Your sales team is performing well? Great.
But are you measuring your team’s performance with relevant sales KPIs?
If not, then the performance alone will not take you anywhere. It is indeed very important that each sales manager should measure their team’s performance with the right metrics. Only then your business can derive insights from the performance reports and forecast future sales.
Tracking the sales KPIs (Key Performance Indicators) is the simplest way to understand whether your sales strategies are working in the right direction. There are numerous metrics in the business, based on activities, revenue, reach, and deals. But too much data will spoil the purpose. So, choosing the right metrics suitable for your business and only tracking them periodically will yield the desired results. Let’s see some examples of KPIs in sales that need to be tracked by each sales manager.
9 Sales KPIs To Track In 2022
There are different types of sales KPIs based on customers, sales rep’s performance metrics, and marketing reach like a response to emails, social media, etc. Here we can discuss the most used simple metrics to track:
1. Lead Response Time
Lead Response Time is a key sales KPI to be measured to know the performance of your sales team. It is defined as the average time taken by a sales rep to respond/follow up with a lead who has shown interest in your product/service. According to Forbes, the average Lead Response Time is 47 hours ideally. Customers expect the response time as low as possible and measure this metric to know whether their expectations are met by your sales team.
2. Customer Lifetime Value
Customer Lifetime Value is the total revenue generated by a customer during their tenure of business with your company. Especially if your product is serving across industries, measure this metric to know which industries give you more revenue. Find out whether doing business with a particular industry is of loss or very less margin compared to the amount you spend on them. Avoid these types of customers to improve your business growth.
3, Customer Acquisition Cost
The total amount of money your business spends on the marketing and sales strategies for acquiring new customers. By measuring this KPI, you can adjust your marketing budget accordingly. It can be calculated by,
Customer acquisition cost = Sales & Marketing Expenses / No. of new customers
4. Conversion Rate
Sales conversion rate is used to measure the effectiveness of your sales team in converting the leads you got into your customers. It can be measured monthly or yearly based on your needs. For example, if you get 10 clients out of 100 leads you got for your business, the conversion rate is 10%.
5. Sales Cycle Length
The sales length cycle is the total amount of time taken from the first contact with a lead till the deal is closed. Salespeople should constantly work towards reducing this sales KPI value. By measuring this metric, a sales manager can find out at which stage the sales reps struggle to move forward. In Lystloc app, you can save your leads and fetch their data later at any point in time. You can view the status of each meeting with that particular client with the timeline. This helps you in timely follow-ups and helps in reducing the sales cycle length.
6. Average Deal Value
As the name suggests, this sales KPI indicates the average amount of revenue you get by closing deals.
Average Deal Value = Revenue you get through N number of deals/ N (total no.of deals won)
By calculating this value, you can come to a conclusion on how many clients you need further to achieve your monthly/yearly targets.
7. Customer Retention & Churn Rate
The best that can happen to any business is customer retention. The exact opposite is the churn, and both these are related. By measuring both these rates, one can easily align their strategies towards retaining more customers. So basically these rates are calculated to understand the reasons for customer churn and correct them earlier.
8. Yearly Revenue Growth
If your company earns X amount of revenue last year and Y amount of revenue this year, then yearly revenue growth can be calculated by the formula, Y-X. It is the simplest among all the sales KPI examples. By forecasting your revenue with the help of data analytics, you would be able to check whether your business is achieving it on time.
9. New Sales Leads
This KPI is a measure of the prospecting ability of your salespeople. How good are they in prospecting how many high-quality leads they are getting? , how many calls and emails they are sending out? , etc are the questions answered by measuring this metric. By monitoring this metric periodically, you would be able to identify the trends in the data which help your business.
To sum up shortly, only if you track your sales team’s performance, you will know the areas that need improvement. By concentrating on those areas, your business will move forward further. Without measuring these metrics, your business remains stagnant. As a sales manager, it is your duty to avoid such situations and motivate your team to achieve more. Hence, if you are not tracking the sales KPIs already, start now.