Forbes – What are Sales Metrics and Which Ones are Essential to Improving Sales Performance?

Sales team looking at a graph, explaining what sales metrics are and which ones improve sales performance.
Reading Time: 3 minutes

Measurement matters. But it matters most if you measure what truly matters. And when it comes to sales, the sales metrics you choose can mean the difference between profit or loss. Between market leadership or dwindling share. Between success or failure. Let’s discuss what sales metrics matter most? First, let me define sales metrics:

Sales metrics are the key performance indicators, or KPIs, that empower a salesperson, team or organization to assess performance against goals and objectives, monitor progress and make necessary adjustments for continued sales success.

When the right sales metrics are in place, the organization and its contributors know where they stand at the individual customer, territorial and companywide levels. Appropriate sales metrics also help identify the state of sales regarding time-based goals. Perhaps most importantly, the right sales metrics can help an organization make prudent decisions for any changes necessary to achieve both short-term and long-term objectives.

But what are the right sales goals? What are the most important sales KPIs?

Important Sales Metrics To Track

Sales metrics typically include sales performance metrics, sales growth metrics and sales operations metrics. Properly defined, tracked and managed, they can help a sales organization measure the success of their sales initiatives — including overall sales strategy, individual sales processes, pipelines and targets

In terms of KPIs, there can be leading indicators and lagging indicators. Both types are essential to effective activity management.

Lagging indicators include quantifiable historical information, such as deals closed, deals lost or quarterly or annual sales data. That’s important information, to be sure, but hindsight can only really indicate where you’ve been — not where you are going.

Leading indicators, on the other hand, are forward-looking and predictive measures of sales performance. Most useful for sales forecasting, they often include such essential real-time (or near real-time) metrics as the number of prospects in the pipeline, the value of those opportunities in a pipeline and time spent prospecting, as well as the number of customer visits, number of presentations made or proposals submitted. Current-data leading indicators can empower sales teams to make strategic and tactical adjustments to ensure that you can get back on track, rather than continue to head toward missed goals. Leading indicators can also make real-time sales coaching more meaningful.

What kinds of specific sales metrics can best help your organization meet its goals and objectives, both short- and long-term? Frankly, that depends on the nature of your industry, your market, your business and your sales culture. Every organization operates in a somewhat unique environment, so your best sales metrics may be just as unique. That said, here are some sales metrics commonly recognized as critical to optimum sales performance (including big-picture measures and more focused KPIs):

• Total revenue

• Market share percentage

• Year-over-year change (revenue and market share)

• Revenue by service or product

• Revenue by market

• Revenue by territory

• Percentage of revenue from new business

• Percentage of revenue from existing customers

• Customer acquisition cost (CAC)

• Customer lifetime value (CLV)

• Cost of sales

• Average time for conversion

• Number of new leads per period

• Number of new contracts signed per period

• Dollar value of contracts signed per period

• Average contract value (ACV)

• Win rate (by team and individual)

• Conversion rate by sales funnel stage

• Number of deals lost to competition

• Customer retention percentage

• Time spent in each part of sales process

• Lead response time

• Follow-up time and cost

• Percentage of sales reps attaining 100% quota

Again, these KPIs are general in nature; some of these sales metrics will have more relevance than others to your company. Beyond these measures, of course, you can drill down even deeper to really get to the core of where your sales team members spend their time and the effectiveness of their sales activities.

Tracking Sales KPIs Using A Sales Metrics Dashboard

Naturally, relevant sales metrics must be identified, quantified and tracked. This is best accomplished by using a sales metrics dashboard within a robust customer relationship management system.

It pays to dedicate time and forethought to how your CRM is structured. Most high-quality CRMs have enormous capacity for detailed reporting. But if the burden of data input is too great, your reports will be incomplete or downright flawed. It is wise to identify and set up your most important KPIs and make sure your sales team members are diligent about updating the CRM. Remember, if your system is too complex, data entry and updating will be overly burdensome and become neglected. So, keep it simple, focused and targeted to truly meaningful data that can help you perform, attain and adjust as necessary.

Again, measurement is important, but you must focus on measuring what truly matters. By understanding and managing the sales metrics that can help your sales organization perform and excel, your company can meet its goals and objectives and enjoy long-term success.