A B2B sales pipeline is a visual summary that captures the journey from the moment a lead is generated to the point it is converted into a customer. It is designed to provide you an overview of what is happening in the sales and marketing function in your organization.
But if you really want to understand how well the sales process is performing, what’s working and what’s not, you need to track specific sales pipeline metrics. The metrics go beyond the big picture to give you specifics that will help you identify gaps, fix broken processes, eliminate inefficiencies, and drive sales effectiveness.
What are sales pipeline metrics?
Sales pipeline metrics are used to monitor, quantify, and measure activities in the different stages of the B2B sales pipeline. Regularly monitoring key sales pipeline metrics help measure and understand the health of the sales pipeline, how well the sales process is working, identify gaps, and find opportunities for improvement.
Sales pipeline vs. Sales funnel
Before getting into the details of the key metrics to track, we need to first clarify the difference between a sales pipeline and a sales funnel. The metrics to track each of these are quite different and it is important to unnecessarily this clearly
A sales pipeline is a set of stages that a prospect moves through, as they progress from a new lead to a customer.
A sales funnel looks at the journey from the prospect’s perspective, and refers to the different actions they need to take as they move from one phase to the next.
A sales pipeline is from the sales team’s point of view while the sales funnel is from the prospect’s perspective. The stages of the B2B sales pipeline are prospecting, lead qualification, lead nurturing, demo, proposal and negotiation, deal closure, and onboarding.
The stages of the sales funnel on the other hand, include awareness, discovery, intent, evaluation, purchase, and renewal or loyalty – all from the buyer’s point of view.
It is essential for a business to track and measure both the sales pipeline and the sales funnel because each of these brings value and helps the go-to-market team take the right steps and close the deal.
Tracking your sales funnel regularly helps marketers in your organization understand the customer’s purchasing journey and anticipate their questions and requirements at every stage.
This will help them tailor the messaging better, and make it more compelling for the prospect to move to the next phase and consider purchasing the product. It also helps the go-to-market team filter the leads with high potential, and focus efforts on leads with the highest chances of converting into paying customers.
Similarly, it is essential to track certain key sales pipeline metrics to identify what’s working and what’s not. This will enable you to fix inefficiencies in the sales process and optimize efforts of your sales teams so they’re able to swiftly move leads towards closure.
17 Important Sales Pipeline Metrics to Track
There are several sales pipeline metrics that you can use to measure the health and success of your sales pipeline. Some indicators are used to measure how smoothly leads are being converted into customers, some key sales pipeline metrics help identify gaps, and certain other metrics help highlight inefficiencies in strategy or the sales process.
You can choose to look at tracking all the metrics, or a combination of some of these sales pipeline metrics depending on what your sales pipeline goals are.
To help with this, we can break the different sales pipeline metrics into categories and look at the key metrics under each category. Let’s go!
1. Lead generation metrics
These metrics are used to measure the success of the first few stages of the B2B sales pipeline. It helps identify how healthy the beginning of the sales pipeline is, because that is what defines how the subsequent stages of the pipeline are.
2. Number of new opportunities
While this might appear basic, it is extremely important to keep a close eye on the number of new opportunities being generated by the sales and marketing teams. This metric will further be broken down into inbound and outbound opportunities, and better understand how effective the marketing efforts are and how effective the outbound sales initiatives are.
3. Marketing Qualified Leads (MQLs)
An MQL is a lead that the marketing team considers more likely to convert, compared to other leads. This lead qualification is done based on intent signals the team receives, such as clicks on CTAs, website page visits, engagement on social posts, etc.
The number of MQLs will give you clear insight into marketing effectiveness. If the number is low, it is an indication that the marketing efforts are not directed toward the ideal customer and target audience.
4. Sales Qualified Leads (SQLs)
An SQL is a lead or contact who is willing to enter the active sales cycle, and have a conversation with the sales or presales team with an intent to buy the product. SQLs are extremely relevant to the sales pipeline as these are the leads that will be entering the sales pipeline and ideally move through the stages to finally become a customer.
