In a data-driven world, you can find a multitude of metrics to measure absolutely anything you wish. However, knowing which are the essential numbers to track in order to drive value and progress in your organisation can be difficult. With so much choice, how do you narrow the possibilities down to a few, manageable and, most importantly, useful data points? This article explores the key sales team performance metrics you need to know about.
PwC found that companies who describe themselves as “highly data-driven” are three times more likely than their peers to report a significant improvement in decision-making. This is why you should make the most of the statistics at hand. This will help you understand how far you’ve come as a team and where you are likely to head if you continue with your current sales strategy.
Types of sales performance metrics
There are a number of types of sales team performance metrics that you should monitor. This table explains more about the main categories, what they include and how they are useful to sales leaders and other sales professionals.
|Type||Description and examples|
|Sales Activity Metrics||Actions that your sales reps undertake on a day-to-day basis. By tracking these, you can see what your team is doing to bring in sales and the relative success of these different activities. They include scheduling meetings, making phone calls, issuing proposals, requesting referrals and other similar work.|
|Sales Pipeline Metrics||Metrics that reflect the health of your pipeline. Your sales pipeline is how you track where your deals are, based on the stages of the sales process the prospects have reached. These are metrics such as the length of your sales cycle – the shorter the cycle, the quicker your pipeline is flowing – and your win rate, which represents how many of the leads that go into your pipeline in a certain time period come out of the other end as sales.|
|Lead Generation Sales Metrics||Lead generation is where the sales and marketing teams meet. It is important to understand how many leads you are generating, as this is how you bring in customers. But it is also essential to track those leads through the pipeline and understand what happens to them so you can improve the process. You should look at the volume of new opportunities coming in, how long it takes you to respond to them and how many qualified leads you are left with after you have applied your specific criteria to those that are generated.|
|Sales Productivity Metrics||Details on how efficiently sales reps meet their sales targets. The quicker they reach those sales goals, the more productive they are deemed to be. To measure this type of metric, you would look at what percentage of the rep’s time is taken up with actually selling, compared to data entry, admin and other tasks. You might also track what percentage of high-quality leads they follow up with.|
Why are sales team performance metrics important?
Your sales metrics are the key performance indicators (KPIs) that sales leaders use to understand which direction their team is travelling in. These metrics allow you to monitor the performance of your sales professionals and their progress towards their sales quotas. They also help you understand when there are problems in your sales strategy so that you can act quickly to change course without too much damage to the sales performance.
By spotting sales process trends with your metrics, you can extrapolate what will happen in the future and predict revenue. This allows the business to plan ahead and adjust strategy accordingly and plan for growth and expansion.
Sales performance metrics to track regularly
This represents the gross amount of income raised from the sales of goods and services. Obviously, tracking this metric over time is important, as increased revenue is important. However, it is worth remembering that it shouldn’t be analysed in isolation.
You would expect more revenue is always a good thing. However, you need to know how this number interacts with other sales team performance metrics. For example, if your total revenue for a year increases, but customer acquisition cost also grows and your percentage of new customers vs existing customers shifts more towards new clients, you might find that your profit is actually lower.
Total revenue is an essential metric to track but needs to be analysed in context.
Customer Acquisition Cost (CAC)
Your customer acquisition cost tells you how much it costs the company to bring in a new customer. This could be based on the marketing campaigns you plot, the commissions sales leaders pay to reps, events you put on, the resources that you create to drive sales and anything else that goes into striking your deals.
You take the overall expenses incurred from these elements, divide it by the number of new clients that you onboard and you find your CAC. You can calculate your overall CAC, but you can also work out the CAC for each different lead generation tool to see what is most cost-effective.
CAC = Total Sales and Marketing Expenses / Number of Customers Acquired
This table shows examples of CACs using different channels:
|Channel||Social Media Adverts||Newspaper Adverts||Live Demos|
In this example, the live demos have the lowest CAC, even though the cost of organising them was more than the social media and newspaper adverts combined. With this information, you might choose to invest more in live demos or work out how to optimise your social media advertising to bring down the CAC.
Lifetime Value (LTV) of a Customer
This metric helps you work out how long it will take to recoup the investment in acquiring the customer and whether your lead generation tools are cost-effective. If you are spending a lot of money to acquire clients whose customer lifespan is not long enough to repay the layout, you are in trouble and you need to adjust your strategy to entice customers to spend more and for longer.
