As sales are the ultimate source of revenue generation for most businesses, measuring and optimizing your sales team’s performance is crucial. Tracking the right sales metrics allows you to see what’s working and what might need adjusting so you can better contribute to the business’s overall goals and increase revenue.
In this article, we’ll look at the different types of sales metrics, which are most important (according to the experts) and how to track those metrics effectively.
What are sales metrics?
Sales metrics are data points used to gauge sales performance, both on an individual and a team level. Sales leaders use relevant metrics to determine progress against predetermined goals and objectives.
Tracking sales metrics will help you see if you’re spending enough time on the right sales activities and whether or not they’re paying off.
If a metric is critical to your sales team’s success, it becomes a key performance indicator (KPI). These are the metrics that directly contribute to meeting the business’s overall sales objectives.
To get a complete view of your sales team’s performance, you need to track a variety of metrics relating to different parts of the sales process. For example, if you only looked at the total amount of revenue generated, it would be impossible to diagnose why that figure goes up or down. On the other hand, if you only tracked sales activities without considering the end results, it would be difficult to measure their effectiveness.
When deciding what metrics to follow, aim for a combination of:
Sales activity metrics
Sales performance metrics
Customer satisfaction metrics
Sales activity metrics
Sales activity metrics reveal what your sales team is doing with their time. While a lot of factors go into a successful sales strategy, you can’t expect your team to get good results if they’re spending most of their day on non-sales activities.
Pipedrive’s latest State of Sales and Marketing report found that only 54% of sales professionals spent most of their working day actually selling. Other activities – from prospecting and lead generation to administrative tasks and tech support – are competing for attention and diverting salespeople from their most important work.
Tracking sales activity will ensure you have a strong foundation for your sales funnel and that your team is using their time efficiently.
As leading indicators, these metrics can also help you with sales forecasting. For example, you might work out that it takes your team an average of 10 calls to book a meeting, five meetings to book a demo and three demos to make a sale. With that information, you can see that your reps need to make an average of 150 calls to close a deal.
Sales performance metrics
While activity metrics help measure your team’s efficiency, sales performance metrics measure their effectiveness. If you want to measure specific activity performance, look at metrics related to those channels such as:
Sales and customer satisfaction might sound like two completely different departments at first, but tracking customer satisfaction metrics can help your sales team become much more effective.
Rather than doing anything to close the deal, salespeople who consider the long-term impact on customer satisfaction will find ways to add meaningful value, leading to reduced refunds and ultimately more revenue.
Use customer surveys to find your customer satisfaction score (CSAT) and net promoter score (NPS). By sending a survey immediately after a prospect has interacted with your salespeople, you can get a better idea of your sales team’s impact on satisfaction.
You can then use lagging indicators, such as customer retention rate, churn rate and customer lifetime value (CLV) to see if your customers’ actions match up with the survey results. Sales managers can also compare CLV with the customer acquisition cost (CAC) to ensure that they’re sufficiently profitable.
The sales metrics recommended by the experts
With so many metrics to choose from, knowing where to start can be overwhelming.
We asked some experts what key sales metrics they think are the most important in the industry and what the concept of metrics means to them.
The most important sales metric that an organization should measure is customer satisfaction during and after the sales process.
“Measuring sales is obviously a very important metric, however, it often encourages salespeople to only focus on the sale.
“This pressure can sometimes lead salespeople to not give enough attention to the customer experience, sometimes only pushing for a quick sale. By focusing on the customer experience, you increase the chance of winning long-term customers over short-term deals.”
All performance metrics start and end with revenue. Why are we doing it and why does it matter? Revenue is the answer to both of those questions. A good ‘true north’ metric should be as close to revenue as possible.
The most important sales metric we track is our sign-up to paid conversion rate.
“We calculate this metric by dividing the number of product sign-ups (as measured by Mixpanel) with the number of sessions on our website.
“Given we offer both a free forever version and a free trial of our paid plans, many of our new users are able to set up our software on their own. As a result, many of our new customers purchase our product with only a bit of assistance from us.
“We may have a few quick chats with them to answer some specific questions or a call with them to help them do some set-up, but we rarely uncover their decision-making process or qualify them on budget, like in a traditional sale.