5. MQL to SQL conversion rate
This sales pipeline metric tracks how many MQLs convert into SQLs. A low conversion rate indicates a gap in the go-to-market strategy and shows that the sales and marketing teams aren’t aligned on the lead generation activities.
6. Pipeline health metrics
This set of sales pipeline metrics indicate the health of the quality of the leads that are in your pipeline, give you a picture of how many of them are likely to turn into customers, and what revenues you could expect.
7. Total Pipeline Value (TPV)
This is a simple, straightforward metric that tracks the total value of all the deals in the pipeline. While it may not directly translate into revenues, it gives an optimistic view of the revenue opportunity before you.
In most cases, the final revenue number will be far lower considering the deals that might drop off along the way, and the pricing negotiations that might come up as the deal is closed.
8. Pipeline coverage ratio
This sales pipeline metric looks not just at your B2B sales pipeline in isolation but compared it against the revenue targets or sales quotas. It is an indicator of how much of the pipeline needs to be converted in order to achieve targets.
To calculate the sales pipeline coverage, you need to take a ratio of the total dollar value of your sales funnel and your revenue targets.
9. Average deal size
This is a simple calculation of the average revenues each deal or account brings in. This metric helps plan and go after the number of deals and the kind of deals that need to be closed to hit the revenue targets.
10. Win rate
Win rate is a measure of the number of leads that turn into customers, i.e., how many customers you have won over a period of time. Typically, to calculate the win rate, you calculate the percentage of prospects that became customers divided by the total number of deals in a given period.
This sales pipeline metric, while extremely critical, can be tricky to calculate and can provide different perspectives and it depends on when and how the win rate is calculated. For example, the insight would vary if you were to calculate a win rate at each stage of the sales pipeline, or if you considered a deal that was put on hold as a lost deal, and so on.
While calculating the win rate, it is important to define the criteria clearly to get an accurate picture of the pipeline.
11. Sales velocity
Pipeline velocity or sales velocity is the pace at which a lead moves from one stage of the sales pipeline to the next. The faster a lead converts, the better it is for your company. Here’s how you can calculate this sales pipeline metric: Sales velocity = Number of opportunities × Average deal size × Win rate percentage ÷ Sales cycle length
12. Efficiency metrics
The next set of metrics talk about how efficient your sales pipeline is. It can be a reflection of the sales team, and can be used to identify stages where there are inefficiencies, and also figure out where processes can be improved to optimize efficiency. The use of technology and sales intelligence tools such as Highperformr can easily help improve efficiency in sales processes.
13. Average sales cycle length
This sales pipeline metric measures the time it takes to turn a lead into a customer. It tracks the period between the first contact with the lead and the moment the contract is finalized and payment is completed.
There is no one ideal sales cycle length and it could vary depending on the industry you’re in and the kind of product you’re selling. However, each company will have its ideal number that will be used to optimize the sales process.
Using automation and AI tools such as Highperformr can help you shorten the sales cycle by going after warm leads that are more likely to convert and focus your efforts on high-potential deals.
14. Conversion rates by stage
This is another version of the conversion rate metric, giving you more granular insight into the different phases of the sales pipeline. For example, you would calculate the rate at which an MQL converts into an SQL, the rate at which a lead moves from the demo stage to the proposal and negotiation stage, etc.
This sales pipeline metric helps dissect the B2B sales pipeline to understand which stages are performing well and which ones need to be re-evaluated.
15. Deal drop-off rates
This sales pipeline metric is used to identify and address issues in the sales process. It measures how many deals fail to progress from one stage to the next.
To calculate the drop-off rate, divide the number of deals that didn’t advance by the total number of deals that entered the stage, then multiply by 100 to express it as a percentage.
Tracking the drop-off rate at each stage helps identify where leads are getting stuck, understand what went wrong, and develop a strategy to fix the problem.
