“The ability to take data – to be able to understand it, to process it, to extract value from it, to visualize it, to communicate it – is going to be a hugely important skill in the next decades.” Hal Varian
Managing sales has never been this challenging.
With changing times, there has been a drastic shift in the ways that businesses sell their products. And these new ways have brought new bottlenecks in the sales processes.
According to a survey by Silent Edge, 49% of sales directors felt that it’s taking too much time to close deals. 22% of them reported lost sales pipeline as their biggest challenge.
The pressure of bringing in more revenue is immense. Sadly, all the burdens are shouldered by the sales managers.
We can’t let that happen, can we?
So, what’s the solution?
What are sales KPIs?
Key Performance Indicators (KPIs) are a type of performance measurement, which evaluates the success of an organization and helps make smart and informed decisions about the direction the business should take.
The key is to choose the right KPIs that are most relevant to your industry and business goals. Choosing the wrong KPIs is equally damaging in nature.
First, let’s understand the WHY of it, then we can move forward with the HOW.
Why are sales KPIs important to measure?
What’s the point of all the data in your system if you can’t track the performance of your sales.
This is where KPI for sales comes into the picture.
With the help of sales KPIs, you can come up with new strategies and approaches. Tracking these KPIs can also help you forecast your future sales and revenue generation.
Sales KPIs as activities
What we’ve learned over the years is – the best performing organizations are the ones that are able to break their sales process into individual, measurable activities.
Most of the B2B sales happen because of certain predictable activities – and negligence of these activities can lead to a decline in sales. Therefore, to keep track of your KPIs, it’s also recommended to use real-time data visualization software so that you can be sure that you can always stay on top of your key metrics.
Here are some activity-based sales KPI examples that you can look into for your sales team:
- No. of sales meetings with new prospects/existing customers
- Calling X no. of potential customers
- Conducting X no. of product presentations
- Sending emails X no. of existing customers
- Sending out X no. of written offers
- Conducting X no. of follow up calls
Here are some benefits of setting individual goals for your organization and tracking them:
1. Improved sales management
Understanding the relationship between your activities and your sales results can become a much stronger tool for managing your sales organization, conducting sales reviews, forecasting sales, and prioritizing future activities.
In short, it leads to better sales.
2. Practical sales tools
Your sales representatives get better sales tools to work with. Since the entire sales process is divided into individual activities, it’s more practical to carry out the work.
3. More efficient dialogue
The follow-ups with your sales reps can be smoother and more efficient as every activity is reviewed.
Moreover, efficiency and employee satisfaction are likely to increase, thus improving the quality of the organization, especially at the sales and marketing front.
How to create better sales KPIs?
Setting up activity-based sales KPIs for your business is highly dependent on a specific area of your business, products and services, and organization.
Ask yourself these two basic questions:
- What are the types of your customers?
- Which sales activities are appropriate for these customer types?
Once you know your customer types and sales activities, you can start to set targets for each activity in relation to customer type.
Here’s a simple way to move forward with sales KPIs:
1. Map the activities to the customer types
List down your regular sales activities and determine their relevance in relation to your customer type.
Some activities may be focused on bringing in new customers, whereas, some may focus more on the existing clientele.
For example, making 50 cold calls per day can be the activity that focuses on generating new leads, while sending 1000 follow-up emails using email sequences can be the other activity that deals with the current customers.
2. Set activity targets
For the relevant activities that you listed down in the above point, you can set a target for how many activities you expect your sales organization to perform on a weekly/monthly/quarterly basis.
Once you set these targets, you can then break them down so that every sales rep in your team knows their own individual targets.
3. Set up a support system
Set up a system where the sales reps can input their activities and progress. This would preferably be a CRM software that can act as a shared resource for both sales and marketing employees.
4. Monitor, review, and adjust
Once the system is set up, you can then use it to measure the performance of each activity against the actual sales.
This way, with the help of sales reports that your CRM provides, you can check which activities are providing good results and hence, can prioritize them for the future. The targets too, can be adjusted accordingly.
Sales KPIs every sales manager should measure
One thing to keep in mind for every sales manager is that not every KPI for sales is right for your business. Hence, you must choose the KPIs that align with your business goals as well as the activities that you perform at each stage of the sales process.
Let’s take a look into the most relevant KPIs to measure your sales team’s performance:
1. Sales volume by location
When you compare sales volume as per the locations, be it an online store or a physical store, you understand which region gives you more sales, and from there you can figure out why.
