The Most Important Sales KPIs To Track For Measuring Sales Success
By Maddy Osman on Aug 19, 2020
In 2019, remote work accounted for a small percentage of working U.S. Americans. A 2020 remote work survey conducted by Clutch has now revealed that nearly 66% of Americans work from home at least once a week.
The continual rise of remote work presents new challenges for gaining insight into sales team performance. However, the industry is no stranger to digital workflow transitions.
While team-management structures may be changing, key performance indicators (KPIs) remain an effective way to monitor sales rep productivity and track sales success.
Even from your home office.
To ensure your sales team is on the right path, we’ll be diving into:
Answering, “What are KPIs in sales”
The top five most important sales KPIs to track for sales success
What are KPIs in Sales?
Key performance indicators in sales measure the outcome or effectiveness of a specific selling activity against overarching goals.
When it comes to KPIs, there is no one-size-fits-all solution for every company. There are hundreds of potential options depending on your business goals.
When determining which metrics to track, it’s essential to evaluate the top KPIs for sales that most align with the outcomes you’re aiming to achieve. Focusing on the wrong metrics can misguide your sales team and set everyone up for failure.
But don’t stress — we’ve sifted through the clutter and narrowed down the top five sales KPIs for judging sales success.
The 5 Most Important Sales KPIs for Measuring Sales Success
1. Conversational Intelligence
While individual and team quotas are intrinsically connected to the sales process, look beyond the numbers when it comes to prospects. Put yourself in their shoes. A deeper emotional connection is necessary to sway today’s tech-savvy decision-makers.
Enter conversational intelligence — arguably the most important sales KPI you should be tracking, and for a good reason.
Think of conversational intelligence as engaging others by creating shared personal connections rooted in developing trust and fostering a collaborative environment.
This is an invaluable empathy-metric considering Salesforce’s third-annual State of Sales report revealed 78% of business buyers look for salespeople who act as trusted advisors. The way sales reps connect with a prospect is a good indicator of the outcome you’ll see down the pipeline.
To track conversational intelligence, you’ll first need visibility into every customer touchpoint.
The searchable timeline format located directly in your inbox gives you a birds-eye-view into your entire sales team’s communications. Browse historical Salesforce data, and gain insight into every email chain, meeting, and call, all in one place.
With streamlined visibility into customer conversations, you can evaluate the quality of communication, identify action steps, and personalize any needed follow-ups.
Gong is another great tool for recording sales conversations, then tracking effectiveness via meta data extracted from the call.
2. Sales Cycle Length
The average amount of time between the first touchpoint with a prospect to closing the deal is also known as the sales cycle length.
A short sales cycle is usually optimal. However, there is a sweet spot.
You don’t want to rush a potential buyer into a sale they aren’t ready to make. Conversely, a long sales cycle can make them feel undervalued.
By measuring the length of your sales cycle, you can forecast won deals based on the number of leads in your pipeline during a specific time.
How to Track Sales Cycle Length
To get your average sales cycle length within your specified time frame:
Sales Cycle Length = Length of all Deals by the Day / Total Number of Deals
3. Sales Conversion Rate
Marketing and sales should be working in tandem to qualify new leads and transform them into paying customers. Implementing a sales conversion rate is an efficient way to integrate both departments and increase sales success.
In short, the sales KPI analyzes your sales team’s ability to convert leads into customers.
How to Track Sales Conversion Rate
The two most popular ways to measure the sales conversation rate are as follows:
Conversion Rate = (Total Number of Sales / Number of Qualified Leads) X 100
Conversion Rate = (Total Number of Sales / Unique Clicks) X 100
4. Customer Retention Rate
In sales, the customer retention rate refers to the number of recurring customers over a specific amount of time.
By now, it’s no secret retaining customers is more cost-effective than continually seeking out new leads. According to research cited by Harvard Business Review, a 5% increase in customer retention rates increases profits by 25-90%.
The number of customers at the start of a period (S)
The number of customers at the end of a period (E)
The number of new customers gained during that time frame (N)
Once you’ve compiled that information, the formula looks like this:
Customer Retention Rate = [(E-N) / S] X 100
5. Customer Lifetime Value
Customer lifetime value (CLV) is an educated prediction of the total revenue expected from a single customer throughout the transactional relationship. Unlike sales quotas, CLV encourages sales reps to develop mutual connections with their prospects.
The CLV metric is vital for understanding the type of buyer personas that are the most profitable to tailor your sales strategies to target similar customers.
How to Track Customer Lifetime Value
To configure the CLV metric, start by multiplying the average customer retention rate by the average number of purchases. Once you have the total, multiply that number by the average deal total.
Customer Lifetime Value = (average customer retention rate) X (average number of purchases) X (average deal total)
Final Thoughts: The Most Important Sales KPIs To Track For Measuring Sales Success
Work-styles may be changing, but there are still ways to keep track of your sales team’s productivity and success by tracking KPIs for sales. Thoroughly evaluate the metrics against the set goals for your team to ensure proper tracking, improve siloed workflows, and ramp up sales productivity.
Remember, today’s buyers are digitally savvy and expect a personalized experience.
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