Your sales strategy is only as good as your sales metrics. Both in strategically selecting which metrics to track and what those numbers are.
When you start tracking your sales and marketing processes, you’ll quickly see a lot of data you could be tracking. The daily work of your sales team organically generates tons of information.
Modern sales and marketing tools allow you to easily track all kinds of KPIs and metrics, from simpler metrics like the # of leads or $ revenue generated to more complex metrics like the average number of touchpoints to close a deal from a cold lead.
So, what are the most important sales metrics you should track?
In this article, we explore the most useful and essential sales metrics to track to support your sales team in producing the best possible results.
First, What do We Mean by Sales Metrics?
Sales metrics refer to data points that help gauge the productivity and efficacy of a sales process, sales rep, or even the entire sales department. Sales metrics can indicate the trajectory of your overall sales to help in planning. Or they can be used to pinpoint current issues in your sales process.
Metrics vs. KPIs
KPIs (or key performance indicators) are sales metrics with a specific benchmark (e.g., 20% close rate). Sales managers will typically set KPIs for the most important sales metrics to help monitor and evaluate salesperson performance and to help set sales goals.
Whichever way you refer to these data points, they are invaluable for measuring your sales reps’ actions, the results they’re getting, and the overall success of your pipeline and process.
Sales metrics are the cornerstone for strategic and data-driven decision-making By helping you make objective and accurate decisions based on numerical data.
Types of Sales Metrics to Measure
There are three main categories of sales metrics that your sales team should be tracking:
- Sales Action Metrics (inputs): How many prospects are you finding, the number of sales calls you’re scheduling, and the number of email follow-ups sent?
- Sales Result Metrics (outputs): What is your total sales volume? What is the average revenue generated per lead?
- Success Rate Metrics (efficacy): How successful are your sales input metrics at generating sales calls? How many sales calls turn into a proposal? What’s your close rate?
Put, your sales action metrics are the steps you take or sales activities you complete, which serve as the inputs into the sales equation and are the areas you have direct control over. Then, your sales result metrics are the resulting outputs of those sales activities. Finally, your success rate metrics are for the overall efficacy of your sales pipeline – basically, how effective your sales process is at bringing a lead through each stage of the sales funnel.
An analogy would be with a car for your sales process. The input is gasoline (sales activities), the output is the miles you drove (sales results), and the m efficacy is how many miles per gallon your car gets (how efficiently you convert through the sales pipeline).
Common Sales Metrics to Measure
Sales Action Metrics (Inputs)
Lead Follow-up Percentage
Sometimes, you’re held back by a lack of leads in sales. In other cases, the issue is not fully utilizing your leads. Tracking leads following a percentage helps differentiate between the two and can help indicate how reliable different salespeople are at following through on their leads.
Total Lead Follow-up Percentage = (100 x Total Leads Followed-up With) / Total Leads
# of Booked Meetings/Demos
Most businesses drive sales through some sales meeting or product demo. This means the more you schedule, the more sales you make (assuming equal quality leads).
# of Proposals Sent
Now that you’ve had the sales meeting/product demo, it’s time to send the proposal (or contract). Keep track of the total number of proposals sent and broken down by salesperson. This will help show you how effective your sales process is at converting leads from initial meetings to sent proposals and how effective each salesperson is at giving the pitch.
Total # of Sales Emails Sent
Another useful input and lead indicator to track is the total number of sales emails sent over a given period. While this metric doesn’t correlate as strongly as some previous metrics, they still trend in the same direction. This data point is also helpful for gauging how much sales work is being done (call side of the calls and proposals). If you’re having trouble converting leads at a particular point in the pipeline, you can use this metric to assess whether the issue is the lack of email communication with the lead.
Sales Result Metrics (Outputs)
Total Sales Revenue
This one is pretty straightforward. Total sales revenue is your most important output metric that you should always optimize for first and foremost. When you make changes, always see how they affect the bottom line.
# of leads generated
Tracking the number of leads generated is a useful output metric for the work of your SDRs (or for your salespeople if they also do your prospecting). It’s also a number that you’ll need to calculate some other metrics below.
