The existence of every company depends on the revenues it generates from the products and services it offers to its customers – whatever the company may be. Among all teams, the one that influences the profitability of the business the most is the sales teams and so all strategic decisions that affect the way this team operates, cannot be guided by the intuition of team leaders due to the high failure risk.
Instead while making decisions certain performance indicators must be taken into account. These indicators are actually numbers that can be turned into meaningful stories and actionable insights. But what should a company measure regarding its sales performance?
Since you cannot manage what you do not measure, selecting the right key performance indicators (KPIs) for reporting is crucial. From the tactics, you use for approaching new customers and your email campaigns to your website and the use of social media channels, all elements must be reflected in your KPIs.
The good news is that all modern services used for sales operations can provide you with an ocean of data. With integrating data from multiple sources into a database you can start monitoring all the critical factors that matter to your business.
However in order to identify what exactly type of KPIs you need to be paying attention to you must start by thinking about the goals that you have set and the sales mix you are using. Of course, the goals of each company differ and so does the performance indicators it has to measure. Although there is nothing as one-size-fits-all, in this post we are going to report the most important KPIs as long as the data source you can use to calculate them.
When it comes to sales, the most important performance measures have to do mainly with conversions rates (for more info check here), i.e. how many leads and opportunities are converted into paying customers and the amount of revenue generated from them. Apart from these, you may find useful monitoring other aspects too such as inbound and outbound reach effectiveness or the productivity of each agent. If you are still building your sales team and you are using some service like Salesforce, Hubspot or Pipedrive, then here are some pointers in the main directions your KPIs should aim.
Outbound Reach KPIs
In this section, we have included a set of metrics and sales KPIs that focus on each and every step of the sales pipeline. Monitoring all these steps is important while taking a closer look at your sales team performance.
- The number of emails sent: This KPI represents the absolute number of emails sent during the outbound lead generation.
- Calls made: It represents the absolute number of calls made during the outbound lead generation.
- Email Open Rate: The email open rate KPI measures the percentage of people who open an email from an outbound approach.
- Click-through rate: Similarly to the previous metric, click-through rate measures the percentage of email receivers that click a link included in the outbound email they received.
- Email Response Rate: Out of the total number of send emails, how many receivers replied.
- Average/Maximum/Minimum Lead Response Time: A sales KPI regarding the time a receiver of an email, i.e. a lead, takes to reply back.
- Average/Maximum number of follow-ups before responding: Statistics regarding the total number of contact attempts a marketer makes before receiving a response of any kind.
- Demos scheduled: Whenever applicable, it represents the absolute number of demos scheduled during the outbound lead generation. It refers to those leads that have already responded and have expressed interest in company’s products but have requested for a live demonstration before considering to convert.
For more information regarding outbound reach you can check here.
Being able to monitor the progress of the sales team on a higher level is also important in order to get in a blink of an eye a clearer overall view of the performance without having to combine information from multiple graphs.
- Length of the sales cycle: The sales cycle is actually the time starting from the first contact with a potential customer until his deal is finally closed (either won or lost). Its length can be interpreted as an indicator of sales team performance. If it is considerably lower than the average in a particular industry, it may mean that the sales team is doing a good job persuading customers to buy quicker than its competitor sales department.
- Total Opportunities Opened by month: This KPI represents the absolute number of leads that turned into opportunities each month. A lead turns into an opportunity when it has been qualified through email or phone and has met the sales team qualification criteria.
- Total Opportunities Closed by month: The absolute number of opportunities closed each month either as won or lost.
- Lead to Opportunity Conversion Rate: This Sales KPI Reflects the percentage of leads that turned into opportunities each month.
- Opportunity to Win Conversion Rate: Reflects the percentage of opportunities that turned into paying customers each month.
- Average Contract Value: This metric represents the average value of each sale. By effectively quantifying this value the sales team can get a grasp about how valuable can a potential opportunity be.
- Percentage of Deals Won: The KPI calculates the percentage of won deals over all closed deals over a specific time period, e.g. a month or a quarter.
- Percentage of Deals Lost: The percentage of lost deals over all closed deals over a specific time period, e.g. a month or a quarter.
- The overall trend in lead generation (comparison to the number of previous months): A comparative measure between the leads generated this month against those of the previous.
Sales Productivity KPIs
- Distribution of Lead per sales reps (Owner): When a lead is created it gets assigned to an owner. Its owner is responsible for keeping in contact with this specific lead.
- Distribution of Opportunities per sales reps (Owner): Opportunities are owned by the same sales reps as they did as leads. This metric along with the previous one can reflect how well each sales reps doing. sales reps with have many owned opportunities are likely more convincing than others.
- Percentage of sales reps achieving 100% quota: Each sales representative has a daily or monthly goal. This can be expressed either as total emails sent out every day/month or as the total number of leads or opportunities that converted into paying customers. By measuring how close each representative came to his goal is a way of evaluating how productive he was.
Revenue Gain Metrics
By integrating Salesforce data with other Financial Services like Stripe you can also measure:
- Total Revenue: The ultimate sales KPI that instantly translates selling efforts into value. It can also work as a motivator for the sales team.
- Total Revenue generated from top 10% customers: By identifying the company’s most valuable customers and tracking the revenue generated by them can give the sales team more insight into the value of each one of them and furthermore help them prioritize the company’s customers.
- Revenue by product: This metric helps the sales team to determine what portion of the total revenue was generated by each product separately. It is even more helpful in the case of new products where this proportion is equal to the value added by the addition of a new product or service.
- Total Revenue in Sales Pipeline: It is highly correlated with the Average Contract Value KPI mentioned before. While not all potential customers in the sales pipeline are going to convert to paying ones, monitoring their total potential revenue can help the sales time to realize how valuable each one of them is for the company.
Final thoughts on sales KPIs
In today’s world, the competition that a company has to face is greater than ever before. And so is the amount of the available data. Only by taking advantage of it a company can continue to thrive through continuous monitoring of the right performance indicators and business metrics within a data-driven culture.
Looking for more resources about sales KPIs? Check out the following posts: