As a sales manager, accountability is key.
It’s ultimately your job to keep your sales team accountable to their personal and organizational goals, but how? I think you’ll agree with me when I say that tracking sales metrics is EXTREMELY time consuming.
Not only that, but sales managers also have to consider which sales KPIs (key performance indicators) to focus on. With a multitude of factors to watch, it can feel like an overwhelming amount of data being thrown your way.
“Which sales metrics should I be tracking?”
It’s a common question.
Have you ever tried to scale performance without tracking how you got there in the first place? The famous SharkTank entrepreneur, Daymond John, gives his insights on sales metrics through this analogy:
...imagine your ship is in battle and you have no command center giving you visibility of whether or not your ship has been hit until 30 days later, nor visibility on whether enemies are behind you or in front of you. What do you think will happen to your ship? You Sink.
Top 10 Sales Metrics for Managers to Track
1. Opportunity-to-win Ratio
The opportunity-to-win ratio, or win rate, measures the success of your sales team per opportunity over a given time period.
By comparing the number of closed-won opportunities to all closed opportunities in the same time period (both closed-won and closed-lost), you can get a high-level view of your sales team’s overall success.
Sales managers can also use individual win rates to identify weaknesses and strengths among their individual sales reps and take corrective action.
How to calculate Opportunity-to-Win Ratio
Win Rate = the # of closed won opportunities / # of closed opportunities (closed won + closed lost) in the same time period
READ this blog: What’s holding you back from being a successful sales professional?
2. Conversion Rate
The conversion rate, sometimes known as close rate, is going to paint a clear picture of the effectiveness of your funnel.
Lead generation starts at the top of the sales funnel, and works its way down the funnel into the hands of the sales department. This will give both marketing and sales insight to the quality of their leads coming into the funnel through marketing campaigns.
In order to measure your lead-conversion rate, you need to determine what is considered “converted” in your company’s eyes. Typically, a lead is considered converted when they become a paying customer.
Average conversion rates are going to vary from one industry to the next, but it is important to track conversion rates from both Sales Qualified Leads (SQLs) and Marketing Qualified Leads (MQLs).
How to calculate Conversion Rate
Lead Conversion Rate = (Total # of New Customers / Number of Leads) x 100
3. Average Deal Size
Knowing your average deal size will give you a starting point to grow the size of your deals.
How can you double your deal size, without knowing your current average deal size?
Exactly —You can’t.
This tool is going to help you keep track of revenue coming in, and will act as a guideline for how many deals need to be closed in order to reach (or surpass) monthly quotas. It can also help sales managers to identify at-risk opportunities.
Keeping track of this metric month-over-month will also help you to understand how and when your pipeline changes. For example, if average deal size is increasing, you may be attracting leads with a wider set of needs than in previous months.
How to calculate Average Deal Size
Average Deal Size = Revenue $ of deals closed / # of deals closed
4. Average Days to Close
The average number of days to close is based on how long it take sales reps to close a deal from the first point of contact with a prospect.
This metric give insight to how quickly sales reps are able to move prospects through the pipeline and turn them into revenue for your company.
Various types of prospects require various sale cycle lengths. For example, a larger opportunity may take significantly longer to be closed than one with a smaller value.
How to calculate Average Days to Close
Average Days to Close = (Add all days it took to close deals for the month) / # of deals closed
5. Percent of Sales Reps meeting Quotas
By monitoring which sales reps are meeting quotas, you are measuring the effort being put toward each of their accounts.
Though technology is on the rise throughout B2B organizations, Forbes alludes to the fact that person-to-person interaction still plays a huge role in building stronger relationships. This article pointed out:
57% of sales reps are not meeting quotas.
Meeting quotas has much to do with the personal efforts of the sales reps theirself, and spending more time on the needs of their clients and making quality connections. By monitoring this metric, sales managers are able to observe who on the team is excelling in sales, and who is not.
6. Time spent in each stage of the pipeline
Knowing the number of deals in each stage of the pipeline will reveal how your prospects are working their way through your sales pipeline (and where the pipeline is getting clogged).
This metric will give insight into developing different sales techniques to push prospects from one stage to the next.
Get those contracts into their hands!
Make sure that your sales staging is based on what is actually happening, not on how sales reps feel; you can feel really good about a deal, but that doesn’t mean the prospect will close.
By being certain with the position of your prospects, you’ll be able to assess more accurately which stage of the pipeline your prospects are sitting.
7. Monthly Sales
Sales seems like an obvious one, but it’s a great way to see if you’re forecasting your sales quotas in a way that is challenging but still achievable for the sales team.
We know that revenue is the ultimate sales goal, especially among a group of competitive sales reps, and it’s also a great indicator when tracking sales performance.
8. Churn Rate
“How good are you at keeping your clients?” is a question you should definitely be asking yourself.
If we could only pick one sales metric to focus on, churn would likely be the one.
Knowing your churn rate means knowing why—and how often—your customers are leaving you. The higher your organization’s churn rate, the more customers in the hands of your competition. Knowing why customers churn is the key to making improvements in your sales tactics and techniques for future success.
How to calculate Churn Rate
Customer Churn Rate = (Customers beginning of month - Customers end of month) / Customers beginning of month
9. Average Lead Response Time
Your lead response time is the average time it takes to reach out to a lead after they’ve been identified as a lead.
Each company will have their own description of what a lead means to them, but typically it refers to a prospect downloading a piece of content or filling out a demo request. According to InsideSales, a study done by Dr. James Oldroyd reveals that:
50% of buyers choose the vendor that responds first.
No doubt about it, you want your contact with someone to be the first vendor they talk to—especially if you have tons of competition.
How to calculate Average Lead Response Time
Average lead response time = Sum of # min/hrs/day to respond for all contacts / # of contacts
This last point isn’t your typical sales metric. Effort isn’t just one number that you track month-to-month, but a representation of all efforts made by your sales team.
Measuring effort can take many forms: number of calls made, presentations booked, emails sent… whatever your organization identifies as contributing to winning a deal.
After all, the little things can have a huge impact, both on successful sales outcomes and future customer relationships.
You made it to the end! Those are our Top 10 Sales KPI’s that you should be tracking in order to lead in sales and performance. Tracking these metrics will:
- Help to direct the focus of your sales team
- Quickly identify potential problems
- Allow you and your sales reps to improve
Although there are endless sales metrics, one of the most valuable factors is attitude. Your attitude expressed throughout all your efforts will ultimately determine the success of your sales team. Utilize these 10 sales metrics in your next sales report to scale productivity and boost performance.