Someone recently asked me to write a post on sales metrics. There are an infinite number of sales metrics you can track, so I decided to condense this list down to 10 sales metrics that matter. This had the makings of a long post, so I am broke it into to two parts – look for conclusion later this week. For purposes of this post, I am focusing on metrics that are topical for companies that sell Managed Dedicated Hosting and/or Colocation
Conversion Rate – Not from your website, but from proposals sent. You should strive for something greater than 20%. Anything lower and there is probably some issue with your sales people or process. If you are higher than 40% your team is either awesome or not sending enough proposals, be honest with yourself.
Avg. Sales Per AE – Good reps in our industry sell >$10K per month in new Monthly Recurring Revenue (MRR), great reps consistently sell over $20K in new MRR per month. Anyone doing above $6K in New MRR is probably a serviceable rep assuming your compensation system isn’t unusually high. These numbers should be at least 50% higher in companies that only sell colocation. If your reps aren’t producing at these levels, you need to make a change to get them to these levels.
Up-Sales vs. New-Sales – Most hosting companies are around 50/50 on this metric. If up-sales are significantly higher than new-sales you may have a marketing or sales problem. If new-sales significantly outpace up-sales, you are either successfully spending heavily on marketing / sales or you may have a retention issue (see Net New MRR to confirm).
Net New MRR – Your MRR this month compared to MRR last month (New MRR minus MRR Churn). Then benchmark this to the publically traded companies in our sector (they report Net New MRR in their Quarterly Reports). For Managed Dedicated I use RackSpace (RAX), Savvis (SVVS) and NaviSite (NAVI) for Colocation, I use Eqinix (EQIX), Switch and Data (SDXC) and Terremark (TMRK). If you are growing faster than the industry great job! If not then you have a problem that one of the other metrics in the post may help you pinpoint.
Pipeline Tracking – Is your pipeline growing or shrinking? You should track both the raw and probability adjusted pipeline. Additionally, use past pipelines to track AE accuracy and close rate. This metric will help you track sales rep efficiency, sales rep accuracy and project future sales. This is a self evolving metric, you need the inital data to figure out what is good for your company.
To be continued.
