Not to sound too much like Joey Tribbiani, but we want to ask your sales team: “How you doin’?”
While they may be making sales, we want to make sure you know how your SaaS sales team is really doing and that you have a way to track it.
Why? Because in the B2B SaaS industry, sales efficiency is critically important.
Selling software at scale is about finding the optimal sales resource levels and ensuring that your investment in sales reflects in the revenue your team is generating.
And in order to do that, you’ll need to specify what stats and rates, or sales benchmarks, you should be tracking to understand how well your team is performing.
So, join us as we break down everything you need to know about monitoring sales benchmarks to ensure that your team is absolutely killing it.
What are SaaS sales benchmarks?
To get us started, let’s go over some definitions to make sure we’re all on the same page.
People tend to use performance metrics, KPIs, and benchmarks interchangeably, but there’s a subtle difference.
While SaaS metrics are quantifiable data points, benchmarks measure real-world activities of companies, departments, and individual team members and are the standard by which something is measured and evaluated. Teams use benchmarks to compare their sales performance against the industry average to ensure that the business remains competitive and viable.
Compared to KPIs, benchmarks don’t measure how well a business unit, project, or individual performs against strategic goals. Instead, they compare a SaaS business’s processes and operations with other entities, primarily competitors, to understand its success.
In sales, benchmarks can be anything from calls, demos, and appointments to sales opportunities or number of leads — anything to do with the actual selling process.
You need to understand benchmarks to compare your sales results against your industry. But first, you need to know what to measure and how. And once you know the data for your company, you can use it to compare with your industry standards.
That’s why we’re gonna dive a little deeper into the important sales efficiency benchmarks you should measure within your sales department and how to calculate them.
5 B2B sales benchmarks you should track
What’s that sound? Is that your heart beating out of control?
We get it. The thought of impending math calculations also causes that same reaction for us. But you can tell that nervous breakdown you’re about to have, “Not today!” because determining this benchmark is actually pretty straightforward.
(Same goes for all of the benchmarks on our list.)
So, let’s get back to business.
1. Cold call to conversation rate
You provide your sales team with a lead list, and you can see them making phone calls, but how many people are picking up and engaging in meaningful conversation?
Well, you guessed it. There’s a benchmark for that.
The cold calling conversation rate measures how successful your outbound sales approach is and tracks the number of conversations they have compared to the total number of calls each rep makes.
How to calculate the cold call to conversation rate
To help us demonstrate how you can determine this benchmark, we want to go over a quick example.
If a rep makes 200 calls a week and manages to have four conversations, your call to conversation ratio is 4/200, or 2%. For every 100 calls you make, you’ll only have two conversations.
Call to conversation rate formula: Conversations per month / calls per month
Ideally, you’ll want to keep this metric at 10% or more. And one way to do this is by changing up your tactics.
It’s a good idea to call at different times of the day, invest in a regional phone number, or try following up calls with texts and emails to see if the metrics improve.
How do you stack up against your industry?
Let’s take a look at how you compare to the competition:
The average call to conversation rate for a SaaS business is about 5-10%.
As for the average successful cold call, it lasts 5:50, while 3:14 is the norm for unsuccessful calls and includes a 37-second sales pitch.
Key takeaway
Whether you love it or hate it, cold calling is highly important for SaaS business. It helps salespeople establish relationships with prospects and move them further into the sales funnel.
Without tracking this benchmark, it’ll be much harder to pinpoint where to make improvements to your outbound strategy.
2. Conversation to appointment rate
Next up on deck, we have conversation to appointment rate.
Why track this, you ask? Well, the ratio of conversations leading to in-person or phone appointments is a good indicator of how well your reps communicate your message and unique value proposition.
How to calculate average conversation to appointment rate
Let’s take a look at an example.
If your rep has 100 conversations per week, leading to 25 appointments, your average conversation to appointment ratio is 25%.
If you find that this ratio falls below 25%, try listening in on a few of your rep’s calls. (If you have an outbound dialler linked to a CRM system, you can do this unobtrusively.)
1. Is the rep able to hold the prospect’s attention?
2. Do they have a hard time moving the conversation forward?
3. Are they doing a good job listening to the prospects and understanding their pains?
Once you have a better understanding of what might be going wrong, provide your team with a little coaching to improve your results.
In our Happy Reps, Happy Prospects webinar, our panelist, Samantha Mckenna explained the importance of taking the time to understand what your sales team needs and how to give it to them.
“We spend too much time really focused on the business results and not remembering about investing in our people. Figure out what it is that you need to coach them on. And be honest with yourself. Do you know how to do the things that they need from you? And if you don’t, get that professional development or hire an outside counsel that can do that,” she told us.
Conversation to appointment rate formula: Number of conversations / appointments
How do you stack up against your industry?
Time to see how you stack up against the competition:
The average conversation to appointment rate for a SaaS business is 23%. This means that a sales rep has to have 20 conversations to book around 5 appointments.
Key takeaway
By calculating the conversation to appointment rate, you can find how well your sales reps are doing in their job and how close or far away they are from reaching their sales goals.