“So, in order to optimize our conversion rate, our product, marketing and pre-sales support teams must work together on initiatives. Our sign-up to paid conversion rate helps us measure the impact of all of these initiatives.
“For example, our product team identified that 20% of our sign-ups try to set up one of our more complicated features and that 95% of them give up when trying to figure it out. So the team is building a new onboarding process to make it easier to set that specific feature up.
“When the product team rolls this out, marketing will help us launch it and our sales and support team will help us get feedback.
“Additionally, our pre-sales support team has a separate initiative to more aggressively offer set-up assistance over a Zoom screen-share call, since we know that our close rate increases when we have a call with a trial user. Marketing will help us craft the messages that book those calls.
“Marketing will also be creating content that educates users about how to get themselves set up. Our sales team is helping them figure out that content and they’ll work with our product team to deliver it to users in-app.
“Signup to Paid Conversion is a great metric since everyone can impact it. With initiatives designed to improve just one number, but executed by different teams, we can get everyone collaborating better. When multiple projects work out, we can celebrate together. We can also be more sure that we’ll increase this one metric because we have a portfolio of initiatives designed to improve it.”
“If cold emailing leads helps you book meetings, make sure open rates are improving. If reps are closing 5% of quality phone conversations, strive for five quality conversations each day. But don’t waste time on metrics that don’t definitively send leads down the line. Taking the time to figure out the two or three most solid metrics helps you and your reps move the needle.”
Setting goals and benchmarking activities, like the velocity of meetings booked and customer response times, against the team’s top performers can help drive and measure desired sales effectiveness and behaviors from the rest of the team.
“But, not all reps need to be monitored in the same way.
“For younger sales reps, managers need to monitor more tactical behavior such as the number of calls, and the number of emails in order to monitor the quantity of activity.
“With a more seasoned team, a manager might want to monitor which roles are being engaged at each stage of the sales process. Measuring your team with the appropriate metrics will not only help them accelerate deals, but will also help keep them from feeling like they’re being micromanaged.”
How to track sales metrics
Even the most relevant metrics and sales KPIs are only useful if you can track them and use that information to optimize your sales. This can be challenging, especially if the data you need is scattered across multiple apps and services.
The first step is to confirm that you’re recording all the necessary information and, if so, where it’s being stored. This is much simpler if you’re using dedicated sales technology, rather than trying to manually DIY your sales processes. While you can technically send a sales email through a standard email provider, or make sales calls with any telephone, sales tools offer additional features to improve productivity and effectiveness. These typically include analytics that allow individuals and team managers to track relevant metrics.
For example, If you want to see email activity and performance metrics, your email outreach platform will be able to tell you how many emails you’ve sent, the click-through rate and your response rate. Auto dialer software will usually record how many calls you’ve made, connection rate and average call duration.
This also applies to customer satisfaction metrics, where dedicated software will automatically analyze the results from customer surveys to calculate your CSAT and NPS scores. For other sales performance metrics, such as the number of deals in the pipeline, win rate and total revenue, sales reps should update the CRM software as deals progress.
Once you’ve confirmed that you have all the necessary data to track your chosen metrics, the next step is to collate that information in one central location for analysis. You can automate the process by connecting your sales tools and other data sources. As well as saving time, this will help reduce any mistakes that can arise from manually copying over sales data from one app to another.
For most sales organizations, CRM software will be an ideal central platform for collating and analyzing your data. CRMs like Pipedrive come with integrations to connect your favorite apps and can display the results in visual sales dashboards. These give you a high-level view of your key metrics for both individual and team sales activities in real time, so you can spot any potential issues and react quickly.
You can also use your CRM to automatically generate detailed sales reports, which go into greater detail with a more comprehensive overview of your sales performance over a specified period of time.
Defining what sales metrics matter to your organization is a huge part of understanding your sales team’s performance. Setting sales goals and benchmarks helps keep everyone accountable and motivated in the long run.
If you’re a sales manager, make sure to clearly lay out your sales performance metrics at the beginning of sales periods. Set up meetings to explain benchmarks, expectations and incentives for hitting sales targets and sales performance measurement goals.