Sales Tips

Sales KPI: # Sales Metrics You Should Be Tracking

Sometimes, sales individuals are in the dark about their performance. For example, during the recent COVID pandemic, sales individuals could not maintain a field presence. As a result, keeping a tab on the sales-related performances was a hassle. However, it is not mandatory to maintain a field presence to measure sales performance.

Sometimes, sales individuals can make the best use of the available data to measure performance. Every sales rep or manager should have an understanding of insightful sales KPIs. Let us discuss some of the best KPIs for sales reps, managers, and marketers.

Understanding the Concept of KPIs in the Sales Industry

KPIs are not specific to only the sales industry. Every company relies on industry-related KPIs to track performance. Besides measuring the performance of sales reps with KPIs, the performance of software systems, IT infrastructure, and other elements is evaluated.

In the sales industry, metrics demonstrate the performance of sales reps, marketing campaigns, and sales managers. KPIs always measure the performance of an individual or department against some pre-defined roles. Also known as sales metrics, KPIs help companies find loopholes and fix them immediately.

Tracking KPIs involves making the best use of available sales data. With the help of analytical practices and software solutions, KPIs can be tracked. The result is displayed in a simple form so everyone from the company can understand. Companies also have to choose the right sales metrics to measure the performance of their sales reps.

Choosing the wrong set of KPIs can backfire on an organization. Tracking sales KPIs is not only for managers or business development experts. Individual SDRs can also track KPIs and know the areas for improvement. Let us discuss some insightful KPIs that are essential in the sales industry.

Best Sales KPIs in 2022

1. Sales Cycle Duration

sales-cycle-duration

The sales cycle duration essentially depicts the time involved in making a sale, right from the point of initiating contact with the prospect. There is no absolute way in which you approach sales and so, there are no clear-cut steps of the sales cycle. It will vary from company to company. However, there’s an industry benchmark based on which you can assess your performance.

According to industry benchmark research, the average sales cycle length for B2B companies is 102 days (source). In order to check how you are performing according to industry standards, you need to calculate your sales cycle duration. Here’s one way to calculate sales cycle duration-

Sales cycle duration= Total no. of days taken to close all deals/ Total no. of deals

If your sales cycle duration is longer than the industry standards, perhaps there is a need to alter your sales process altogether. As a matter of fact, measuring your sales cycle duration can be an important step in optimizing your sales process. Whether you need to change your prospecting strategy or your closing techniques, your sales cycle duration will help you identify ways to speed up your sales cycle.

2. Sales Pipeline Velocity

Sales-pipeline-velocity

Sales pipeline velocity refers to the speed at which leads move along the sales pipeline. Besides calculating the duration of your sales cycle, it is also important to find out how fast your leads are moving down the sales funnel. Here’s how you can calculate the sales pipeline velocity-

Sales Pipeline Velocity= (Sales qualified leads X Overall Win Rate X Average Deal Size)/ Length of the sales cycle in days

The idea behind calculating this sales metric is to find out how successful are you in moving your leads. Now, let’s break down the different components of this formula. Sales qualified leads are the prospects who have been examined and researched based on the relevant lead scoring criteria your sales team follows. The overall win rate is the percentage of the closed deals that were won during a given period of time. The average deal size is an estimate of the average price of all your closed-won deals.

Moving prospects from one stage of the pipeline to another can be a daunting task. With the help of sales pipeline velocity, you can point out patterns in which leads move through the sales pipeline. Perhaps some of your leads are getting stuck at one stage or the other. Sales pipeline velocity can help you identify the cause behind this. Further, this sales metric will help you know whether you need to alter your sales lead scoring model or make changes in the way you attempt to close deals.

