Nowadays, the backbone of a high-performing sales organization is the right data. Sales leaders must know how to interpret and use data about their organization and team, and the best way to do that is through well-defined sales KPIs.
Understanding data is crucial for scaling one’s sales team, growing their revenue, and beating out the competition.
In fact, the world’s best sales teams run on data. This, however, doesn’t mean tracking and measuring every move each team member makes, as that will only slow them down.
Instead of tracking more for sales, they should track the right ones. So, if you’re a sales manager, you must understand what sales KPIs are, why they matter, and which of them are important for your sales team.
Key Performance Indicators for sales, or sales KPIs, are metrics used to track the performance of an individual, a department, or a business against goals.
They help sales managers, leaders, and reps track progress to targets, manage the team and individual performance, and recognize high-level themes and trends.
Not tracking sales KPIs brings sales reps and their leaders in a blind spot. They won’t know if their actions and efforts help them to improve results and achieve their goals.
Without a clear overview of their business, they can’t predict their future sales or guide their team members and organization in the right direction.
In fact, things will always change, so it’s important for them to monitor their sales KPIs so that they can adapt when necessary. As the goals of a sales organization change, their key performance indicators will change as well.
By measuring the right KPIs for sales, sales leaders and their teams can optimize their sales process and make sure they are moving in the right direction and prioritizing the right activities for optimal results. After all, results are the foundation of all budgeting, and meeting the sales budget is of utmost importance.
Here are some of the best key performance indicators for sales used by successful sales teams.
Monthly Sales Growth
Modern sales leaders use this KPI to track and measure the growth of their sales revenue every month. Measuring the increase and decrease of monthly sales growth allows them to notice and act on sales revenue trends now, instead of waiting to see their outcome.
Setting realistic individual and team sales revenue goals can inspire performance and ensure constant alignment of sales efforts.
New Leads and Opportunities
This sales KPI shows how team members are helping to expand the business. It shows who of them is successfully reaching their quota, and if the quota is realistic. This allows them to compare themselves and motivate them to be even better.
Average Profit Margin
With this KPI, the sales team is able to evaluate the profit margins across their set of products and services. This is particularly beneficial for companies with lots of different product offerings, as well as companies that allow sales reps to be flexible in pricing to achieve customer lock-in.
Client Acquisition Rates
This KPI shows how many prospects convert to customers. So, sales managers can find out which of their team members perform better, and what it is that they do differently than others.
Monthly Sales Bookings
This sales KPI shows the number of sales bookings achieved by a close deal or a committed/signed sale. It can be divided into more categories, such as sales bookings per employee or region.
Being aware of competitors’ pricing can help business owners and sales managers to create a competitive strategy. If they find out their prices are similar, they can ensure their prices are lower, which would bring them more sales.
What’s more, monitoring the average retail price of a company’s products can help sales managers find out the impact of reducing their prices or running a promotion.
This KPI shows all pending opportunities for sales teams, allowing them to decide which of them are most worth their efforts and resources.
Sales opportunities is a key performance metric that organizes prospects according to the probability of a closed deal and the opportunity value. Prospects have their own estimated purchase value related to them to help sales teams prioritize their actions.
With this KPI, sales teams can see trends when specific products or services are selling better than others.
Some factors that need to be taken into consideration here is whether a specific product is not selling well because of a competitor reduction of prices, or whether it’s selling great based on a major press mention.
Average New Deal Length/Size
This sales KPI shows what product or package is the most profitable for one company. It can also show the average new deals closed per sales rep in a month or year.
Average Cost per Lead
This is how you get the price for generating one lead. For example, if the average cost per lead is $10, and a company’s product sells for $250 a month and they are closing deals left and right, they should consider themselves a winner.
Customer Lifetime Value
This is how sales teams find out how much a closed deal will bring profit to the company over time.
This sales key performance indicator tracks the upsells and cross-sell numbers of existing customers in order to see if specific verticals respond well to specific sale pitches.
By monitoring how, what, when, and to whom sales reps are cross-selling and upselling, sales leaders can adjust the efforts properly.
Let's take a look at what kind of Sales KPIs have other businesses and how do they track it?
"Our main is customer acquisition and reducing churn. Due to the nature of our business, both of these metrics define a crucial aspect of our growth and future.
It’s almost 7 times cheaper to retain a customer than to gain a new one through traditional marketing. That’s why our focus on churn reduction is so important.
Having amazing customer support, understanding why a customer might not want to renew and what would empower them to all play an insightful and crucial role in us achieving our goals."
"Self team-based tracking churn is easily tracked via stripe"
Abdul Mukati, Founder of VerifyBee
"To be honest, I think that you can boast of any cool numbers like a churn of 1%, LTV of 10,000 bucks with a CAC of 100 bucks. But all this makes no sense if your burn rate is 10,100 bucks. Our main metric is net profit."
It’s important to determine the right sales KPIs for your business, products, and sales organization. To create better sales KPIs, you need to be aware of your customer type and the sales activities that are appropriate for them.
Knowing these two factors allows you to set targets for each activity in regard to each type of customer. So, you need to:
Sales KPIs are very useful, but only if they are paid attention to. So, keep track of the most important sales KPIs for your business so that you can guide your team members and sales organization in the right direction.
Published on Apr 07, 2020
WRITTEN BYGintaras Baltusevičius
Gintaras is an experienced marketing professional who is always eager to explore the most up-to-date issues in data marketing. He is always in search of new and unexplored angles to share with his readers.
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