Consistently high sales and full sales pipelines are one of the pillars of any thriving business, regardless of size, location, or industry. But how do businesses know whether their sales team are performing to the best of their abilities or if the sales process they’re following isn’t generating the desired results?
Tracking key sales performance metrics is the answer. These can be as varied and specific as a business needs them to be, depending on the type of insight and granularity the business is looking for.
In this article, we’ll dig deeper into sales performance metrics and highlight the top ten ones that your business should be measuring regularly to achieve success.
What are sales performance metrics?
Key performance metrics, also known as key performance indicators (KPIs), are a measurable value that demonstrates how effectively a business is achieving key objectives or goals.
KPIs are useful to identify what a company is doing well and where it could improve. They’re used across industries to help develop efficient strategies to hit target goals, as well as to gauge the effectiveness of an initiative or newly formulated campaigns.
There are many different types of KPIs suited to different purposes. Specifically, key sales performance metrics can be used to measure how your sales team—both as a whole and on an individual basis—performs.
Sales performance metrics help you evaluate how effective and efficient your entire sales process is. By keeping tabs on these indicators, companies can achieve various goals. For example, they allow businesses to:
- Tweak and fine-tune their strategy and sales process
- Set medium and long-term objectives and milestones
- Identify weaknesses and strengths within their sales teams
- Craft bonuses, commissions, and other incentive plans for salespeople
So, whether you want to incentivize your team to perform better or if you’re aiming to improve the performance of a specific person within your sales team, tracking key sales performance metrics is essential to making data-driven, informed decisions.
Key sales performance metrics to track and their importance
Now that you know what sales performance metrics are, let’s reveal the ten most important ones to measure and review on a regular basis.
1. Revenue per Sales Rep
As the name suggests, this metric refers to the performance of each individual sales rep. It can be measured either monthly, quarterly, or annually, and it helps you assess how every member of your sales team is faring against your company’s goals and requirements.
To calculate it, divide the total company sales revenue by the total number of sales representatives.
- Revenue per sales rep = Total company sales revenue ÷ Total number of sales representatives
Keeping track of this metric provides valuable information about individual and team productivity. These insights allow you to review and improve your sales strategies along with resource allocation.
2. Sales cycle length
This measures the average time that your sales team takes to convert leads into customers. Longer sales cycles usually equal lower sales performance, whereas shorter ones highlight higher effectiveness and productivity—and, in turn, faster sales and cash flows.
To calculate it, add up the total number of days it took to close every sale and divide that sum by the total number of deals.
- Sales cycle length = Total number of days to close sales ÷ Total number of deals
This lets you identify the time needed to convert prospects into customers and close deals. Understanding your sales cycle length is important—you can pinpoint where time is being lost and take the necessary steps to streamline your sales process and better understand your customers’ behavior.
Read also: How to reduce the sales cycle with e-signatures
3. Conversion and win rates
Another key sales metric that business leaders should keep track of is customer conversion rates, which are closely linked to win rates.
Conversion rate refers to the percentage of qualified leads or prospects that eventually become paying customers. It’s a measure of the overall effectiveness of your sales funnel—from lead generation to final sale. This metric helps assess how well your sales and marketing efforts work together to convert interest into actual business.
Win rate, on the other hand, is more narrowly focused. It measures the percentage of sales opportunities (typically later in the funnel) that result in a successful, closed-won deal. It provides insight into how effectively your sales team closes deals once they reach the negotiation or decision stage.
To calculate your conversion rate, take the total number of new customers and divide it by the total number of qualified leads, then multiply this by 100.
- Conversion rate = (Number of new customers ÷ Number of qualified leads) × 100
To calculate your win rate, divide the number of closed-won deals by the total number of deals you had in the pipeline and multiply by 100.
- Win rate = (Number of closed-won deals ÷ Number of deals in pipeline) × 100
Customer experience (CX) is one of the most critical aspects in this respect as it can make or break your conversions and win rates. So, think about boosting your CX through your marketing and customer support departments, and always leverage the valuable insights uncovered by customer feedback to inform your sales activities.
