Sales is a complicated process. Making decisions about running successful sales campaigns requires executives and sales leaders to take into account countless factors. And that isn’t easy without the right data to back those decisions up.
That’s why sales metrics can be the difference-maker in the way that sales campaigns perform. Companies that know which metrics to track and how to use them can make gradual improvements, notice emerging trends, and allocate resources in a way that makes the most sense.
But what are sales metrics, anyway? And how can they be useful?
Let’s answer these questions below. And then, let’s look at the top sales metrics you should track.
What Are Sales Metrics?
Sales metrics is a broad term that describes data points as a representation of sales performance. There are countless possible sales metrics that companies could use, but smart sales teams learn to leverage data points to get answers to specific questions.
Underneath the data they show, sales metrics are just that – answers.
They’re what sales teams can use to make better decisions, seeing how the campaigns are performing from all angles, tracking performance towards goals, and anticipating the best course of action in any situation.
Some of the ways you can use sales metrics include:
- Seeing how many sales your company is making;
- Identifying the best sources for leads;
- Calculating how long it takes to convert a prospect;
- Or even measuring where your sales funnel is underperforming, sales metrics can provide specific answers and show trends that you couldn’t discover any other way.
How Can They Be Useful?
Even though most companies use sales metrics to some extent, not all know what making data-driven decisions can offer. With that in mind, let’s look at some of the key benefits you can expect when implementing more sales metrics into your sales tracking process.
The number one reason why sales metrics are important is seeing the bigger picture of your sales performance. Each individual sale may not have much meaning alone, but as you start looking at data from different viewpoints and seeing the bigger picture, you can discover patterns about your performance.
And those patterns or trends can be incredibly powerful. For instance, you could find that a lead generation approach that doesn’t make up a large percentage of your sales funnel is performing exceptionally well. You could then use this information to focus more on that approach, scaling the number of leads generated through that channel and making your sales team’s job much easier.
At the same time, you may find that a once-effective sales funnel is starting to drop off. Short-term fluctuations are normal, but if you see a gradual decline over multiple months, that can help you stay ahead of the problems and make the necessary adjustments to improve performance again.
Be More Confident About Your Decisions
Making big decisions about sales strategies can be stressful. The impact of the choices you make can have effects that will last for years, sometimes even defining how successful your company can be and setting it on a course that can be hard to change in the future.
But when you have hard sales metrics to back up your decisions, you can feel much more confident about the choices you make, knowing that data backs up your choices and that you aren’t relying entirely on your gut or guesswork.
What’s more, having sales metrics to back up your decisions will make getting those decisions approved much easier. When you can show specific KPIs that indicate the need for a particular decision, it will be much harder to say no because it’s not just your subjective opinion, but a trend or pattern backed up by data.
Achieve Gradual Improvements
Even though many would like to think otherwise, massive improvements rarely happen overnight. In sales, succeeding rarely comes down to revolutionary ideas and is instead fueled by making gradual, calculated, and consistent improvements that can make a big difference over time.
And sales metrics play a central role in making that happen.
By measuring performance across the entire sales process, you will have a complete picture of what’s working and what isn’t. You will also be able to quantify whether different decisions have panned out or not.
Over time, the improvements you make by taking a data-driven approach will amount to a complete change in how your sales team operates. You’ll know more about your audience, how to appeal to them, and where to find them.
Essential Sales Metrics You Should Track
Now that we’ve explored the definition of sales metrics and looked at why they’re so important, we need to look at specific metrics that can help your company’s growth.
And since three are so many to choose from, narrowing down your focus isn’t always easy. However, these ten metrics will help you discover more about your audience, your company’s current growth rate, your sales team’s performance, and the effectiveness of your existing sales funnel.
Let’s dig into these sales metrics below.
Monthly Sales Growth
Your business is only as successful as the number of sales you can bring in each month. Sure, sales can fluctuate for various reasons, and it’s not always a bad thing, but it’s still a vital KPI to track if you want to ensure you don’t fall behind your quotas.
Most SaaS companies focus on tracking sales annually, but a monthly overview of sales performance will give you actionable insights you can apply right now.
It will also allow you to spot trends and fluctuations in your sales performance, enabling you and your team to make adjustments and get ahead of more significant issues in sales numbers before they can develop.
Lead Conversion Rate
The total amount of new sales is important, but it doesn’t provide a complete picture of how your sales team is doing. To get a better understanding of sales performance, you also need to track how many leads you were able to convert into customers.
