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Five essential charts to understand a new business sales function

The ability to win ‘new client logos’ is one of the most important predictors of future growth for a B2B business. The problem is, assessing this ability isn’t always straightforward, even though there is often no shortage of data available.

Deciphering the drivers behind new client logo acquisition can involve navigating siloed datasets, accommodating inconsistent CRM entries and picking apart complicated financial models. More often than not, in our experience, all of these are necessary when forming an estimate of the achievability of a business plan.

Suppose you are an investor, developing your own assumptions for new logos and sales team resourcing before your next trip to the Investment Committee. With such a breadth of data potentially available, choosing where to start can be an intimidating prospect.

At Coppett Hill, we’ve developed a set of approaches which use our suite of proprietary tools to assess new client logo acquisition, which we use when undertaking Value Creation Due Diligence. We’ve come up with the five charts that consistently top the list when looking for insights on a new business sales function.

1.      Pipeline value over time

This may seem obvious, but however sharp a sales team is further along the line, the ceiling for their performance is determined by the number/value of leads entering the very top of the funnel. Management teams can often find this hard to provide unless they’ve been ‘snapshotting’ the data regularly, or have old board packs containing the data. We’ve developed an approach to rebuilding historical pipeline value by day based on CRM data.

new business sales analysis

So, what do we look for?

  • Is there a positive trend, that ties in with the commentary provided by Management?

  • Is there evidence of seasonality in this data?

  • If there are big changes / spikes, could these be related to the arrival of a superstar member of the marketing or sales teams or a new product launch?

  • Has the pipeline been impacted by the wider economy, or a change in regulation within the industry?

The value of the pipeline prompts questions about the overall context in which a new business sales team operates and is essential to underpin the understanding of more granular analysis.

If the business has a longer sales cycle with more defined stages in the customer journey, it may make more sense to consider weighted pipeline, where a percentage likelihood of conversion is assigned to a prospect depending on how far along they are in the sales cycle.

2.      Historical conversion rates

Looking back historically, there is merit in considering conversion rate measured by both when opportunities first enter the pipeline (some of which may still be open, distorting the conversion rate) and when they are closed. Both are important when forming a view of just how much of a current pipeline is likely to be won.

One especially important point here – conversion rate is only a useful metric when considered within the context of CRM use. Validating the quality of pipeline data can establish this context – if conversion rate is very low, is this a reflection of the effectiveness of the sales team, or are inappropriate/low probability opportunities being added to the CRM? If it has changed historically, does this reflect a change in CRM use?

It’s also worthwhile to analyse conversion rate at several different levels – a business may have had more success winning one type of opportunity than another. Cutting conversion rate by customer type, product/service opportunity and region can give a picture of sales momentum heading forward in to the vital first year of a private equity investment.

Contrasting a value-weighted conversion rate with a volume-based conversion rate can shed some light on the opportunities that a sales team are most adept at winning – is this consistent with the business plan assumptions?

3.      Pipeline/forecast accuracy

Just how accurate have previous forecasts of conversion percentage at each stage of the funnel consistent with actual outcomes? Is the ‘weighted pipeline’ reliable? We use the log of changes stored in the back-end of a CRM system to identify all historical opportunities that have reached each stage of the pipeline, and how many go on to eventually convert.

The conversation triggered by the presentation of this chart can quickly surface gaps between management’s idea of what drives sales performance, and what the data shows. More often than you may think, the assumed conversion rates are the defaults used by the company’s CRM system rather than a result of considered historical analysis!

4.      Attribution analysis

Where have the last 10 logos the business has won come from? Performing analysis on the origin of won customers is essential for understanding which demand generation channels should be prioritised for further investment, which should be ‘turned off’ and ensuring that marketing and sales resources are allocated effectively.

You would be very lucky to have a ‘Source’ field that is well-populated and reliable in the CRM, so we often generate a list of recent wins and talk through each one with the marketing and sales team (and sometimes the customers themselves) to define the source.

The correlation between a marketing team’s view on attribution and that of the sales team can give a high-level indication of the relationship between these teams – are they well integrated, or do they hardly speak to one another?

5.      Individualised sales metrics

All of the charts we’ve covered can be isolated down from an aggregated view to give a view of the individual performance of each salesperson.

Well-organised smaller teams may exhibit spikes in conversion/sales cycle etc due to each member of the team being responsible for different types of customers in their individual niche. In larger teams, with many individuals in essentially the same role, these metrics and their accompanying incentive structures may reflect the relative performance of each individual.

Is there a consistent ‘ramp’ profile of new joiners in the sales team which speaks to a quality hiring and onboarding process? Have underperformers been addressed? Are there any superstars which could represent a risk if they were to leave? A view of these key metrics by individuals can inform all of these questions.

As an investor or operator, there are countless ways to assess a new business function, and this approach is inevitably going to depend on the unique product/sales process involved. We think in almost all cases, the charts we have listed are a good starting point.

If you’d like to discuss how you can better understand your new client logo acquisition, please Contact Us.


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