Both your conversion and win rate allow you to figure out which sales approach or strategies are working and which aren’t. They can also alert a business as to whether they’re going after the right target market.
Analyzing individual win rates helps sales managers identify top performers as well as reps who may require additional training, coaching, or process improvements.
4. Customer lifetime value (CLTV)
CLTV refers to the total revenue that your business can expect to generate from each customer across the entire duration of your relationship with them.
To calculate CLTV, simply multiply the value of a sale by the average customer lifetime and subtract acquisition costs.
- CLTV = (Value of a sale x Average customer lifetime) – Acquisition costs
This metric allows teams to design better plans and make more informed decisions in terms of marketing and sales investments, as they’re able to focus on nurturing and retaining the customers with a higher CLTV.
5. Sales quota attainment
Typically, your company would have a “sales quota”—a sales goal that your sales team and individual reps should work toward regularly.
To find out whether they’ve achieved it, you should keep track of the sales quota attainment metric. This is usually identified by a percentage.
To calculate the sales quota attainment, divide actual bookings by sales quota and multiply by 100.
- Sales quota attainment = (Actual bookings ÷ Sales quota) × 100
The higher it is, the better the team or rep has performed against the quota for a particular time period.
This metric can also be indicative of a sales rep’s overall professional mindset. A sales rep who always has a high sales quota attainment percentage is likely driven and recognizes the importance of self-management. One who never meets the quota may be lax and more carefree.
You can use what you find out about your reps through this metric to develop training sessions or mentoring programs tailored to their learning needs.
6. Cost of customer acquisition (CAC)
Winning new customers always feels awesome, but it comes at a cost. That cost is captured by the Customer Acquisition Cost (CAC) metric, which measures how much your company spends, on average, to acquire each new customer.
To calculate CAC, divide the total expenses to acquire customers (cost of sales and marketing) by the total number of customers acquired over a given time.
- CAC = Total expenses to acquire customers ÷ Total number of customers acquired over specific time period
With this metric, you can work out whether your sales and marketing strategies are effective or if they need to be reviewed and tweaked to bring the cost down.
Naturally, lower CACs indicate that you’re acquiring new customers in a more cost-effective way, which translates into steadier growth and profitability.
7. Customer churn rate
Sadly, throughout the years, you’ll see customers leave your company and start doing business with one of your competitors.
The metric that measures this occurrence is the customer churn rate, and it’s usually expressed as a percentage.
To calculate your customer churn rate, divide the number of customers lost during the given time period by the number of customers at the beginning of the given time period, then multiply that figure by 100 to get a percentage.
- Customer churn rate = (Number of customers lost in a specific time period ÷ Number of customers at the start of a specific time period) × 100
Keeping track of this metric is important—analyzing the causes of a high churn rate can enable you to spot any particular issues that are driving customers away.
This could reveal areas that need improvement, such as poor customer service support or an incorrect pricing strategy. You’ll then be able to develop retention plans and strategies, whether this be a better call center QA process or a restructuring of prices to eliminate the problems and keep your customers close.
8. Average deal size
Your sales team will likely close many different types of deals throughout a typical year. However, if you want to know the value of the average deal that they close, you’ll need to track the average deal size metric.
To calculate the average deal size, take the total revenue earned in a given period and divide it by the number of closed-won opportunities within that time frame.
- Average deal size = Total revenue earned in given period ÷ Number of closed-won opportunities
This metric can yield valuable insights into what customers seem to prefer in terms of products and services, as well as their purchase patterns and behaviors. Ultimately, this will help you refine sales and pricing strategies and project your annual revenue.
Read also: How to create a sales process that wins?
9. Key account performance metrics
What is account-based marketing for? What about inbound marketing? These types of marketing strategies are popular among businesses as they help greatly to secure key accounts.
These refer to the most important customers you have—those with the highest potential to drive long-term revenue and growth. Monitoring their performance helps ensure you’re nurturing the right relationships.
To evaluate key account performance, track these KPIs:
Revenue contribution: Take revenue away from variable costs.