Calculate customer lifetime value by working out the average purchase value and multiplying it by the average number of purchases. This customer value metric should then be multiplied by your average customer lifespan to work out the LTV of a customer.
CLTV = Average Purchase Value per Customer x Purchase Frequency x Average Customer Lifespan
If the value is getting lower, you need to work out how to garner better customer satisfaction, loyalty and retention.
Percentage of Revenue from New vs. Existing Customers
Many businesses throw the majority of their marketing spend at acquiring new customers but is there a better way? The statistics certainly give that impression. Research shows:
- It costs five times more to acquire a new customer than it does to retain one that has already bought from you.
- You will be 60 to 70% successful in selling to an existing customer as opposed to 5 to 20% when trying to bring in new clients.
- If you increase your customer retention by just 5%, it can lead to an increase in profits that sits anywhere between 25% and 95%.
It makes sense to redirect some of your marketing and a proportion of the efforts of your sales team to working with existing customers. By pushing the balance between revenue from new and existing customers towards those who have bought before, you can cut costs and increase the money that you make.
If the split moves towards new customers, you might not be making as much profit as you could be. This is why this is an important metric to track.
Monthly Recurring Revenue (MRR)
For subscription businesses, MRR is a vital metric for monitoring. This represents predictable income from existing customers. Of course, it rarely stays steady, as is the nature of subscriptions. New customers sign up and existing ones cancel and move on. However, by calculating the MRR every month and plotting the data, you can work out whether you are growing your business and by how much. This allows you to forecast future monthly revenue, which helps with budgeting and decision-making.
MRR doesn’t give an exact picture of the company’s revenue, as there are other streams to consider as well. But it does paint a picture of where you are going and that can be very helpful.
MRR = Number of Subscribers x Average Revenue per User
You can also calculate the MRR of each plan and the MRR of new customers.
Your churn rate tells you whether your subscription-model business is growing or not. It relates to the number of subscribers who leave your service by cancelling or not renewing during the time period you are focusing on.
You calculate the churn rate by taking the number of lost subscribers by the total number of customers at the start of the period you are looking at. You then multiply by 100 to get the percentage.
Churn Rate = (Lost Subscribers / Total Customers) x 100
For example, if you had 500 subscribers at the beginning of the period and lost 12 during it, you would have a churn rate of (12/500) x 100 = 2.4%.
Obviously, you want this rate to be as low as possible or, even better, negative churn. A negative churn rate means that you are increasing your numbers and growing your business.
Sales Cycle Length
Your sales cycle represents the length of time between first contact with a customer and closing the deal with them. A shorter cycle means that you are getting leads through your sales pipeline with more speed and making more deals. Of course, some industries require a longer sales cycle than others by the nature of the goods and services they provide. However, when you benchmark your own performance, you can track whether your sales team is becoming more efficient or whether things are slipping and sales velocity is slowing down.
To calculate your average sales cycle, add the total number of days it took to close your deals during a certain timeframe and divide it by the number of deals you have made. This shows the average time it typically takes to make a sale and provides a target for you to beat.
Sales Cycle Length = Days to Close a Deal / Deals Made
The higher your win rate, the more of your prospects you turn into customers. This is a metric that companies love to target for constant improvement, as it shows that their sales team is so good, it can win over as many prospects as possible.
To calculate your win rate, divide the number of closed opportunities in a certain time period by the total number of opportunities in the pipeline during that time. This shows how often you successfully turn prospects into sales. Increasing this rate shows forward momentum.
Win Rate = Closed Deals / Number of Opportunities
However, you also need to take other factors into account. A high win rate could show how effective your team is, but it could also indicate that they are choosing not to follow up leads that they are not absolutely certain about. In fact, they could bring more revenue into the business by taking on more leads, even though their win rate might go down because some of those less solid leads will drop out at some point in the pipeline.
This metric is all about monitoring how many proposals your team sends out to leads following meetings, demos and discovery calls. This is such a key stage of the sales process that you need your team to be proactive in making proposals once they have worked out the customer’s needs.
It stands to reason that you want to send as many proposals as you can, but they also need to be high-quality proposals. That is why this is another metric you can’t look at in isolation. Once you know the number of proposals sent, you should track what happens after that. If a qualified lead drops out of the pipeline soon after, you need to work on the types of proposals you are sending and your strategy for dealing with leads at this stage.
