High-performing sales teams use data to make strategic decisions to take their sales to the next level. Sales key performance indicators are at the heart of defining which direction you’re moving in. The data-driven ecosystem of today means teams have more numbers than ever to work with and process.
Key performance indicators in sales drive success, but you also need to know what to track to avoid getting lost in the numbers. Below, you’ll learn about the value of KPI metrics for sales, why you should track them, and which ones you should track to boost performance.
What is a KPI in sales?
Sales KPIs consist of raw data gathered during your sales activities converted into critical metrics to measure everything from the individual performance of a salesperson to the success rate of the whole department.
KPIs can focus on any aspect of your sales activities and be tied to the business’ overarching goals. Typically, your leadership team will come together to determine the goals for the month, quarter or year.
For example, you may have the goal of upping your sales velocity by 30% over the next year. Throughout the year, you would monitor your KPIs to determine whether you are on target to hit that goal.
Countless KPI examples for sales demonstrate how you can use your raw data to measure and track sales performance.
Are KPIs the same as metrics?
You’ll often hear about metrics and KPIs, but the KPI meaning in sales is slightly different from that of a metric.
Sales metrics can measure the performance and activities of your team and the individuals within that team. Sales KPI metrics are a type of metric used to measure overall performance against set goals.
Simply put, metrics come from data generated by your sales activities. KPIs measure whether you are on course to meet the business’s objectives.
Why you need to track sales KPIs
Tracking your KPIs is essential to running a successful sales team. With so many tools and platforms available to monitor KPIs, most work happens on autopilot.
Here are a few main reasons why KPI sales tracking is critical to the success of your business.
Measure performance
The primary benefit of tracking your KPIs is to measure performance. It could be a particular sales campaign, a brand-new strategy, or a new employee working on your team.
Measuring performance periodically lets you see how close you are to your chosen goals. It helps with planning and making the decisions that will impact your team going forward.
For example, you may have a goal for the upcoming quarter: 100 more sales than the previous quarter. Based on this goal, you can break your targets down into more manageable goals covering the whole quarter.
Following performance-related KPIs like this is just one of the many sales KPIs that can help you determine where to position your resources, which demographic to target, and which strategies to implement.
Improve employee morale and engagement
More sales teams than ever are choosing to set KPIs for individual sellers. Setting goals for each seller improves engagement, morale and accountability.
Many employees find it motivating to work on short and long-term goals. Some organizations link KPIs with incentives, such as monthly bonuses, extra time off, free memberships and other experiences that give your reps an extra boost.
You can also link the achievement of KPIs with rewards for the team. For example, the company will take everyone out for lunch if you achieve your goals for the next quarter. Programs like these bring people closer together and help create a culture where victories are celebrated.
Departmental KPIs can further encourage communication and collaboration across your company. However, to get the most out of them, you must choose KPIs that are genuinely achievable and under the team’s control.
If goals become too ambitious, KPIs can have the opposite effect.
Close learning gaps
KPIs will highlight areas of underperformance within your sales team. Managers looking to empower their teams need the data to help support those employees who are not meeting the required standard.
For example, suppose a salesperson fails to sell a particular product but performs well when selling another. In that case, their KPIs indicate they need additional support and guidance to close those learning gaps.
Sometimes, KPIs can demonstrate whether someone is cut out for the job. Addressing problematic areas becomes much easier when you have the data in front of you.
Help to make the big decisions
Adherence to KPIs is designed for data-driven businesses. While KPIs cannot make the decision for you, they can form the foundation of the decision-making process.
It can be tempting to take a single KPI in isolation to figure out whether a sales campaign is going well. Scraping some KPIs can also be tempting because they’re not telling you the whole story.
To make the most of the KPIs available, you must be able to look at the big picture.
For example, if you have noticed that your outreach campaign has led to a drop in visitors to your website, it’s easy to say that your sales team isn’t creating the right content to engage your target audience.
However, the right way to approach this scenario is to examine other KPIs, such as time spent on the page and the number of engagements. Visitor numbers are essential, but they’re not definitive proof that your sales team is failing in its outreach strategy.
Detect patterns over time
Weekly, monthly, quarterly and yearly KPIs allow you to spot trends and patterns within your data.
You can use a variety of KPIs to create sales graphs, charts and other visual aids. Detecting and reporting patterns over time can show whether you are moving in the right direction. They can also allow you to plan for the long term.
If your sales team had a poor January, for example, it’s easy to say that each person needs to work harder. However, if you dig into the data and see that your KPIs are historically down in January, you know it’s less of a problem with your sales team and more of an issue of a natural down period.