If the sales in location A is the highest, then perhaps that place has a higher demand of your product. You can then try to customize your products for this particular location and see if it drives more sales.
If you are comparing numbers across regions, then you can use the age-old A/B testing and take advantage of the same.
For example, say the locations P and Q both show a similar sales volume in the month of April, you can come up with a promotional sale in one of the regions and find out if it drives more sales.
In addition to the promotional sale, you can also use tactics like discounts, coupons, shelf display, demos or samples.
2. Competitor pricing
Although sales managers and business owners shouldn’t be tracking every activity of their competitors, however, being aware of their pricing can help create a competitive strategy.
If your prices don’t differ much, try a price-matching strategy, guaranteeing your customers the lowest price- and you the most sales.
Additionally, if you are aware of the average retail price of your product, you can measure the impact of cutting your price or implementing any discounts or promotions.
Sales managers should also make sure they train their sales reps for handling price objections. Exercising role-plays at the office can help your sales rep in discussing the pricing without wavering to discounts.
3. Existing client engagement
Maintaining a good rapport with your customers even after the sale process is finished is the key to long-term business. By keeping in touch with the customers regularly, sales managers and representatives can understand how things are going and how they can help, in turn, building trust and keeping the customers happy.
When the sales team is always available to help, the customers know they will always have someone to cater to their business needs.
Apart from benefitting your company’s outlook, keeping in touch with the previous clients also supports an important business goal- it’s a sales metric that matters.
4. Employee satisfaction
According to a survey, 75% of the employees are moderately engaged in their work. In fact, just 18% of the employees can be responsible for a loss of thousands of dollars over lost productivity.
Sales is a very challenging front, it requires persistence, and sometimes, sales reps can run out of steam. So, the biggest challenge that sales leaders face is to keep their sales team engaged and motivated so they enjoy their work.
With remote sales culture kicking in, sales managers find it even more difficult to get a grip on their sales teams. Hence, it’s another challenge to manage the remote teams.
Employee feedback is crucial for a successful sales culture. And sales KPIs are not only used to measure the performance of the sales team but also of the managers.
Since job satisfaction isn’t a quantifiable aspect, try asking the sales reps to rate their satisfaction on a numeric scale along with a few qualifying questions to understand what’s making them happy/ unhappy, then compare the results to your goals.
5. Upsell and Cross-sell rates
The most qualified leads in your sales funnel are your existing customers, obviously!
Have your sales reps track their upsell and cross-sell numbers, and use this data to identify whether certain verticals respond well to certain products or pitches.
For example, if a particular sales rep was successful in selling a feature A to a customer with a product package X within a six-month tenure with you- this might be a worthy milestone to add to your sales process.
Keep a tab on to whom, how, and when are your sales reps upselling and cross-selling, and adjust your efforts accordingly.
6. Sales cycle length
A sales cycle is an important aspect to be measured in the sales process. Some reps might be closing the deal in three weeks while the others take six weeks. Figure out the churn rates for each sales cycle length.
Analyze which sales cycle length provides the highest closed-won business. And don’t forget to also look at these deals’ success down the line.
If there are reps in your team that close the deal in record time, but you find their customers often dissatisfied with your product/ service, then a longer sales cycle might be a better option that yields healthy business.
Once you have all this data on your KPIs, analyze it to determine why you got those results. Then, find out how you can improve the performance and follow it up with action.
7. Close ratio
Close-ratio determines how efficiently a salesperson or a team has closed deals based on the leads they’ve worked on.
This metric KPI works towards system touches to help quantify the effectiveness of your sales team’s outreach strategy.
Close-ratio can be calculated by dividing the number of closed deals by the number of total lead opportunities that a sales rep was given during a time period.
Sales KPIs every sales rep should measure
Your sales reps are constantly generating new leads and performing several activities simultaneously. Here are some KPIs that can help you as sales managers to track their progress:
The number of sales activities performed in a set time period by each rep can give you an indication of the level of their productivity. You can consider measuring:
- Number of calls made per day
- Number of emails sent
- Number of meetings scheduled
Note that these metrics might not give the entire clear picture of the scenario your team is in, since some reps may believe in quality over quantity. However, it does make for a baseline to measure the performance of the entire team together.
2. Opportunities created
This is the sales metric that sales managers consistently monitor.
Sales activities mean nothing if they don’t result in a tangible sales pipeline growth. This is the reason why metrics like sales activities are best compared with the opportunity created by the sales reps.
This gives an insight into which sales activities are working best and which sales reps are generating more results out of those efforts.