- Revenue contribution = Revenue – variable cost
Customer retention rate: Determine how many customers you have at the end of a given period (week, month, or quarter) and subtract the number of new customers you’ve acquired over that time. Then, divide by the number of customers you had at the beginning of that period and multiply that by one hundred.
- Customer retention rate = ((Number of customers at the end of a given period – Number of new customers acquired in that time) ÷ Number of customers at the beginning of that period) x 100
Engagement: Divide the total number of interactions your content receives by your total number of followers, and multiply this by 100%.
- Engagement = (Number of content interactions ÷ Number of followers) × 100
Tracking these metrics allows you to manage and strengthen your relationships with your most valued customers.
10. Sales activity levels
Whether you’re focused on boosting the sales from influencer marketing campaigns or you want to increase revenue across the board, another great metric to track is sales activity levels.
Looking at sales activity levels is an effective way for sales managers to measure productivity. This includes tracking more activities such as:
- Number of meetings booked
- Phone calls made
- Demos conducted
Continuously monitoring these activities gives managers insight into how well their teams are executing the sales process.
In doing so, managers can better understand how reps are performing in each specific activity, allowing them to prioritize what’s working well and review or adjust what isn’t.
Appropriate sales enablement solutions can also be implemented to assist your sales reps and provide them with the tools they need to succeed.
It’s up to the leaders or managers to decide which activities are most important to their company’s sales process so that the right sales activity volume KPIs can be tracked.
Potential challenges in tracking sales performance metrics
Tracking key sales performance metrics isn’t always a walk in the park. Below, we discuss some of the main hurdles you may encounter along the way.
Inaccurate or incomplete data
Data quality is one of the biggest issues that any business that’s serious about data analysis could face.
Data that’s inaccurate, incomplete, inconsistent, or downright incorrect can hugely distort your KPI measures. In turn, this may lead you to make the wrong decisions for your business.
Data silos across different systems
When the data you’re using is stored across a range of separate systems and tools, you’ll struggle to make sense of it. Imagine you need to create a sales report by pulling data based on sales, marketing, customer support, and perhaps email correspondence.
If each department stores its data separately, it can lead to a fragmented, incoherent view of sales performance, which can ultimately hinder decision-making. To achieve consistency and accuracy, having a single source of truth is paramount.
Don’t forget to ensure that whatever software or solution you turn to, such as a CRM or data platform, is up to standard when it comes to security. Protecting your data is paramount to obtaining valid and authentic information.
Read also: How to create a sales process that wins?
Data integration challenges
Having a solid data integration and management strategy is essential if you want to build a more structured and standardized way to handle your data. Without this, you’ll end up with scattered information that’s difficult to make sense of and use for your purposes.
Ensuring accurate and consistent KPIs
Another mistake that many companies make is not establishing accurate and consistent metrics to track in the first place.
Knowing exactly which key sales performance metrics to track is vital as it allows you to zoom in on what truly matters to your company and enables you to design a strategy to accomplish it.
Effectively analyzing and presenting data
Just as automation tools are essential to help you with things like email marketing and social media post scheduling, the right software is essential to help you analyze, understand, and present your data.
Using something that doesn’t align with your sales goals can present a further challenge to tracking KPI sales performance metrics.
Instead of settling for your company’s legacy BI tool, consider upgrading to something that’s a bit more advanced and can better support your analysis, sales, and marketing efforts.
You can feed the data you obtain from metrics such as sales cycle length and sales activity levels into a dedicated AI tool to generate accurate sales forecasts and predict future revenue. Train your team on how to use AI in sales to maximize the many benefits it brings.
Conclusion
If you’re committed to consistently enhancing your sales and expanding your customer base, tracking key sales performance metrics is essential.
From measuring the average time it takes to convert qualified leads to working out the average deal size and average revenue for a specific period of time, measuring these key metrics is vital.
Indicators such as conversion rates, customer acquisition cost, and average customer lifetime value are essential for helping you better understand how your sales team as a whole is faring, as well as highlighting the strengths and weaknesses of specific reps and sales leaders.
Moreover, tracking these metrics can also enable you to take a proactive approach when it comes to refining your sales, marketing, customer support, and product development strategies. This fosters informed decision-making that brings the results you want for your business.