16. Revenue impact metrics
The final category of sales pipeline metrics look at the direct impact of the sales pipeline on revenues. Here are the key metrics that give you the link between the company revenues and the sales pipeline.
17. Customer Acquisition Cost (CAC)
This is one of the most commonly used sales pipeline metrics. It tracks essentially how much a company spends to get a customer. The customer acquisition cost (CAC) is a measure of how much it costs in sales, marketing, and operations to get a new customer.
This is an important measure of the success of a sales strategy because no matter how high the revenues are, a very high CAC would indicate an issue and would mean that the process can’t scale if certain things don’t change. To calculate the customer acquisition cost (CAC), divide the total sales and marketing expenses by the number of new customers you’ve won.
18. Customer Lifetime Value (CLV)
CLV measures the total revenue a business can expect from a single customer. It goes beyond just one transaction, and takes into account the potential revenues that can be made from the customer.
This sales pipeline metric is based on a few assumptions and not entirely on hard data, but is still important because it helps the company plan its sales and marketing efforts.
For example, a company might choose to focus more time and resources towards a customer with high CLV rather than channel resources towards a customer that might not bring back as much revenue.
19. CLV:CAC Ratio
The CLV:CAC metric that establishes the relationship between the two sales pipeline metrics we discussed above. The CLV-CAC Ratio compares the lifetime value of a customer to the cost of acquiring them. This is an indicator of the return on investment that a company makes towards getting more customers.
To calculate the LTV-CAC ratio, you divide the lifetime value by the customer acquisition cost.
20. Revenue growth rate
This is perhaps the most important metric to track. It is a measure of how revenues have been growing over a specific period of time. You can calculate the growth by comparing the previous period's revenue with the current period's revenue.
Why tracking pipeline metrics is crucial for business growth
Regularly tracking each of these sales pipeline metrics can take up a lot of time and resources but it is an activity worth investing in to ensure business growth. Here are some benefits that underscore the importance of tracking a sales pipeline:
- Accurate revenue forecasting, so you can plan your activities based on clearer projections of future revenues.
- Improved efficiency of sales teams, because you can help teams focus on high-potential leads and close deals faster.
- Detect inefficiencies or gaps in the sales process so you can fix it in time before things escalate and cause bigger problems.
- Take better, sharper decisions using granular data.
- Nurture better relationships with leads and customers, earn their trust, and attract brand loyalty.
- Ensure alignment between sales and marketing teams so the entire go-to-market function works together towards shared goals.
Best Practices
Here are some best practices to follow while tracking key pipeline metrics, so your efforts lead to actionable insights:
✅ Track the right metrics
Not all metrics are equally important for every business. Identify the key metrics that matter for your business, and focus on those. Important metrics will usually be ones that directly influence your revenue, like conversion rates, pipeline velocity, and deal win rates.
✅ Define metrics clearly
Ensure clarity in how metrics are defined and calculated. For example, is a deal marked as lost only when the decision-maker says they’re not interested, or also when the deal is placed on hold? Clear definitions prevent ambiguity and ensure consistency across your team.
✅ Analyze data
Data without proper analysis is just noise. As you measure and calculate different metrics, ensure that your team takes the time to analyze the data and derive actionable insights. But this needs to be done carefully and properly. Misinterpreting data can lead to poor decisions, or decisions that could even harm the company.
✅ Monitor metrics regularly
Track metrics periodically and regularly rather than sporadically. It helps you to spot trends over time and ensure that there is constant improvement.
✅ Review and iterate
What worked in the early stages of your business may no longer be relevant as you scale. Regularly review your measurement criteria and refine them to ensure they reflect your current business priorities and requirements.
✅ Automate basic tasks
Save time and reduce human error by automating repetitive tasks. Use tools such as Highperformr to automate workflows and manage data enrichment, send real-time updates to the CRM, track granular analytics, etc. and ensure that you have a clean and updated CRM that can be the single source of truth for your sales and RevOps team.