Here are some questions that this sales metric can help you answer:
- How are the sales reps contributing to the expansion of your business in their given territory?
- Who’s reaching their quota?
- What percentage of your team is hitting their numbers?
- Is your set quota too high/ low for your team?
Present this data to your team so that each rep knows where they stand against their team members. This will motivate them with the help of a little healthy competition.
3. Proposals sent
It doesn’t matter whether the sales reps handle a lead on their own or hand it over to the account manager, however, a sent proposal shows that the sales representative is prospecting the right clients and generating SQLs and opportunities that are genuinely interested in buying, and not just kicking tires.
4. Deals won
This is an important metric, since all the efforts that a sales rep puts into a deal go to waste if the deal isn’t closed. By monitoring the number of deals won per rep and across the rest of the team can help you make sound decisions when budgeting and reinvesting in sales plays.
Across the board, teams who used win/loss analysis on a regular basis outperformed those who did not have any sort of analysis process. Here are a few of the key sales metrics for analysis users:
- Team attainment of sales quota: 5% higher than non-users
- Customer retention rate: 12% higher than non-users
- Year over year improvement of corporate revenue: almost double that of non-users
- Year over year change in lead conversion: 1.6% improvement versus -0.6% drop among non-users
5. Client acquisition rates
Another important metric to track is the client acquisition rate for each sales rep. Out of all the prospects that a sales rep reaches out to, how many convert into customers? It’s obvious for some salespeople to convert more than others, but if the difference is huge, then dig deeper.
Find out if low-performing reps are reaching out to bad fits, or the over-achievers are doing something different in a meeting that others aren’t.
Compare the number of closed deals with the number of prospects and find out the number after which the conversion decreases or stops. Use this number as a benchmark to avoid the wear-out of your sales reps.
Finally, compare the conversion rate to the outreach method to figure out what ways work the best for you- it can be cold calling, email outreach, or face-to-face interaction.
6. Average response time
This KPI especially applies to the inbound sales reps.
If a lead is flagged qualified by the marketing team, or if the lead shows interest directly by filling out a form, then there’s absolutely no time to waste. A sales rep needs to immediately respond to the new leads in order to make sure they are not lost.
You can benchmark the response time and encourage your sales reps to improve it. This way, they’ll catch new leads as soon as possible, and won’t leave the prospects waiting for anything.
7. Percentage of leads followed up with
Cherry-picking isn’t an option when it comes to following up with qualified leads. You want your sales reps to follow up with every lead there is, so as to not miss out on any opportunity.
This metric can give you an insight into the productivity of your team and their bandwidth.
8. Positive vs. negative reply rates
Consider that all the replies you get from the prospects as binary- they are either interested or they are not. It’s based on sentiment and not customer acquisition, which makes this KPI different than the others.
This KPI is measured at the prospect level, which means that all that matters is the total number of leads contacted. No matter how many calls or emails or follow-ups went to get an answer, the final figure will not reflect these numbers.
This metric is measured in percentage. For example, if 100 prospects are being contacted and 40 say yes, then the positive reply rate will be 40%.
You can track this KPI and identify trends. This metric can expose any flaw in your outreach, or highlight the benefits of the aspects of your sales process like sales sequences, prospecting approach, and channel preferences.
9. SQL-to-customer conversion rate
Your sales team is responsible for converting qualified leads into paying customers. Be it SQLs or MQLs, it’s up to the sales reps to take the process ahead and close the deal.
Low conversion rates can mean that the lead qualifying process isn’t optimum, or if some specific sales reps are converting less, then you can make decisions regarding their further training and development.
10. Deal win-loss ratio
This KPI indicates the quality of experience a certain prospect had with your sales reps as well as what they think about your product.
KPIs for sales and marketing to track
Here are the 8 most useful KPIs sales and marketing teams should measure.
Take a look.
1. Percentage of leads in each lifecycle stage
If you break down leads by sales lifecycle stage, you’ll be able to figure out the pinch points and bottlenecks across the two departments.
Marketing is responsible to increase the number of leads in the MQL, then the hand-off happens during the MQL-SQL stage, and then the sales team is responsible to convert the SQL to customer.
However, if the sales team doesn’t get the right leads, then the conversion rate will be affected. With this metric, you can diagnose any issues in the sales pipeline.
2. MQL-to-customer conversion rate
Raising the MQL-to-customer conversion rate should be a shared motive for both departments. Since marketing provides MQLs and sales converts them into leads, it’s important to track whether the quality of MQLs is good enough for the sales team to convert it.
