What are the key performance indicators (KPIs) that your sales teams use?
How many of those KPIs measure sales outcomes, and how many measure activities?
It's a question that every sales leader and sales manager should be able to answer.
Sales KPIs represent a good way to track the performance of your sales team, and sales KPIs are also good indicators of how your sales team is doing. The right sales KPI can provide you with the insight you need to know what you need to do next.
Many people assume that the sales department is somewhat removed from the day-to-day operations of a business. While this perception is somewhat true, sales KPIs are still critical to running a successful business. It's also important to realize that the role of sales is shifting in today's businesses. Their role is no longer limited to selling a product; it's about generating revenue. T
This blog will give you an overview of the most important sales KPIs that you need to track in the year 2022.
But first,
What are sales KPIs?
Sales KPI stands for Key Performance Indicators. It is the set of performance measures that help you to understand the current state of your sales team. Sales KPIs are a set of metrics that help you to measure the performance of your sales team.
Sales KPIs are one of the most important classifications of business metrics in the SMB and enterprise landscape. Sales KPIs help you measure your sales team's performance, track your sales pipeline, forecast your future revenue, and more.
With that said, we've decided to create a list of sales KPIs for sales teams to track in 2022. These KPIs are based on a combination of our current day sales KPIs and trends in the Salesforce ecosystem that are starting to appear. Our goal is to create a set of KPIs that will help sales leaders across the world make smarter business decisions.
Are sales KPIs and metrics the same?
They are pretty much two sides of the same coin.
Sales metrics are the metrics that help you measure sales performance. They are the quantitative ways of measuring the performance of your sales team. Sales metrics are often used to track and predict sales performance, and sales metrics include things like conversion rate, churn rate, sales volume, and a number of other metrics.
And sales KPIs are the business metrics that are related to sales. Sales KPI is a measurement of sales performance. It is also a measurement of the sales team. Sales KPIs are used to measure the performance of the sales team. Sales KPIs are used to predict sales.
But while setting up sales KPIs, most sales leaders end up focussing on individual sales reps' KPIs, which in the long run doesn't really help in unifying individual and business goals. That is why setting up revenue focussed KPIs is essential for tracking and taking action based on KPIs data.
Why are sales KPIs important?
In the past two years, the way businesses sell has changed significantly. With the rise of social media and the internet, there are now more opportunities for companies to interact with customers than ever before. As a result, businesses have had to adapt to the changing needs of customers, and that has led to the development of the KPI. Today, companies are more reliant on their KPIs than ever before, and it is more important than ever that sales teams keep track of their KPIs.
Sales KPIs are some of the most important numbers for any business owner to follow. If you know how much you're making and how much you're spending on marketing, you can better determine what impact your marketing is having on your sales.
If you know how much you're making and how much you're spending on marketing, you can better determine what impact your marketing is having on your sales.
Sales KPIs are also important because they prove that your marketing is working. If you're spending a lot of money on marketing and don't see the results in sales, then you might be spending the money in the wrong places. Sales KPIs show you if that's the case.
They can also tell you if you're spending too much on marketing and should be cutting back. If you're not spending enough on marketing, you have no idea how to improve.
Now you must be thinking about what are the sales KPIs that companies should be tracking?
Let us answer these questions.
18 Sales KPIs for Sales Teams to Track in 2022
#1. Monthly Sales Growth
Monthly sales growth is calculated by subtracting the current month's sales by the previous month's sales and then dividing the result by total sales in the prior month. Leaders can monitor monthly sales figures to track growth and other important trends to spot potential problems and act on them in time. Setting realistic monthly targets for teams working to drive new sales is helpful in setting goals that motivate people, give them direction and ensure consistent alignment with the organization’s expectations as a whole.
Monthly Sales Growth = ((Current Month Sales - Previous Month Sales)/ Previous Month sales) x 100
#2. Average Profit Margin
Profit margin is the average between the revenue of a company and its expenditure. One can calculate the overall profit margin by calculating the profits out of everything that makes revenue for a company. Companies can also monitor the profit margins made per product, salesperson, or sales territory. A wide range of revenues is often more trouble than it’s worth because it could mean more to handle. If companies allow their sales reps to set their own prices, they may want to step in to prevent them from overpricing, which will hurt them in the long run.
