Key Sales Funnel Metrics You Should Track for Your Business

Key Sales Funnel Metrics You Should Track for Your Business

In the wise words of the American billionaire and founder of Godaddy, Bob Parsons, “Anything that is measured and watched, improves.”

There’s hardly any company today that’s not working on their sales. Every business today has some sort of a sales funnel driving their conversions. However, most of these sales funnels come with no checkpoints. In fact, according to Salesforce’s Pardot, 68% of companies have not even identified or attempted to measure their sales funnel.

In the hustle and bustle of getting work done, we often forget the value of getting it right. No matter how many expert insights you take, no matter how many tried-and-tested ways you try, your sales funnel can never be perfect. That’s simply because every business is unique, has its own learnings and strengths and there’s no standard recipe for success. So, that leaves you with only one way to grow in terms of sales–through trial and error. The only way you can improve your sales funnel is by measuring it.

So far, in our previous articles, we’ve covered:


Presuming that by now you’d have a fair idea of creating, and managing a sales funnel, we will now talk about improving it. In order to fix a flat tire, you need to figure out the punctures in the tube. Similarly, in order to fix your funnel, you need to identify the cracks. Let’s dive deep into the most important sales funnel metrics that you can track to know exactly what you need to work on to drive better conversions.

6 Significant Sales Funnel Metrics to Follow

Lead velocity rate

Lead velocity rate refers to the number of new qualified leads that are added to your funnel each month. Lead velocity rate is the percentage growth in the number of qualified leads that get added to your funnel in a month. You’d notice that we’re categorically stressing ‘qualified leads’ and not every lead. A qualified lead is one that’s already been filtered out by your marketing team as a prospect that’s interested in your offering. Only a qualified lead is useful for the sales funnel, hence it’s imperative that you measure your lead velocity rate using those.

Here’s how you calculate the lead velocity rate.

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Lead velocity rate

By measuring your lead velocity rate, you are able to keep an eye on the top of your funnel. You not only ensure that your sales team has enough leads to work with but also know how effective your marketing and advertising efforts have been in attracting relevant customers. If you witness a steady increase in your Lead Velocity Rate, know that your campaigns are in the right direction. If not, you might have to rethink your messaging and outreach efforts.


Overall funnel conversion rate

After measuring the number of leads that enter the funnel each month, you also need to understand how many of them convert into paying customers. For that, you calculate the overall funnel conversion rate. Essentially, the conversion rate is measured by dividing the number of conversions by the total number of leads. However, there no period defined in this metric. It is for you to decide upon. Ideally, measuring your monthly conversion rate should work. However, if you’re actively advertising, you might want to keep an eye on weekly conversion rates to budget your paid promotions.

Here’s the standard formula for measuring the overall funnel conversion rate:

Overall funnel conversion rate

Source: Glew

Conversion rates tell you the overall effectiveness of your sales funnel. Low conversion rates could mean a major issue in the sales messaging or a disconnect between your marketing and sales team on qualified leads. Either way, the key is to constantly track your conversion rate to know when your sales funnel needs realignment.


Stage wise conversion rate

Diving one step deeper into the metrics, you can also measure the leads that convert at each stage of your funnel. As we’ve discussed before, there are four key stages in a sales funnel namely Awareness, Interest, Decision, and Action. More often than not, business leaders are unable to use this metric effectively.

When you look at the stage-wise conversion rate, you have to bear in mind that the conversion rate at each stage may vary drastically, and that’s okay. You may find that a lot of leads convert from awareness to interest stage but only a few move towards the decision stage–that’s okay. While your goal should have high conversion rates at each stage, you shouldn’t compare one with another. In fact, you should use this metric to identify which stage of the funnel needs more effort to deliver better.

To find the conversion rate for a stage, you simply divide the conversions at one stage from the ones in the stage before that. Here’s the formula for it.

Stage wise conversion rate

Source: Brain Shark

Average Sales Cycle Length

As the next step to measuring how effective your efforts are, you should also keep in mind the average time to move a lead to its definitive conclusion. This means the average time your sales team takes to interact with the lead and close them as a customer or as a lost lead. The longer your sales cycle is, the slower would be your growth. Not just that, when you know the average time it takes to convert a lead into a paying customer, you can plan and budget accordingly through predictive analysis.

To calculate your average sales cycle length, simply record the number of days each lead spends from the ‘lead generated stage’ to ‘lead closed’ stage and take an average of that. Here’s the formula for it.

Average Sales Cycle Length

Source: Propeller

Your sales cycle is directly dependent on the time taken by your sales team to follow up, reach out and interact with a lead. A longer sales cycle, therefore, becomes an indicator that you need a more hands-on-deck to engage with your leads and that your sales team is under-resourced. However, before adding more people to the team, you should also consider investing in a sales funnel management software that can empower your sales team to automate the follow-ups and also keep track of the average follow-up time.


Cost Per Acquisition

Cost Per Acquisition is one of the most common metrics that every sales team measures. Before we get into what CPA is, please note that it’s not the same as Cost Per Opportunity. Cost per Opportunity is not a sales funnel metric to track. Rather, it’s a marketing metric.

Cost per Acquisition essentially means all the cost your sales team puts in to take a lead to a paying customer. It is also commonly known as Cost Per Conversion, where a conversion means converting a lead to a paying customer. It has a rather simple formula.

Cost Per Acquisition

It doesn’t take a rocket scientist to tell you that if this cost is higher than the value you get out of each customer, then your sales funnel needs to be relooked at. However, it’s okay if the Cost per Acquisition is slightly high when you’re starting out.


Lifetime value of a customer

The lifetime value of a customer is the average revenue you can expect from a single customer in total. This is what you should measure your CPC against, not the order value of their first payment. You need to understand that when a lead turns into a prospect, their order value may be lower as they’re trying out your offering. However, once they become a loyal customer, their lifetime value is much higher. So, we recommend measuring lifetime value.

Unlike the other 5 metrics, this is not as straightforward. Here are the steps you should follow to calculate the Lifetime Value of a customer:


  • Calculate the average order value for a customer i.e. the amount they make an average purchase of.
  • Calculate the average frequency of purchase for a year i.e. how many times they purchase in a year.
  • Calculate the average lifespan of a customer i.e. for how many years does a customer stay with you.
  • Multiply the three.
  • That’s the lifetime value of a customer.
Lifetime value of a customer

In The End

All said and done, these are the most common metrics that every business must measure in their sales funnel. However, since each business has its own goals and targets, don’t hesitate to add relevant metrics that cater to your sales funnel to this lot.

The key here is to measure. You must always know what’s working and what needs improvement in your business. Relying on your ‘gut’ or random ‘feedback’ will never help you make informed business decisions, data will. So, what are you waiting for, start measuring your efforts today!

While we’ve covered a crucial aspect of Sales here, there’s a lot more that goes into meeting those sales targets! To excel in sales and lead sales in 2022, here’s the ultimate sales guide that every sales manager should definitely read. Check it out>