Stop Losing Sales - the Data Approach
15 Apr 2024
Fintech companies need revenue. And the most surefire way to generate revenue is to close more sales. In this newsletter, I’ll show you the data strategy approach I would use to improve a sales pipeline.
Centralize your Sales Data
Being able to keep your sales data (leads, accounts, contacts, deals etc) in one place enables you to understand your organization’s sales process. Having all the data in one place means that everything you do with it becomes much easier.
When centralizing your data, you want to focus on two things: data quality and process management. High quality data is extremely important - without it you can’t trust the insights you’re given, which means you can’t use it to make decisions or accurately measure performance. Having a CRM (Customer Relationship Management software) makes this a lot easier - you keep all your data in one place and you can see your entire process in one place. Many CRMs also track communication between your team and your prospects, and this is an invaluable source of data.
Track your Performance
The foundation of data analytics is tracking performance through Key Performance Indicators (KPIs). Using KPIs makes your sales process transparent, so you have more information and a better understanding of the process as a whole.
This transparency makes it easy to identify areas within the process that are not performing well. For example, if you implement a new sales strategy, you want to know whether it’s more effective than your previous strategy, so you need to measure it. If the new strategy backfires, using KPIs enables you to know immediately. And then you can rectify the situation before you take a large financial loss.
Sales Cycle Time (days)
KPIs for sales pipeline efficiency:
Conversion rate
Sales cycle length
Sales pipeline velocity
Customer acquisition cost
KPIs for sales pipeline value:
Average deal size
Customer lifetime value
Revenue loss
Churn rate
Prioritize Quality Prospects
This is where having quality data about your customers and your prospects becomes so valuable. In order to accurately prioritize prospects, you need the information you have on them to be correct and complete. Having access to accurate data on revenue, company size, industry and location goes a long way to identifying high value prospects.
It is also a good idea to use KPIs such as Customer Lifetime Value (CLV), Customer Acquisition Cost (CAC), conversion rate and customer retention when prioritizing prospects. This information will make it easy to identify the types of prospects that will become high value clients, and those that won’t.
It is also important to know what channels your high value prospects come from. By knowing this information, you can focus on prospects that have a high probability of conversion. Also, you can divert marketing budget from underperforming channels to high-performing channels to drive more quality prospects into your pipeline.
Eliminate Bottlenecks and Weak Points
Once you’ve centralized your sales data and prioritized the best prospects for your sales team, then it’s time to improve the sales pipeline itself.
Using data such as the date that a prospect entered your pipeline and the date they closed (won or lost) gives you the Sales Cycle Length:
Sales Cycle Length (days) = Date Closed - Date Entered
Ideally, you want to reduce how much time it takes to close a sale. You can measure the whole sales cycle for an overview of the process, and you can measure each stage separately to identify the most time-consuming stages.
Conversion rate (%) = 100 * No. of prospects in current stage / No. of prospects in previous stage
Over time, you want to increase your conversion rate because it means your sales pipeline is very effective at closing sales. At each stage of the pipeline, knowing what percentage of your prospects convert enables you to identify stages that perform poorly. As you can see below, this company’s “Value Proposition” stage performs well below the other stages - this would be a great place to investigate and improve.
Conversion rate per stage (%)
By increasing conversion and shortening the sales cycle, you will create a far more efficient sales process. You will generate more revenue, sooner, and it will take less time and money to convert a single prospect.
Conclusion
As we discussed, using data within a sales process provides you with transparency. And having that transparency makes it so much easier to know what is actually happening within the pipeline. You can then use that information to make informed decisions that improve your sales team’s performance and grow your revenue.