Plus, this benchmark will enable you to determine whether your research is effective or if it’s time to look into other strategies.
3. Appointment to opportunity rate
So your sales team is setting loads of appointments. They’re busy and they’re schedules are always packed.
Way to go, team!
But does this stack up with the number of sales qualified leads (SQLs) coming in?
Well, that’s why you’re gonna want to monitor your appointment to opportunity rate.
This benchmark helps you determine whether or not your sales team is booking quality meetings or wasting their time with leads that aren’t a good fit for the product.
How to calculate appointment to opportunity rate
You can calculate appointment to opportunity rate by looking at your sales pipeline to see how many appointments booked move to the opportunity stage of the sales conversion funnel.
You saw it coming. We’ve got another example to show you what we mean.
If 200 appointments lead to 25 qualified prospects, then you have a 12.5% appointment to opportunity rate.
Appointment to opportunity rate formula: Total appointments set / total lead volume
How do you stack up against your industry?
But how well are you doing compared to other SaaS companies?
The average appointment to opportunity conversion rate is 38% for SaaS companies.
And irrespective of industry, the average opportunity conversion rate is 13%, while the average time to conversion is 84 days.
Key takeaway
Calculating the appointment to opportunity ratio is super important because it can help you determine if your sales team is booking quality meetings with prospects or wasting time with prospects that aren’t good fits.
And this will enable you to save time and money as well as understand if the strategies you’re using are working.
4. Opportunity to conversion rate
SQLs are great, but you know what’s even better? Dolla dolla bills, y’all!
So, let’s examine how many qualified opportunities actually convert to paying customers.
The opportunity to conversion benchmark will tell you whether or not your sales team is adequately moving leads from the middle of the sales funnel into closing.
Calculating the opportunity to close rate is a simple process. But just remember that you need both data points to be between the same time period.
How to calculate opportunity to close rate
Here’s another example coming your way.
(Wait, you knew that already? How? Are you a mind reader or something?)
If a sales rep creates 10 opportunities and wins 5, their opportunity to close ratio is 50% because they managed to close five deals out of the ten opportunities they created.
Formula: Deals won / opportunities created
How do you stack up against your industry?
This is how you’d measure up against the competition:
The average opportunity to conversion rate is 22% for SaaS. For all industries, though, the average close rate sits at 19%, which is close enough to the SaaS average ratio.
Key takeaway
Opportunities are hard to create, so be careful not to waste them.
A good opportunity to close ratio varies from industry to industry, business type, and campaign. Yet, it’s a crucial benchmark to calculate and consider, as, just like the previous one, it can help you determine whether your sales reps are successful in their sales approach.
5. Demo to close ratio
How many of your qualified leads who view your sales demos convert and become customers?
If this isn’t something you’re currently tracking, we would highly recommend taking a look at this important metric.
In fact, this benchmark can tell you a lot about the success of your demos. If your ratio is low, your demos might need some updating.
How to calculate demo to close ratio
To calculate this benchmark, you need to divide the number of sales you’ve made by the number of demos you’ve delivered to prospects.
For example (because you know we love examples), if you’ve given 100 demos and made 60 sales, your demo to closing rate is an impressive 60%.
But if you’re using an interactive product demo platform like Walnut, you can actually learn so much more about your demo process as well. Track the rate your prospects click through or whether they enjoy certain features more than others.
Formula: Number of demos / number of sales
How do you stack up against your industry?
See how your demo to close ratio compares to the competition:
The average demo to close ratio is 1 closed deal for every 4-6 demos. In other words, the industry-standard ratio is about 15-20%, meaning that at least 20% of prospects who view a demo presentation will make a purchase.
Key takeaway
Thanks to the demo to close ratio, a SaaS business can easily understand if its demos were effective and converted prospects.
If the rate is low, it means that either your demos aren’t as effective as you thought they would be, meaning you might need to consider gaining more insights on how to create an interactive product demo. Alternatively, a low demo to close ratio means that you may have to re-think your sales approach, your target customer base, or your products or services.
Optimizing your whole sales process with demos
As important as they are, try not to lose sleep over your benchmarks.
They aren’t meant to stress you out, but rather help you manage your sales and pivot to new strategies, or make improvements while necessary.
Sales benchmarks can provide actionable insights that drive those improvements and give you a way to compare your progress against your industry.
But no matter which area of the sales process you are struggling with, a good sales demo platform like Walnut can be really helpful.
Whether you want to send a short personalized demo to your prospect after your first call or a more in-depth one later on in the sales process, having an international demo platform in your sales tech stack can significantly improve your entire sales process.
If you find that you’re losing customers or that you can’t convert prospects, building interactive demos can make the difference and help you grow your businesses.
It’s not hard to see why; product demonstrations let prospective consumers experience a product hands-on without needing a set-up. This way, prospects get the chance to try before they buy and enjoy a demo earlier.
So what are you waiting for? Push the “Get Started” button to start improving your sales funnel today.
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