Set future goals
To reach your sales goals, you need objectives that chart your journey and targets for reps to help achieve them.
Keeping all team members in the loop is tough, but working toward a shared goal brings everyone together and creates a culture of everyone pushing in the same direction.
KPIs are vital to following your progress and setting manageable goals for the future. After all, you can’t set goals without hard data to show where you should focus your efforts.
The 20 most important sales KPI metrics to track
KPI metrics for sales are pivotal to your success, but which metrics should you track? Not all KPIs are created equal.
Businesses often differ on the KPIs they choose to focus on, but there are some metrics that every sales team has to track. Below, you’ll learn which metrics are most important to your sales team.
1. Monthly sales growth
Businesses only flourish when they’re growing. Increasing your sales is the No. 1 goal of any good sales team everywhere.
Tracking monthly sales growth allows you to spot trends and pinpoint any problems. It also lets you act on any patterns you see in the data.
Establishing a realistic monthly sales growth number is an excellent way of pushing your sales team to greater heights.
2. Average profit margin
Your average profit margin is how much of your revenue is pure profit. It’s a vital KPI for sales teams because it shows which products you should be focused on selling and what the best products are to upsell.
Companies can also monitor their average profit margins to determine whether they’re pricing their goods and services appropriately. Of course, setting prices is a tricky task and will require input from your sales team to indicate which price the market will stand for.
3. Monthly sales bookings
Sales bookings are a KPI that measures wins over a set period. Tech companies often use monthly sales bookings as a prime metric to track the value of their wins.
Leaders can also use this metric to develop their overall sales strategy and come up with accurate forecasts moving forward.
4. Sales opportunities
The sales opportunity metric calculates how valuable a lead is based on the probability of closing a sale.
As you know, prospects are categorized based on a weighting score. Every stage of your sales funnel will have a different weighted value to direct your sales team to where they should focus.
For example, if you’ve reached the negotiation stage of the sale and the estimated purchase is $10,000, the sales opportunity would be $5,000.
Tracking these sales KPIs helps you forecast sales and identify which leads are worth going after. If this KPI increases, it indicates that you have a higher potential to generate more profitable sales. In contrast, a decreasing sales opportunity metric shows you need to redouble your sales efforts.
5. Sales target attainment
Will your sales team hit its quota this month? Which person on your team is performing the best? Is your actual revenue better or worse than predicted?
These are the questions that sales target attainment can help answer. Sales target attainment is a comparison between established targets, previous sales periods and your actual performance. It’s an effective way of visualizing sales performance and comparing it against your targets.
6. Quote-to-close ratio
The quote-to-close ratio is how many deals you’ve closed when compared to the number of prospects you’ve provided quotes to.
It analyzes how your team is performing when they have already reached the stage of quoting prospects. You can compare it against historical trends to assess how well you’re performing.
For example, if your sales rep sent 100 quotes last month to their prospects and won 45 deals, they have a quote-to-close ratio of 45%.
Low quote-to-close ratios can highlight problems with your pricing and how you’re presenting your product or service.
7. Average purchase value
The average purchase value is how much the average customer spends on your products and services.
One of the best ways to generate revenue is to sell more to your customers. Average purchase value shows how well you’re upselling and the performance of your products and services in the field.
Teams will use average purchase value as a KPI when figuring out how to incentivize customers to spend more.
8. Monthly calls per sales rep
Managers and team leaders need to know what their sales reps are doing all day. Measuring the activities per rep can give insight into an individual’s productivity level.
Measuring how many calls, emails or other outreach techniques happened in the last month is the easiest way of measuring activity rates.
You can also use this KPI to find out who your top performers are.
9. Sales per rep
Your sales team is only as good as the individuals on that team. Most businesses want to know who their best-performing reps are and those who need additional training and guidance.
Sales per rep is a KPI that will highlight the standouts on your team. Sales reps tend to be competitive, so measuring sales per rep can help create friendly competition within your organization.
10. Product performance
Chances are you have a range of products and services for your target demographic. But which products are selling best, and which are falling behind?
Product performance will tell you which of your products are the favorites among your customers. Note that product sales volume won’t necessarily correlate with revenue.
For example, you may have a product that sells every day, but if it’s a low-value product or a loss leader, it may account for a small fraction of your overall revenue.
Sales leaders can use the product performance KPI to analyze market trends, including whether it’s time to retire a product.
