Your sales team’s performance determines how profitable you are each quarter. No surprise there, tracking sales performance has always been important.
But what sales KPIs should you be tracking?
What’s a KPI?
Key performance indicators are numeric values that help you measure performance. KPI monitoring helps you evaluate your organization and make data-driven decisions (the best kind).
KPIs are often called business indicators or performance indicators.
A few examples of KPIs:
- Sales Growth
- Monthly Recurring Revenue
- Operating Cash Flow
- Net Profit Margin
- Planned Value
Types of KPIs
Defining effective KPIs from the beginning helps your team stay actionable during performance reviews. They also give management a benchmark for hiring.
There are five major types of KPI’s:
- Business KPIs
- Financial KPIs
- Sales KPIs
- Marketing KPIs
- Project Management KPIs
Each type measures performance differently, since each department has their own goals.
In this article, we will be explaining the sales KPIs that managers must have to keep track of the completion of their organizations objectives.
As a sales manager, setting measurable values to track achievements is essential if you want your team to improve.
Your sales process is only as strong as it’s weakest link, and what gets measured gets improved.
Lead – to – Sale Conversion Rate
The percentage of new customers compared to new leads.
Your conversion rate is how effectively your team is converting prospects into customers.
If your lead-to-sale conversion ratio is low, break it down by individual reps. If you see anyone underperforming relative to the rest of the team, schedule a 1-on-1 training with them. Some salespeople are autonomous and never need much feedback, others benefit from a personal approach.
Providing your team with sales collateral is a guaranteed way to save more deals. By leaving the prospect with something they can review and think over you make follow-ups much more effective.
Teach your team to stay on-top of deals, even if they seem stalled. Multiple follow-ups help deals maintain momentum, but many sales reps give up after 1 or 2 attempts.
Not every lead will buy, but finding and fixing the holes in your sales cycle will improve conversions dramatically.
Cost Per Lead/Conversion
Leads are rarely free, unfortunately. Advertising, and even web design, take a considerable amount from the company budget. Add these costs to your Sales Dashboard and calculate how much you’re spending to attract prospects – and how often they’re converting.
Sum up monthly marketing-related costs and divide it by the number of monthly new leads. Don’t forget to include the salaries of your marketing team and the time spent by them while generating the leads.
Cost per conversion is based on cost per lead. So, sum up all your monthly marketing costs and divide it by the number of new customers/sales made monthly.
For exact figures, it’s easier to use software that can collect all of this data at once and update it actively.
If your cost per lead has gone down, then it means your brand awareness has increased. If it’s getting more expensive to convert leads, it might be time to adjust your marketing strategy.
Customer Turnover Rate
Customer turnover rate is an annual metric that depicts the number of clients that have decided to stop using your products or services.
Losing customers is normal, but only to an extent. Don’t let those customers go without finding out why they’re leaving.
You spent a lot of time nurturing them in your sales cycle. If you notice a pattern of churn, like groups of customers leaving because of poor support, you should act immediately.
You can control your churn rate by providing excellent customer service and support to your existing customers.
Customer Lifetime Value (CLV)/Profitability
What each customer is worth for the average amount of time they stay with you.
Compare your profit with the total cost spent acquiring customers. CLV/CP highlights your customers overall worth to your company.
It’s used to compare the money you spent for acquiring the client against the amount of business they generate for you.
This helps you calculate the profitability of the various customers groups, giving you the complete details of the segment that returns the higher profit.
Average Conversion Time
This KPI helps you understand the time taken by your customer to move ahead in your sales funnel.
This can be calculated from how long each prospect takes to become a customer. It’s the sales team’s job to shorten this as much as possible, so that your sales cycle stays on track.
Your network is your net worth. Your promoter score is the strength of that network.
With the help of this KPI, you can find out if the current customer pool is ready to recommend your product and services to their connections or not.
The simplest way to do so is through a follow-up email after a product order or while sending new subscription confirmation email.
There are three levels of customer endorsement:
- Promoters. (9-10 score): Loyal ones that will always recommend your company to others
- Passives. (7-8 score): Satisfied but are unenthusiastic and will leave if they get better offer somewhere else
- Detractors. (0-6 score): Unhappy customers that spread negative information regarding your company; damaging your brand image
Compare this metric over a period of time and see if your customers’ user experience is improving or not.
Note, a decreasing Net Promoter Score may indicate a stronger competitor that is targeting your customers with better services.
Organic Conversion Rate
Visitors who find you on their own are organic leads. These need special attention from the sales team, so you should capture email addresses and have a proper handoff process in place.
But don’t forget about your website! Everything on your website, from the content to the user experience and overall design, determines your organic conversion rate.
Organic Conversion Rate shows the percentage of site traffic expressing interest in your services.
Market Share is a game changer for any sales manager or CEO. This metric helps you understand the relative market share of your company in comparison with your competitors.
To be on the top or give competition in the market you need to:
Have an eye for spotting new market trends ahead of your competitors. There is always a change happening in this market and that’s how Netflix overpowered Blockbuster.
Always Be On Your Toes
The e-days have arrived and customers no longer entertain organizations that say “We’ll get back to you in 24 hours. For the customers of this new technological era, that’s considered unresponsive.
If you are not fast enough in providing a solution before your competitor, you are going to stay behind them in the market.
Customer engagement is subjective, it depends on how you measure the use of your product or service.
Define what success means for your user. What do they need to learn how to do? How do they need to change their behavior? Measure these metrics and you’ll find how engaged your clients are with your company’s products and services. This helps you improve customer loyalty, the most value metric of all.
If you start measuring these Sales KPIs you’ll notice more actionable goals develop as a result.
Although there are many more sales KPIs that you can use to measure the performance of your organization, always focus on the ones that are relevant to your business process.
While selecting your Dashboard, always have the metrics that are crucial to your company’s working cycle. If you need help in deciding how to select an insightful sales dashboard, feel free to get in touch with us, we’d love to help.
About the Author: Salesmate is an intelligent SaaS based CRM that provides support to sales reps with features such as Sales Intelligence, Sales Forecasting and Automation.