That’s why the lead conversion rate is another crucial sales metric that helps you learn more about where your best customers are coming from, how you can improve your processes, and whether you are getting enough leads in the first place.
If you find that your lead conversion rates are low, you will probably have to rethink how you generate leads as a whole. Acquiring each lead costs money, so you need to constantly monitor that the leads you bring in convert into customers at a reasonable rate.
Average Conversion Time
Lead conversion rate should be a primary metric you look at. But the time it takes for a lead to become a customer is also an important consideration, as that will determine how many leads your sales team can handle at any given time.
It will also help you figure out how much time you can allow yourself when converting leads into customers. If you have a lower-priced product such as a SaaS tool, you can’t have a long time to convert leads if you want to sustain business growth.
At the same time, if you notice that your lead conversion time is fast, you can consider expanding your lead generation efforts and increasing the number of leads you work with each month.
Customer Lifetime Value
For most companies B2B businesses immediate sales keep the company moving forward, providing immediate cash flow that can be reinvested into growth.
However, to accurately measure how much you can spend on acquiring new customers, you need to have a process for calculating how much you can expect to make from each customer over the lifespan of their relationship with your company.
And that’s where sales metrics such as the customer lifetime value are so irreplaceable. As you collect more data, you can begin accurately predicting how much each customer will bring in, which will help you plan future revenue much more accurately.
Sales Rep Productivity
If you want to put your sales team in a position to succeed, you must not only track the overall performance but look at individual productivity as well.
Most sales reps want to do well, but sometimes some will face challenges that could hinder the company’s progress if they are not resolved.
By tracking the individual performance of sales reps, you can develop a more personalized approach to helping your team members succeed, establish best practices, and use the time management methods of your most successful salespeople as a benchmark you can build on.
Customer Acquisition Cost
Acquiring customers is hard. For new companies, it can also be very expensive. But while some companies are willing to operate at a loss initially, you need to know exactly how much you’re spending if you want to create a sustainable business.
That’s why CAC (customer acquisition cost) should be at the very center of your sales efforts. When you know how much it costs to acquire a customer, you can look at how it relates to your customer lifetime value and work towards making each acquired customer profitable.
And as your customer lifetime value increases, you can also allow yourself to spend more on acquiring each customer, which will enable you to be more aggressive in how you pursue new leads.
Average Purchase Value
Average purchase value is similar to customer lifetime value, but it measures the average value of each order instead of how much a single customer typically spends over time.
That can be helpful when you need to have a figure for each sale that occurs, using it as a more immediate estimate of how much you can expect to earn.
This sales metric is also essential for calculating acceptable CAC and can be used to adjust the sales strategy or sales channel focus.
Sales Funnel Leakage
If you have a process for tracking conversions throughout your sales funnel, you can also collect data about sales funnel leakage.
It can tell you where the biggest drop-offs occur on your funnel, informing you about potential weak spots and giving you ideas on how quick fixes could potentially have a positive effect on how many people end up becoming customers.
Some of the insights you can expect to discover are whether the leads you’re attracting are actually a good fit, if you’re spending enough time nurturing them, and what types of offers might work better to different audience segments.
Lead Response Time
If you want to ensure that you convert as many leads as possible, you need to keep track of whether your team is providing a quality service to prospective customers.
And one of the best sales metrics for measuring that is lead response time, which calculates how long it takes for your sales rep to follow up with a lead after they enter your funnel.
For instance, once someone submits a form or subscribes to a list, they should be assigned a sales rep that needs to reach out and guide them forward.
The time it takes until the contact is established is crucial, since the longer you wait, the less chance of the lead still being interested.
Sales Pipeline Coverage
If you want your sales team to close more sales and meet quotas, you need to make sure that they are getting enough leads to work with in the first place. That’s where the sales pipeline coverage KPI can be so helpful.
It’s calculated by seeing how many sales days you have, how many leads are coming in, and how many of them you can realistically close according to past performance.
You can then use this data to see if, at the current rate, you will have enough leads to reach your sales targets. If you find that’s not the case, you can up your lead generation efforts and provide your sales team with enough opportunities to succeed.
Sales metrics play a vital role in your sales team’s performance and the direction you take to reach company goals. But to make the most of what sales metrics can offer, you also need to be selective about which metrics you track and how you answer specific questions about performance.
The ten sales metrics listed above cover a lot of ground in terms of valuable sales performance insights, providing you and your team a lot of guidance on how to make decisions both in the short and long term.