Nine Essential KPIs for Sales Success
When trying to improve the performance of your sales team, at some point, you’ll need to decide which Key Performance Indicators (KPIs) to measure.
Hitting sales KPI targets shows your business is moving towards success. If you’re missing targets or if the indicators are shrinking, it can be a sign you need to change something in the sales process.
It’s important to choose the KPIs that point you towards your goals. If you use an inbound strategy to generate leads, for example, there is little point measuring your sales teams’ outbound efforts.
Likewise, businesses in different sectors will choose different indicators. An eCommerce store will have a different set of requirements to a SaaS platform or a manufacturing business.
In this article, we’ll explore some of the most important KPIs for sales teams.
Definition: What is KPI in Sales?
KPIs are metrics that show how an organisation or team is performing. Most organisations will use several different KPIs to measure performance at multiple levels. Businesses that don’t will find it hard to measure performance over time as they won’t know if they are moving towards their goals.
KPIs for sales should be used to measure the activities that are most likely to reach sales objectives.
Imagine a sales team with the goal of growing sales revenue by 10 per cent compared to the previous year. In this case, sales managers would have to identify the indicators that could point to an increase in sales.
This would include the number of sales made over a daily, monthly, or quarterly period. However, it should also include other indicators that could lead to more revenue. For example, the number of deals in your sales pipeline, the average purchase value of sales, or your business’s churn rate.
Nine Essential KPIs for Sales Success
As mentioned above, there are plenty of KPIs your business could choose to measure. Think about what your company’s goals are as well as how you make sales. Here are nine sales indicators that it can be useful to measure.
Sales Over Time
Tracking sales is the most obvious thing to do if your organisation’s goals are based on hitting a certain sales target. If you have a quarterly or yearly goal, tracking sales on a daily or weekly basis can show your team is moving in the right direction and allow you to make real-time changes if it isn’t.
Most businesses will have a general idea about how many leads they need to generate a target number of sales. Assuming this is the case, measuring the number of new leads your team generates is a great way to ensure your sales team is on target to hit its goals.
When measuring new leads, it can be a good idea to measure that of the whole team as well as individual reps. That way you can see who is over and underperforming and give underperforming reps training or materials that could improve their numbers.
Lead Conversion Rates
Getting a ton of new leads is no use if your team is not converting them to sales. A low conversion rate could point to issues with the sales process.
Perhaps your team is not targeting prospects that are a good fit for your product. Alternatively, they may need to work on their sales technique or be provided with more effective sales materials.
Either way, knowing something is wrong is the first step to improving it and that’s why tracking conversion rates is so important.
If most of your sales come from online/inbound channels, you can look at a poor conversion as a sign you need to improve part of your funnel to make it more effective. Alternatively, you can use some of these sales enablement strategies to provide reps with everything they need to reach their targets.
Customer Acquisition Costs
Customer acquisition costs show the price of bringing in a single customer. In general, the lower this number is, the better as it means more room for profit.
However, businesses with a high average lifetime customer value may be able to handle a higher cost of customer acquisition in relation to the initial purchase as they expect to make the money back later on.
Nonetheless, bringing this number down while keeping sales steady can lead to higher profits.
Customer Lifetime Value
This is how much a customer spends at your business during their relationship with your brand. Providing an excellent customer experience or using techniques to build customer loyalty (here are some ideas) can help to increase this.
Churn rate is the percentage of customers that leave your business over a certain period. A high churn rate could suggest customers are not happy with your product, or that you should improve the sales processes that target existing customers.
Churn rate is an especially useful metric for SaaS products sold on a subscription basis due to their potential for consistent, long-term revenue.
Returning Customers vs. New Customers
The ratio of returning and new customers your business takes on shows how effective you are at both selling to new customers and selling to existing ones.
A high number of new customers can hide issues relating to customer retention, while a high number of returning customers is a good sign but could point to an opportunity for growth by targeting new customers.
Existing Customer Engagement
Measuring existing customer engagement can show whether your team is doing enough to manage relationships with existing customers.
A high existing customer engagement rate can lead to happier customers who are more likely to stick with your business. In order to discover your company’s optimal existing customer engagement rate, look at the amount of engagement given to your long-term customers and base your targets on that.
No sales team or company works in a vacuum. Checking your competitor pricing is a simple way for sales teams in a pretty much any industry to gain information about what customers are willing to pay for their product. It can also help businesses stay competitive.
If you notice your prices are higher than your competitors’, either attempt to beat their prices or use another tactic to make your product more appealing. Either way, showing the value of your product relative to its price is a great way to overcome customer objections.
As you measure these metrics over time, you’ll begin to gain an idea of whether your company is heading in the direction you want it to. If it is, great news. If not, you can use the insights gained from tracking KPIs to adjust your sales process.
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