3. Monthly Sales Growth 

Monthly-sales-growth

Revenue is an important metric to estimate your growth. Monthly sales growth measures the month-over-month rise or falls in the revenue. It makes sense to measure your sales revenue every month than on an annual basis. Monitoring this sales metric on a monthly basis will be helpful in knowing whether your sales team’s efforts are paying off or not. Here’s how you can calculate your monthly sales growth-

Monthly Sales Growth= (Net sales revenue for the month- Net sales revenue for the previous month/ Net sales revenue for the previous month) X 100

There is a huge benefit to measuring your monthly sales growth. For sales reps, monthly sales growth will provide an incentive to perform better. On the other hand, sales managers can use the monthly sales revenue data as a way to enhance the teams’ sales efforts.

But remember, you can’t study your monthly sales growth in isolation. Track monthly sales growth in tandem with other important sales metrics. A relevant sales KPI such as ‘revenue sold per rep’ and/or ‘percentage of sales quota hit’ measured alongside monthly revenue will give you a better picture. Assess your sales growth on a monthly basis and then look at other sales metrics to point out which factors are working in your favor and which ones aren’t.

4. Sales Volume by Region 

Sales volume by region simply refers to the volume of sales generated in every region. As simple as it sounds, sales volume by region is one of the most important sales metrics for building a data-driven sales strategy. Sales volume by region can help you identify the regions where you should prioritize your sales.

Calculate the volume of sales that different regions are generating. Optimizing your sales process becomes much easier with these numbers in your hand. Now, you’ll know which regions are more responsive and concentrate your efforts accordingly.

To the convenience of sales managers, targeting efforts become much easier when they know which geographical segments are more receptive. Besides the geographical composition, other demographics may also be helpful in making important decisions about prospecting. As a matter of fact, this sales metric will help you build a more well-rounded vision for your ideal customer profile.

5. Sales Win rate

Win-rate

The sales win rate refers to the closed deals your team won out of the total opportunities. In other words, this sales KPI helps gauge the rate at which your sales team is closing deals with respect to the total deals. Here’s how you can measure the sales win rate-

Win rate= (No. of deals closed/ Total no. of opportunities) X 100

In a research on nearly 500 companies by RAIN Group Center for Sales Research, it was found that the average win rate stands at 47% across industries. How does your win rate fare against the industry benchmark? A low win rate is definitely not a good sign. After all, the win rate impacts your sales pipeline velocity.

Examine your pipeline at every stage. As a sales manager, being vigilant of shortcomings is as important as spotting opportunities. Examine every stage of your sales pipeline. Find out where your sales efforts are falling short. A slow conversion rate at the top of the funnel, for instance, calls for better skills-training of sales reps. But, even adept sales teams tend to face low win rates to point out lags in your sales strategy.

6. Sales Opportunities Created

Tracking sales opportunities created is as important as tracking the win rate. To define this sales KPI, it is simply the number of opportunities that your sales reps are creating, which have the potential to convert. Though this is a qualitative sales metric, capturing the sales opportunities created will help you a great deal in sales forecasting. In sales, time is money and it is vital to use this data to weigh and score every opportunity.

Regularly tracking your sales opportunities will make it easier to identify patterns and thereby, spot prospects who are worth vetting. Again, studying this sales KPI alongside other relevant sales metrics is important. For instance, look at the number of sales opportunities created through different sales channels. Is email more effective or cold calling?

Perhaps, you need to assess your sales opportunities created along with the win rate. This will help you understand whether you are using the right sales strategies. Maybe you need to reconsider your ideal customer profile altogether. For sales managers, measuring the sales opportunities created will aid in making well-rounded decisions.

7. Email and Call Analytics

It goes without saying that outreach methods play an important part in determining sales success. Apart from that, keeping a check on your sales reps’ performance is also needed. Ultimately, sales reps are at the front of the prospecting process. This is why tracking your email and call analytics is important.

How many cold emails are you putting out every day? What is the number of follow-up emails you are sending out? Since emails are an integral part of sales prospecting, keeping tabs on these numbers will be crucial for developing effective sales outreach plans. Besides analyzing these numbers on a daily basis, you may also want to look at it from a longer-term perspective.

