Whether you’re in e-commerce, SaaS, or any other kind of business, sales are essential. It doesn’t matter how great your product or service is — if you’re not selling, you’re not going to be in business for long. If you want to master your sales, you need to understand your sales data.
That’s where sales metrics come in. Rather than simply leaving your sales performance to chance, using the right sales team metrics allows you to accurately measure your strengths and weaknesses, then come up with a practical plan to get better results.
This post will help you understand what sales metrics are, why they’re so important, and how to use them to drive revenue.
What are sales metrics?
Simply put, sales metrics refer to the specific measurements used to assess your sales performance. They can be used for measuring sales performance of individuals as well as the sales team as a whole.
Rather than subjective feelings (“I think our sales team is doing well”), sales metrics are an objective measurement of sales performance, assigning numerical values to activities and results (“Our conversion rate has increased by 8% over the last quarter”).
Sales metrics can be divided into two main categories:
- Leading indicators - metrics that can be used to predict future results
- Lagging indicators - metrics that show current sales performance based on actual results
For example, a leading indicator might be the number of leads that agree to a demo. Based on this metric, you could predict how many people will sign up for the product. On the other hand, a lagging indicator could be the number of deals closed in the previous quarter.
Why are sales metrics important?
Metrics can transform your sales from a guessing game to a well-managed machine, where you can see exactly how any changes you make affect your sales performance. They help you to reward positive activities, predict future results, and identify potential issues at both an individual and team level.
However, it’s important that you’re paying attention to the right sales metrics. With the amount of data now available, it’s easy to become overwhelmed and obsess over the wrong details. At the same time, looking at certain sales team metrics in isolation can be misleading, resulting in poor decisions that could end up hurting your sales. That’s why you should select your most important metrics as your sales KPIs (key performance indicators).
Rather than trying to measure every possible metric, your KPIs for sales should use the metrics most relevant to the results you’re trying to achieve and cover the key stages of the sales process, including both leading and lagging indicators.
The rest of the post will look at the most valuable sales KPIs in the following areas:
- Sales activity metrics
- Sales productivity metrics
- Sales pipeline metrics
- Sales performance metrics
Sales activity metrics
While sales is more than just a numbers game, selling requires activity. These sales metrics cover the tasks you’re performing on a day-to-day basis.
Number of calls made / emails sent / conversations
Whatever methods and channels you use, tracking how active your reps are on their designated sales channel is one of the fundamental KPIs for sales.
Number of meetings / demos booked
Meetings and demos are the next step in activity and getting closer to closing the deal
Time spent on sales
According to Pipedrive’s State of Sales report, only 53% of salespeople spend most of their day actually selling. Tracking how much time your team spends on sales helps ensure they’re not becoming overrun with non-sales activities.
Sales productivity metrics
Sales activity is important, but if that activity isn’t useful it won’t translate into results. Sales team metrics that measure productivity help you tell the difference between who’s busy and who’s effective.
Positive reply rate
How many positive responses are you getting from your outreach? If you’re using other channels, how many interactions are resulting in people entering your pipeline?
Average response time
Prospects expect a fast response as part of their online shopping experience, otherwise they’re likely to look elsewhere for a solution. Having response time as a sales KPI ensures you’re meeting those expectations.
SnapCall allows you to go from onsite chat to a voice or video call with just one click, so you can talk directly to your leads without them waiting on hold or worrying about long-distance call charges.
Percentage of reps meeting quota
While not every one of your salespeople will perform at the same level, there should be a consistently high percentage that makes quota. If this starts to fall, it’s a sign that there’s a problem, whether that’s hiring, training, management, or something else.
Sales pipeline metrics
These sales metrics show the overall health of your pipeline, which is useful for predicting future revenue and identifying potential issues.
While it’s great to see a pipeline full of opportunities, the reality is that not all of those opportunities will convert. By multiplying the expected revenue if a deal closes by the likelihood of it closing (based on the current stage in the pipeline), you’ll have a better idea of how much revenue is really in the pipeline.
Time spent at each stage of the pipeline
A shorter sales cycle means you can close deals faster and reach out to more people. By looking at how much time is spent on average at each stage of the pipeline, you can identify opportunities to streamline the process.
Stage conversion rate
Just as not every lead will convert to a customer, leads will also drop out between the different stages in your conversion funnel. If you notice a sharp drop in conversions between any two stages though, then it’s important to identify why and fix that leak.
Sales performance metrics
Finally, your KPIs for sales should include the results you’re getting from your sales team. How are those activities translating into revenue?
Customer Acquisition Cost (CAC)
Every sale comes with its own expenses. How much is it costing you to acquire each customer? This sales KPI is calculated by dividing all the sales and marketing expenses over a given period by the number of customers acquired in the same period.
Customer Lifetime Value (CLV)
Once you have a customer, how much revenue can you expect? This is calculated by working out the customer value (average order size multiplied by the average number of orders), and then multiplying that by the customer lifespan (how long a person stays as a customer before churning).
Monthly sales / Monthly Recurring Revenue (MRR)
The bottom line: how much revenue is your sales team generating each month? For this sales KPI, e-commerce companies can look at actual sales while SaaS and subscription-based businesses should look at how much revenue they’re generating over the month (taking into account both monthly and annual payments).
Sales is the lifeblood of any business, but if you’re not using the right sales metrics it’s difficult to see how well you’re doing or any barriers that are holding you back. By using a combination of leading and lagging indicators to measure your activity, productivity, pipeline and performance, your sales will be more effective and drive more revenue for your business.
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