Common Challenges and Solutions
Tracking sales pipeline metrics not just putting numbers into a formula and getting an output. It requires planning, effort, and a detailed action plan to overcome some common obstacles that could distort these metrics. Here are some of the key challenges and their solutions:
1. Data quality issues
The accuracy of your pipeline metrics hinges on the quality of your data. Outdated or inaccurate information can lead to incorrect conclusions about your sales pipeline. Regularly updating your CRM, validating data sources, and using tools like Highperformr to enrich data with real-time signals can help overcome this challenge and provide a clearer picture of your pipeline.
2. Pipeline stagnation
A stagnant pipeline, with no significant changes or progress, is a huge challenge. Metrics like pipeline velocity and deal drop-off rates can help identify stagnation. To handle this, it is important to analyze bottlenecks, relook at the sales processes, and ensure that sales teams are proactive about nudging prospects through the different stages of the sales pipeline.
3. Inconsistent tracking
Inconsistent tracking of metrics results in unreliable data and inaccurate or biased inferences about the key metrics. To avoid this, establish a standardized tracking process, keep all data updated, and use AI platforms like Highperformr to maintain CRM hygiene and ensure all the data is updated in real-time.
4. Resource allocation
Inefficient resource allocation can also have an impact on the calculation of pipeline metrics. Ensure that resources are appropriately distributed by aligning sales and marketing efforts, so you’re able to track the pipeline as a whole and get a clear picture of the pipeline, rather than just a few of the stages of the sales pipeline that receive all the resources and focus.
Tracking and analyzing sales pipeline metrics goes beyond simply making a list of metrics or numbers to measure and analyze them. There are a few other things you can do to make your sales pipeline tracking more effective and efficient.
1. Pipeline forecasting
In addition to tracking standard metrics like pipeline velocity, win rate, CAC, or CLV, include pipeline forecasting into your go-to-market strategy. This refers to estimating future sales performance based on current pipeline data.
It not only helps with revenue planning but also gives you the opportunity to compare forecasts and actual results. This is useful in helping you identify gaps in your sales process, refine strategies and allocate resources more effectively.
2. Use AI and predictive analytics
AI-native tools like Highperformr can take your pipeline tracking up a notch. With Highperformr, you will be able to maintain a clean CRM, ensure that every contact in every stage of the sales pipeline is enriched with real-time buying signals, and as a result, get a clear picture of the likelihood of conversions.
AI and predictive analytics further enhances accuracy, enabling sales teams to identify trends, anticipate challenges and take timely corrective action.
3. Explore automation opportunities
Automate repetitive tasks within the pipeline management process to save time and effort. Activities such as lead enrichment, follow-up scheduling, and data updates can be automated using CRM systems and GTM intelligence tools such as Highperformr.
Taking Action on Pipeline Metrics
Measuring the success of your sales pipeline is more than just an independent task that operates in a silo. It is the first in a series of steps the company takes to iterate and improve processes and drive sales effectiveness. Here are the ways in which you can take action on the sales pipeline metrics each time you measure and analyze them:
Enhance decision making
Sales pipeline metrics based on recent and relevant data enable teams to take more informed decisions on important activities such as resource allocation prioritizing high-potential leads, and restrategizing to optimize sales processes.
Rethink and improve strategies
Analyzing key sales pipeline metrics don’t just give you insight into what happens, but can tell you why it is happening. This can be used to identify bottlenecks, spot gaps, or unearth inconsistencies that need to be fixed.
Team training and development
Key sales pipeline metrics don’t just give you a picture of what is happening in the organization but also tell you how every team in your company is performing. Looking into certain individual or team metrics can help you identify high performers and those who need support, so you can tailor training and development programs accordingly.
As you can see, measuring and analyzing key sales pipeline metrics help with a lot more than just giving you an overview of what the sales function is looking like. If you do this regularly, and do it right using real-time data, you will be able to iterate and improve your sales processes before things go wrong and processes break.
To learn how Highperformr can help you get the data in place to ensure accurate measurement of sales pipeline metrics, schedule a demo with our GTM engineer today!