Average Deal Size
The size of your deals tells you a lot about your product and your sales strategy. Sales leaders should calculate the average deal size by taking the total value of deals made in a certain timeframe and dividing it by the total number of deals.
Average Deal Size = Total Deal Value / Total Number of Deals
Having a larger average deal size shows that you are appealing to high-value customers. This can be advantageous because having fewer customers at a higher rate gives you more free time to build on that base than if you are trying to achieve the same amount of revenue with more clients each spending less money. Of course, your business may be focused on closing a large number of small deals in a short time frame. Both approaches can work, depending on your industry.
If you close five deals in a quarter, worth €20,000, €25,000, €15,000, €32,000 and €30,000, your total revenue will be €122,000. You divide that by five to find the average deal size. In this case, it is €24,400.
Each sales rep has a quota of deals to close throughout the month, quarter and year. Quota attainment is the metric that shows how successful they have been in achieving their targets.
You work out quota attainment by dividing the sales made by the target set for that rep. If a rep had a target of €125,000 and achieved €115,000, that would equal 0.92. Multiply that by 100 and you get quota attainment of 92%.
Quota Attainment = Sales Made / Sales Rep Target x 100
If a rep consistently fails to achieve their sales targets, they may require coaching or you might want to look at your quotas and consider whether they are realistic. Has the market changed? The same can be said if a rep regularly exceeds their quota. You might need to raise their targets.
To calculate year-over-year growth, you have to pick a specific period of time and compare performance with the same period in previous years. This is helpful for seasonal businesses, where comparing a quarter in summer with a quarter in winter can be misleading. In these cases, you need to compare summer sales with summer sales.
If you want to compare revenue, for example, you take the revenue from the latest period and subtract the revenue from the corresponding period last year. Take the result of that sum and divide it by last year’s figure, then multiply by 100 to find your percentage growth.
(Revenue This Year – Revenue Last Year) / Revenue Last Year x 100
For example, if your revenue was €1,100 in January 2022 and €1,000 in January 2021, you would take 1,000 from 1,100 to equal 100. Divide 100 by 1,000 to get 0.1 and multiply that by 100 to get 10. Your year-on-year growth rate is 10%.
Leading Vs. Lagging Indicators
- Leading indicators are those that you can use to predict your results. This allows you to be proactive and change your course before the damage is done. However, they are difficult to measure with accuracy. The number of proposals sent would be a leading indicator, as you can increase this to change the course of your business and gain more leads.
- Lagging indicators are based on your actual results. Once you receive these figures, there is already a problem with your sales efforts and you have more work on your hands to change it. Low quota attainment by individual sales reps is a lagging indicator that requires hard work to solve because it is below average revenue. Lagging indicators themselves are proof that there has been a problem.
How can sales analytics improve sales performance?
Sales analytics are useful in identifying trends for sales managers. These trends can help you hone your processes and avert issues before they become engrained. They allow you to take a proactive approach to leading your team with data and backing up the decisions that you make.
What is the difference between sales metrics and KPIs?
Sales KPIs are metrics, but they are the metrics that are absolutely essential to your business. These are the sales team performance metrics that you have identified to be adding the most value to your strategy, such as win rate, conversion rate, etc. A sales metric that isn’t counted as a KPI is also important. However, it is less crucial to your processes than a sales KPI. You must decide which sales team performance metrics will become your KPIs.
Knowing the key metrics available to sales teams and understanding their meaning and relation to your sales performance is essential. This article has explained many of those metrics available. We hope it helps you understand more clearly which sales team performance metrics you need to prioritise for your business.
If you want to give your team the best head start, sign up for a trial of fullInfo. Our platform will instantly provide your team with the most important contacts at the businesses you want to target.
References & further reading
- [Ultimate Guide] How To Monitor The Performance Of Sales Staff
- The Seven Defining Qualities Of A Good Sales Team Leader
- How to Dramatically Improve Your Sales Pipeline + Examples
- 9 B2B Sales Time Management Techniques Of Top Salespeople
- The Simple Guide To Sales Qualification Frameworks
- KPIs Vs metrics
- Comparing win rate
- Leading and lagging factors
- Calculate customer lifespan
- Data-drive sales
- Win rate and conversion rate