Average Deal Size
You can increase sales in three primary ways. Selling to more people. Selling more often. Or by making higher-value sales. Tracking average deal size will show you how you’re doing on the last one.
Average Deal Size = Total Sales Revenue / Total Number of Sales
For SaaS Companies
SaaS companies track sales slightly differently than a typical business. Here are two components of tracking sales revenue for SaaS companies.
MRR (Monthly Recurring Revenue)
Most software products are sold as a monthly subscription, so calculating the monthly revenue is helpful as you build up your user base and the corresponding subscription dollars. If your product includes options for paying annually or quarterly, then you can calculate MRR by dividing the amount of those sales by 12 (or 4 for quarterly).
Average Revenue Per User
The closest equivalent for software companies to the deal size metric is ARPU (average revenue per user). The average amount of dollars you’re getting for each of your customers.
ARPU = Total Revenue / Average Number of Users or Customers
Success Rate Metrics (Efficacy)
Sales Conversion Rate (%)
The percentage of leads that enter your sales Funnel and make it through to a completed purchase gives you the overall sales conversion rate. This is the most important success rate metric, so track this if nothing else.
Sales Conversion Rate (%) = (Number of Leads Entering Funnel) / (Number of Sales)
Sales Cycle Length
The Sales cycle length refers to the timeline from initial prospecting through to closing the deal, with a whole bunch of extra steps in between. Knowing this data point is vital for predicting revenue, the number of new customers you have coming up, or even creating a marketing budget.
Average Sales Cycle Length = Total Number of Days to Close All Deals / Total Number of Deals
Customer Lifetime Value
Customer lifetime value, or LTV, refers to the total revenue generated from a single customer during their entire relationship with you. LTV is one of the most important metrics for creating a marketing budget (knowing how much you’ll make from the new customer over time so you know how much you can spend). Fortunately, most CRM systems can calculate LTV automatically.
Customer Lifetime Value = (Average Order Value) x (Average Number Annual Orders) x (Average Customer Timeline, in Years)
Average Churn Rate
Churn measures the customers who start using your product/service and then cancel, quit, or don’t re-order. this helps you make more accurate predictions by considering the customers you organically lose over time in your sales projections.
Average Churn Rate = (100 x Number of Customers Lost) / Starting Number of Customers
Sales Metrics Average Churn Rate
% of Sales-Qualified Leads (SQLs)
The amount of revenue sales revenue you can generate is significantly influenced by the quality of leads you’re engaging. That’s why calculating and tracking the percentage of leads that are SQLs is so important.
% of Sales-Qualified Leads (SQLs) = (Number of SQLs) / (Total number of Leads)
Read Also:- Zapier Guide
The IOE Framework of Sales Optimization
When optimizing a sales process (or troubleshooting one), checking each metric category is important. Here is how to use the IOE framework to keep it simple. Below is an example of applying this process to an underperforming sales rep.
The IOE Framework
- Inputs – Tasks your team does daily to close deals and generate revenue.
- Outputs – Quantifying the results that your sales department generates.
- Efficacy – The percentage of leads moving between the main steps in the sales cycle.
Example: Troubleshooting an Underperforming Sales Rep
First, measure the inputs, outputs, and efficacy metrics. Get up-to-date numbers on the sales metrics you have chosen to track from each category. You can see the previous two sections of this article for more details about specific metrics you can use to measure.
Second, compare the results for this particular sales rep against your averages or KPI benchmarks. You’ll likely see one main metric category in which they’re underperforming, and several of the specific metrics are off. Both of these provide useful information. The metric category gives you some high-level broad strokes about the issue or where to start, and the low-specific metrics will give you more precise info about what to troubleshoot to bring the numbers up (often with a more technical approach).
Specifically…if the issue is a lack of inputs, the sales rep isn’t doing the work they need to do for whatever reason.
If the issue is with efficacy, the problem more likely originates from an issue in the sales process or how tools have been set up.
If the issue is with sales outputs, this typically means the issue is how this sales rep executes the process or their overall skill level (especially if the other metrics are on par).
And, if they’re not booking calls from their email follow-ups, then it might be how they’re emailing leads.
Or, if their conversion rate is low but just at the very tail end of the sales process, then it might be that they aren’t very good at closing deals.