3. Average length of customer lifecycle
The customer lifecycle refers to the time between the first impression and first purchase- different stages that a prospect goes through on his journey to making a purchase.
It’s good for every business if this time is reduced- since it reduces acquisition cost and generates customers more effectively.
Marketing and Sales both have a hand in customer lifecycle, and can work together to optimize it.
4. Volume of new opportunities
Tracking the volume of new opportunities created will create an alignment between the sales and marketing teams.
However, before tracking this KPI, both teams will have to agree on what a new opportunity is. While there is no universal definition, a sales opportunity can refer to a qualified prospect that has the potential to convert into a buyer.
The sales pipeline begins at opportunities and then moves ahead to deals and customers. Marketing and sales teams can both work together to create more opportunities.
5. Cost per lead
This KPI helps in quantifying the success of any marketing campaigns by measuring the number of leads generated through it.
The lower the cost per lead, the more successful the campaign is.
The cost per lead can be calculated by dividing the total budget of the campaign by the total number of leads that it generated.
6. Customer retention rate
Deal closure isn’t really the end of a customer’s journey with your company. The key to a healthy and on-going business is the customer retention.
You can track your team’s efforts to retain the customers and their revenue over time. While there are several ways to track customer retention, it’s better to stick to one metric and review it on a regular basis.
7. Net Promoter Score (NPS)
Your NPS is the measure of how likely your customers are to recommend your business to someone else. Your customers are asked to rate their likelihood of recommending your product/service on a numeric scale of 0-10.
Here’s what the scale represents:
- Promoters (9-10): They like you- they really like you. They will not only stay with you for long but will also recommend others to do business with you.
- Passives (7-8): They are satisfied with you, but that’s about it. They are competitive pickers because they feel your product/ service is status quo.
- Detractors (0-6): They don’t like you- they really don’t like you. These are a hazard to your business as they will churn out quickly and ask others to avoid doing business with you.
So don’t forget to send your NPS regularly to your customers, but not too soon for the new ones. Because there’s always going to be a kink or two in the system that needs to be resolved before the NPS is sent out.
8. Customer Lifetime Value (CLV)
This is a metric that indicates the total revenue that your business will generate from a particular customer. It considers a customer’s revenue value, and compares it with the company’s predicted customer lifespan.
It’s a crucial metric to determine which customer segment or buyer persona generates the most revenue for the company.
Sales KPIs for your industry
As stated earlier, picking the right KPIs for your business highly depends on what you’re selling. Here are some of the KPIs for each industry type to get you started:
1. B2B sales KPIs
Every business is trying to make money. And in order to make other businesses your customers, you need to prove that you are providing them value.
Hence, the B2B sales KPIs are mostly interested in any sales metrics that can tell them more about their customers’ behavior, trends, and buying practices.
The most important B2B sales KPIs are:
- Average time to conversion
- Sales rep calls and emails made
- Sales rep productivity and leaderboard
- Opportunities created
- Quote-to-close ratio
- Customer acquisition cost (CAC)
- Sales by contact method
- Sales by region
- Qualified leads
- Sales pipeline velocity
- Sales targets
- Sales team response time
- Average purchase value
- Average profit margin
2. SaaS and other software sales KPIs
SaaS and software are some of those few industries that have embraced the power of data-driven sales. For these companies, it’s important to know the nature of their ongoing relationship with their customers, churn rates and customer satisfaction.
Successful SaaS and software companies measure every aspect of their sales process, from generating new leads, to closing deals and maintaining long-term customer satisfaction. Additionally, they optimize their strategies for fintech software development services to stay ahead.
Here are some important KPIs for SaaS and software companies:
- Monthly recurring revenue (MRR)
- Annual recurring revenue (ARR)
- Customer acquisition cost (CAC)
- Customer lifetime value (LTV)
- Customer retention and churn rates
- Revenue retention and churn rates
- Daily and monthly active users (DAU and MAU)
- Product performance
- Sales by location
- All sales rep productivity metrics (including the number of calls/emails made, opportunities created, demos and onboarding calls booked, and conversion rates)
- Average time to conversion
- Pipeline value and velocity
- Channel sales metrics (such as revenue from partner deals and margin by partner)
- Net promoter score
3. Small business sales KPIs
For small businesses, it’s more about quality over quantity. Since you don’t do bulk business to cover up the bad business months, it becomes even more important to track every little detail of your sales process. This keeps you up-to-date with the business’s health and your place in the market.