Cold calling is an integral sales communication method. As such, tracking your agents’ real-time and daily call activities should be an inevitable part of assessing their overall performance. Important data including the number of outbound calls made by your sales reps as well as their live activity and voicemail activity definitely comes in handy.

sales-metrics-call-analytics 8. Percentage of Sales Quota Hit

sales-quota-hit

This sales KPI helps understand what percentage of the sales target are your sales reps attaining. Now, it can be calculated collectively to assess your sales team as a whole. You can also look at the sales quota hit by individual reps as well. Here’s how you can calculate the percentage of sales quota hit-

Percentage of Sales Quota Hit= Total net revenue from deals won for a given time period/ Sales target (in terms of monetary amount) for the given period

As a sales manager, you are responsible for ensuring that sales targets are being met. The percentage of sales quota hit is an important sales KPI to stay on top of your sales targets- whether it is monthly, quarterly, or an annual basis. For a powerful and efficient sales team, tracking progress towards goals and milestones is important.

9. Customer Acquisition Cost

Customer acquisition refers to the sum of all the costs involved in acquiring a new customer. But, as basic as it sounds, it can be a very complicated metric. Now, it will vary from company to company, as to what you include in the cost of acquiring a new customer.

For instance, some companies may be investing in third-party tools to drive their sales besides the cost of hiring sales reps, overhead, and so on. As such, depending upon your business, you can include all the important costs that are incurred in driving your sales.

If you want to increase your sales revenue, it’s important to watch how you’re spending. As a matter of fact, cutting down on costs is the smartest way to push your revenue upwards. Calculating customer acquisition costs will also help you ascertain which customers are worth pursuing and which ones will put pressure on your budget.

10. Profit Margin per Sales Rep

To put it as clearly as possible, the profit margin per sales rep represents each sales rep’s share in the overall profits. As a part of assessing the performance of your sales reps, it is important to see how they are contributing to the overall sales revenue.

An efficient sales team is one that is constantly monitoring the sales reps’ performance. Especially if you follow an incentives-based model for your sales team, it is important to monitor the profit margin per sales rep. A team of motivated sales reps is likely to perform better and drive more sales.

11. Upselling Rate

Upselling-rate

Lastly, another important sales metric that you can’t ignore is your upselling rate. Upselling refers to making sales for an upgraded version of your product or selling other products to your existing customers. Here’s how you can calculate the upselling rate-

Upselling Rate= No. of customers in a group who purchased additional products or services/ Total no. of customers in that group

Now, it is important to remember that your existing customers can turn out to be the best leads. After all, these are nurtured leads who are familiar with your products. Converting them into customers for your other products or upgraded versions of your product will be much easier. This is why calculating the upselling rate will be beneficial.

In the end, your sales team is only vying for more sales and thereby more revenue for the company.

12. Sales Volume by Area

A company can have multiple outlets spread across the country/state. They can amass data related to the sales volume at each location. By collecting sales data, one can know where the demand is highest and where it is the lowest. Once companies discover the areas with low demand, they can take appropriate action.

Areas/stores that drive more sales need not be tweaked. One can increase the inventory size at such locations due to high demand.

Companies can try different tactics to boost reach for areas with a lower sales volume. They can try promotional offers, end-season sales, shelf displays, and other tricks to lure customers. With the help of sales data analytics, one can detect monthly, quarterly, or yearly sales at each store.

Measuring sales volume by area is usually performed by sales managers. Sales reps focus on their individual stores or geographical jurisdiction.

Here’s a run-down of all the sales metrics and KPIs you should be tracking. Additionally, we will help you understand why it is important to track it:

To Conclude

Besides the mentioned sales metrics, there are many others used in the sales industry. Average response time, system touches, proposal acceptance rate, client conversion rate, and many other sales metrics offer insights. SDRs can also use these metrics to track individual performance and find areas for improvement. Start tracking sales metrics to determine the effectiveness of your sales processes!

Sid heads the global Sales Team at JustCall. He has been instrumental in establishing the foundation for the GTM functions at JustCall, driving the organisation into a growth phase. He is passionate about enabling organisations to build great customer experiences using technology. He is always looking to help startups beyond work, advising early stage companies on all things Sales & GTM.

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