11. Sales by contact method
You have many ways to connect with prospects and sell your products and services. Tracing every deal back to the contact method of choice can demonstrate which tools are most effective at contacting customers and closing deals.
The sales by contact method will help determine which techniques generate the most success. For example, if most of your sales happen after an in-person visit, you know that is how you should sell.
It can also indicate whether you need to train your sales team on better harnessing a particular contact method.
The sales by contact method KPI works best when paired with individual rep performance metrics to add an extra layer of context. For example, you may find that one of your reps is better at closing sales in person or over the phone.
12. Average new deal size/length
Do you know which offerings are most profitable for your business?
Tracking sales dollars from new deals and the sales cycle length can tell you more about which products on which you should focus. Managers can also use it to figure out rep performance.
For example, if one sales rep closed 100 deals last month and another closed just 20, it’s easy to believe that the former is the better-performing rep. However, if you are using this metric, you may find out that the second rep did more for the business because their deals were far larger in total value.
13. Average sales cycle length
Average sales cycle length tells you how long your sales cycle lasts between the first contact and closing the deal.
Tracking this metric will reveal how efficient your sales process is. Most businesses will have a benchmark they want to meet to avoid wasting time on unprofitable sales activities.
Sales managers can also look into individual reps’ average sales cycle length to determine who closes quickly and who needs extra support.
Naturally, context is important. If one of your sales team has a longer sales cycle length but closes more valuable deals, a high average sales cycle length may not be a problem.
14. Lead-to-sale percentage
Lead-to-sale percentage, also known as the lead conversion rate, is a measurement of how many leads convert into paying customers.
This metric is vital for determining how effectively your team turns prospects into paying customers. You can also use it for individual marketing channels to find out which channels are most profitable.
Sales managers can use this percentage to evaluate the efficiency of their lead-to-sale process and the strength of the pipeline.
15. Average cost per lead
Calculating your average cost per lead indicates whether a marketing campaign is profitable. With a high average cost per lead, you may need to reconsider your pricing, the products you’re pushing, and which marketing channels you use.
You can also combine the average cost per lead with the average new deal size to evaluate which channels bring in customers with the highest buying power.
16. Retention and churn
Retention rate is the percentage of customers who continue to do business with you. Churn is a representation of the exact opposite.
Keeping track of your retention and churn rates will highlight your sales team’s ability to retain customers. Rising retention rates are critical for any company because it’s far easier to sell to an existing customer than to source a new one.
17. Customer lifetime value
Customer lifetime value refers to how much a company can expect to make from a particular customer for the duration of their relationship. Businesses use this metric to determine which customer segments are most profitable.
It can tell your sales team which customers they should spend more time on and indicate how good your sales team is at selling to prospects over a longer period.
The goal is to increase the lifetime value of your customers. A higher CLV shows that you are increasing the revenue from each customer. A lower CLV is a red flag that you need to reevaluate how your sales team manages customer relationships.
18. Average conversion time
The average conversion time is how long it takes to convert a lead into a sale. Sales managers will use average conversion time to manage the productivity of their sales funnel.
Longer cycle lengths indicate your sales reps could be more efficient in their selling techniques. However, you cannot take average conversion time in isolation.
Sales reps specializing in highly complex deals will always have a higher average conversion time than everyone else. Naturally, high-value products will take longer to sell because individuals and businesses will be more discerning about spending larger sums of money.
19. Number of monthly onboarding and demo calls
Many companies use demonstrations and trials as part of the sales cycle. If your company offers trial periods and demos, you must track how many are onboarded onto a demo monthly.
It’s a powerful KPI to gauge your sales funnel’s effectiveness and your reps’ individual success rates.
20. Customer acquisition cost
The customer acquisition cost KPI refers to how much it costs to gain a new customer as a business. CAC is industry-specific and will depend on the products you’re selling and to whom you’re selling them.
CAC factors everything from your rep’s salaries to the cost of your social media marketing campaigns.
Boost your sales KPIs with Crunchbase
Sales KPIs are vital for measuring the performance of your sales team and uncovering areas for improvement. These KPIs can tell you more about your organization, its sales funnel and the performance of individuals on your team.
To make the most of your KPIs, you need a plan for tracking and analyzing them. Crunchbase can support you with all-in-one business prospecting solutions, assisting you with everything from crafting an effective sales email to utilizing the best sales prospecting tools. Our sales solutions allow you to spend less time on unprofitable leads and more time improving your KPIs. Start your free trial to learn more about how Crunchbase can transform your business.