Let’s look at some KPIs for small businesses:
- Cash flow forecast
- Average profit margin
- Revenue growth rate
- Customer acquisition cost
- Relative market share
- Sell-through rate (sales vs. total inventory)
- Average purchase value
- Product performance
- Customer satisfaction and net promoter score (NPS)
4. eCommerce sales KPIs
When you sell online, it’s important to track not only the output, but also the input. Maintaining an accurate inventory, tracking product performance, and pursuing upsells are some of the things that eCommerce businesses can do in order to grow.
Here’s some of the important KPIs for an e-commerce business:
- Conversion rate
- Cart abandonment rate
- Cannibalization rate (new products taking away from older ones)
- Sell-through rate (sales vs. total inventory)
- Customer lifetime value (LTV)
- Revenue on advertising spend
- Average order value
How to track these sales metrics KPI?
While the power lies in knowledge, the real power is in applying that knowledge to achieve your goals.
Once you make a list of all the right KPIs for your business, you need a way to track, measure and analyze them.
1. Choose the best sales analytics tools and software
Choosing the right sales analytics tool will put you at an advantage instantly. And while there are too many options available in the market, the best sales analytics tools have a few key features:
- Present data in a way that’s actionable, easy-to-understand, and up-to-date
- Give you a high-level overview of your pipeline for the entire team
- Measure the performance of your salespeople
- Allow you to use your sales data metrics however you want
The best tool for analyzing and tracking your KPIs is the Salesmate CRM that allows you to track each and every sales process in a single place.
2. Setting up and building your sales KPI dashboard
Once you’ve picked a sales analytics tool for yourself, the next step would be setting it up.
The best tool would help you start working on it as soon as it comes into your hands. In fact, customizable dashboards and sales reports can even add into the bliss of working for a sales analysis tool.
With Salesmate’s new Dashboard and Reports 2.0, you can use advanced functionalities for more in-depth and powerful analytics.
Salesmate gives you more control over your dashboard to see vital insights that matter for your sales. You can create the dashboard from scratch or use the in-built templates and customize them as per your needs.
3. Tracking and measuring sales KPIs best practices & tips
As you track and measure your data, it’s also important to keep it clean and actionable.
This means you need to pick the right KPIs and not get overwhelmed with data. Here are some of the best practices for tracking and measuring sales KPIs:
- Set sales benchmark
If you don’t know how you are performing against your previous performances or competitors, then the sales KPIs serve no purpose.
Pull out the previous data, or if that’s not available, then use the 30/30/50 rule for cold calling and emails. This means that a successful sales campaign should have at least a 30% open rate, 30% response rate, and 50% conversion rate.
- Know the people behind the numbers
What most businesses mistakenly do is that they only focus on numbers and not the people behind them. Every number on your dashboard represents a real customer.
With Salesmate, you will have an access to the entire customer profile and each of their crucial details, so that you focus on customers and see them as real people, not just numbers.
- Use clear metrics for each stage of your funnel
One of the biggest benefits of using sales KPIs is that you can pick apart and optimize your sales funnel. But the only way to do it is by clearly defining sales metrics and KPIs for each section of the funnel. Make sure you really understand the entire conversion process and what makes the customers convert before trying to optimize with data.
4. Turning your KPIs into revenue
Lastly, all a business wants is to be successful, and we are sure that you are no different. However, it takes more than just a sales dashboard full of numbers to become successful.
“The key to winning in sales is consistency.”
Your team needs to show up every day and keep the motor running. If they don’t send emails or make calls today, they won’t have a deal to close tomorrow!
The ways in which tracking KPIs can lead to more revenue generation are immense. For example, tracking conversion rates per sales rep can tell you a thing or two about your process – the performance of your sales reps, the lead qualification process, and the upcoming revenue generation from that deal.
Say, one of your sales reps brings in a prospect into his sales pipeline. By tracking the prospect’s activities, you can assume the products/services he’s interested in, and hence, you can forecast the revenue that this lead would generate if the sales rep is able to close the deal.
Similarly, tracking the KPIs for your sales team can tell you more about the revenue that you’d generate with each lead and hence, help you grow your business further.
In order to gain more from the KPIs, keep these three points in mind:
- Base your KPIs on activities, not just results
- Map your customer types and your activities around them
- Provide your sales organization with simple tools to support your KPIs
KPIs are a great way to measure the growth of your sales team and improve, but they are only helpful if they are actionable.
Once you get the data from the KPIs, use it to analyze and understand why you got those results. Determine how you can improve the results and follow through with actions.
You can’t manage what you can’t measure!
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