growth. Growth isn't just about getting a business off the ground; it's about staying in business. By using insights from your sales data you’ll make better sales decisions, and better serve your customers.

What sales metrics are most important for startups to track

When it comes to sales, startups should focus on monitoring three main metrics: lead conversion rate, pipeline value, and win rate. These three metrics provide a great overview of how well your sales team is performing and whether or not your leads are converting into deals. Here’s a quick breakdown of each metric:

1. Win Rate
This metric measures how successful your team is at closing deals overall. It takes into account the entire pipeline, from opportunities to signed contracts. A high win rate often indicates that you can successfully identify the right potential customer and demonstrate your value in a compelling enough way to get them to pay.

2. Pipeline Value
This metric measures the expected value of all your deals in your pipeline. Combining the deal value with the probability of closing deals allows the sales team to track overall performance. Most SaaS business aim for a pipeline value that is >3x their sales target. This metric serves as a critical alert when your pipeline is underperforming and you risk missing your targets.

3. Average Sales Cycle
This metric measures the time a deal stays in your pipeline before closing. Ideally, you want this number to be low so you know you’re not wasting time on prospects who will never buy and can generate revenue sooner.

From our point of view, these three metrics are the most important because they give you a simple but powerful overview of your sales cycle.

There are a tonne of other sales metrics you can track, and Hubspot details a full list of those here.

The best practices for Startups using sales metrics

Sales data is essential for running an effective startup but with so many different metrics to keep track of, it’s easy to feel overwhelmed by all of the information available out there. By integrating with Hubspot to help teams understand their sales metrics, we’ve found a few best practices for startup sales success.

  1. Use win and loss rates as feedback. Wins and losses serve as buyer feedback in the sales cycle. They reveal where sales processes can be improved and even how buyers really feel about your product. This helps companies refine their strategy by offering better services and building relationships with potential customers.
  2. Align on what pipeline stages really mean. Getting clarity on what the entry and exit requirements are for each stage in the pipeline will ensure your metrics actually reflect your progress.
  3. Keep lead conversion up-to-date. It’s another great way to measure success since it reveals what tactics work best in converting leads into sales. But you’ll only see value from it if you keep it accurate and updated.

When you're trying to scale your startup, it's essential to track where you are and how things are going. That's why understanding sales metrics – whether they’re team performance indicators or detailed value figures – is absolutely critical. These metrics can give you an instant glimpse into the health and success of your business, so you know what needs to develop further.

The best way to use sales metrics is to establish a clear goal, track progress over time, and make changes based on what you observe. Now that you know which sales metric matter for startups – are you ready to start using insights to improve your sales cycle?

To get started, join Calliper's beta here.

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