Here’s a pretty solid fact: A sales team that doesn’t track sales metrics is a sales team that doesn’t have a goal and direction.
Sales teams deal with numbers on a daily basis. After all, they’re in charge of growing their companies’ revenues.
That being said, there are a lot of numbers that float around. And while all metrics are important and measured by various departments, there are a few sales metrics that the top-performing SDRs choose to monitor themselves.
What are sales metrics?
A sales metric is a data point. These data points represent the performance of an individual SDR (sales development representative), a sales team, or even the progress of the entire company.
These numbers are used as performance indicators—whether it’s to identify issues or track progress.
Why should SDRs track and monitor sales metrics?
Sales metrics are crucial. Why? Because SDRs can’t simply use their “gut feel” to make important decisions.
After all, sales decisions can directly impact the business bottom line, which is not something you would like to risk.
Here are more reasons why SDRs and team leaders should monitor sales metrics:
- To keep track of performance and how close they are to meeting individual, team, and company targets
- To remind themselves whether or not they are going to hit the KPIs and sales goals within the set timeframe
- To identify issues and make appropriate adjustments to current strategies early on
- To pinpoint which SDRs are overperforming and underperforming and investigate what they’re doing differently
- To gain insights into whether their progress is aligned with the goals set at the start of the year, quarter, or month
- To continuously update the marketing team
The 7 most valuable sales metrics for SDRs that you should measure
To be honest, there are a lot of sales metrics that you can monitor. However, top SDRs choose to prioritize a few valuable metrics that allow them to quickly evaluate the overall health and progress of the sales team.
Total revenue is also known as the bottom line, income, and profit. It is the amount that businesses generate from selling products or services during a given time period.
It answers the question: “How much money is your business making?” and can be found on the topmost line of your income statement.
It’s important to note that when we say ‘total revenue’ this means gross revenue. So technically, this still includes your expenses and other costs. However, it’s the fastest way to tell if your business is growing. If there’s an upward trend in revenue, then your business is growing. If there’s a downward trend, then that can be a sign to review your marketing and sales strategy or even your current pricing model.
How to calculate total revenue:
Number of products sold x Price per product = Total Revenue
Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR)
These two metrics are very important for subscription businesses. MRR and ARR measure the predictable revenue generated by customers within a month or a year.
However, MRR is more commonly used for businesses in the early stage and those with plans or packages that are less than a year. MRR shows the day-to-day operations of a business, but ARR shows overall business performance. Think MRR = operations manager and team leads and ARR = C-Suite in board meetings.
How to calculate MRR and ARR:
Average revenue per customer (monthly) x Total number of subscribers = MRR
MRR x 12 = ARR
Year-over-year (YoY) growth
Put simply, YoY growth compares growth in one period against the same period 12 months earlier. For example, January 2022 total revenue vs January 2021 revenue. YoY allows businesses to get a good picture of their performance without seasonal factors.
Take BFCM for example. If eCommerce businesses compared their Q4 revenue with their Q3 revenue, there will most likely be a steep increase. It would make more sense to compare Q4 revenue with last year’s Q4 revenue to get an idea of how the brand grew over the past year.
SDRs monitor YoY growth so they can evaluate if the current strategies are better than the past ones, or if the past strategies should resurface.
How to calculate YoY growth:
Since the formula for YoY growth is a bit longer, we’ve broken it down into simple steps;
- Collect your data for the period you’re going to examine (Current Metric) and the data for the period last year (Past Metric).
- Current Metric – Past Metric
- If the difference is positive, this shows growth. If the difference is negative, this shows a loss.
- Difference / Past Metric = Growth Rate for the 12-month period
- Growth Rate x 100 = Percentage Growth Rate
Here’s an example to better illustrate this:
- December 2022 revenue: $2,000
- December 2021 revenue: $1,500
- Current Metric – Past Metric = $2,000 – $1,000
- $2,000 – $1,000 = $1,000 (Positive difference means growth)
- Difference / Past Metric = $1,000 / $1,000 = 1
- 1 x 100 = 100% percentage growth rate
Customer Lifetime Value (CLTV)
CLTV is the total revenue that a business can expect from one customer throughout their entire relationship. It measures how valuable a customer is to the business for the whole duration of them being a customer.
Since keeping existing customers costs less than acquiring new ones, increasing CLTV is a surefire way to grow a business.
So higher CLTV is a better indicator of growth.
How to calculate CLTV:
Average Purchase Value x Average Number of Purchases = Customer Value
Customer Value x Average Customer Lifespan = CLTV
Customer acquisition cost (CAC)
As mentioned above, it’s more expensive to acquire customers than retain them—up to five times more to be exact. CAC measures how much you spend to get new customers, so it’s essentially the total cost of all sales and marketing efforts combined.
SDRs need to monitor this metric so they can evaluate the effectiveness of acquisition strategies—what’s working, what’s not, and what needs to be changed.
How to calculate CAC:
- Gather the following data:
- MCC – Total marketing campaign costs spent on acquiring customers during a specific time period
- CA – Total number of customers acquired
- MCC / CA = CAC
Average length of the sales cycle
The sales cycle length is how long it takes to close a deal—from the initial contact with a lead up to when the deal is closed, whether it’s won or lost.
This varies depending on factors like industry and the usual size of the deals the SDRs go after. Monitoring this sales metric helps SDRs identify leads that are growing cold or are taking too long to close. Aside from monitoring the overall sales cycle length, SDRs also use this metric to assess if they’re taking too long to close deals. Team leads can then identify the top-performing SDRs and the SDRs who might need additional coaching.
How to calculate average length of sales cycle:
- Add the total number of days it took to close every sale
- Divide the sum by the total number of deals
Also known as the opportunity-to-win ratio, this sales metric measures the successful deals in comparison to the total deals in the sales pipeline. Put simply, this metric measures the effectiveness of a sales team and SDRs to win deals.
A study from Implisit states that the benchmark win rate for B2B sales teams is 6%. So if it’s your first time calculating your win rate, this should give you an idea of where you stand. Of course, there are a number of factors that affect the opportunity-to-win ratio—source, industry, and season, to name a few. You may want to identify the win ratio per channel source so you can evaluate if there’s a significant difference.
It’s important to monitor the win rate of individual SDRs as well as the overall win rate.
How to calculate win rate:
Closed Won Deals / Total Opportunities (Won, Lost, Open, etc.) = Win Rate
Leverage the right metrics for data-driven decisions with TaskDrive
Sales is all about strategy. Tracking the right sales metrics gives SDRs an edge and helps them uncover potential issues or opportunities.
Setting aside time to study the numbers will lead to solid and data-driven insights on how to move forward. That way, SDRs can keep the sales pipeline full, and can seamlessly move deals along to the next stage. No bandwidth to regularly take a deep dive into your sales metrics? Book your free consultation with our experts and simplify your growth process.