Average profit margin = (Net revenue/ net sales) x 100
#3. Sales Cycle Length
Sales cycle length is basically how long it takes for sales reps to close a deal. It is basically the average duration of the whole sales funnel– starting from prospecting, to first touch base, to demo meeting, to negotiation, and final closing of the deal.
By analyzing the duration of every sales reps to take for closing a deal, you can get the average sales cycle length. And ultimately understand how long it should take for highest closure and duration that would lead to loss of the deal.
With this data, you can take necessary steps to engage your prospects and ultimately create a robust pipeline.
Sales cycle length = Time taken to close a deal.
#4. Sales opportunities
The prospect is categorized into different categories during their sales cycle such as account created, negotiation, demo, and opportunity created. Sales opportunities signify the amount or the scope of business that the prospect might do with your company.
This KPI helps in forecasting the pipeline and the revenue that the company would generate. It also aids in deciding which leads are worth pursuing and which should be handled with the bare minimum effort.
Sales opportunity = Sales value x deal stage
#5. Customer Acquisition Cost
The Customer Acquisition Cost (CAC) is a metric that is especially important to startups and businesses that are still expanding. Often, a company's CAC is the difference between success and failure. You should know how much it costs to acquire a new customer, or how much it costs to acquire a paying customer. CAC is also a good way to measure your sales team's progress. If your CAC is decreasing, it's a sign that your sales team is getting better at acquiring new customers. If your CAC is increasing, it's a sign that your sales team needs to improve its strategy.
Customer Acquisition Cost = Sales and marketing cost / Number of customers acquired
#6. Sales per representative
The Sales Per Rep KPI is a great way to keep track of the performance of each of your sales reps. It is also a great way to make sure that your top salespeople are getting rewarded for their performance. This KPI is calculated by taking the total amount of sales your team has made and dividing it by the total number of sales reps. The Sales Per Rep KPI can be calculated on a monthly or weekly basis.
Sales per rep = Total Sales/ Number of sales made by reps
#7. Average Revenue per unit/ subscription
Average revenue per unit (ARPU) is a critical sales KPI that determines how much revenue your team is generating from each customer. It’s a simple calculation: divide total monthly sales revenue by the number of customers you service in that same time period. For example, if your team services 500 customers in a month and your team generates $50,000 in sales revenue, your ARPU would be $100.
Average Revenue Per Unit = Total Revenue / Total Units Sold
#8. Quote to Close Ratio
The quote-to-close ratio is a number that shows how many quotes were opened versus how many quotes were closed. This number can be tracked as a weekly or monthly KPI. You may want to track this number if you're in the B2B world because it shows how well your sales team is performing. This number is a good one to track because it shows whether your team is performing well or needs help.
Quote-to-close ratio = (Number of closed and won deals / number of quotes) X 100
#9. Conversion rates
A conversion rate is the percentage of users that take a specific action after engaging with your website. The main goal of every business is to make a sale, so the conversion rate is one of the best measures of success. It helps you understand how many people take the action you want them to take and how many people don't. This information is invaluable for improving your site. Consider a few things before we start listing the KPIs for conversions. These KPIs are designed to help you see if your sales team is doing a good job. Conversion rate depends on different factors, and these factors also depend on your industry.
There are various conversion rates that you can track.
- Visitor-to-lead conversion rate: It is the ratio of the number of visitors to your website to the number of visitors that convert to lead.
- Lead-to-MQL conversion rate: After the visitors are converted to leads, the marketing team qualifies these leads and filters them based on their business customer qualifications.
- MQL-to-SQL conversion rate: This is the percentage of MQL leads that have a high probability of converting to customers, and hence they become sales-qualified leads.
- Opportunity-to-customer conversion rate: This is the percentage of sales qualified leads that finally convert into customers.
#10. Monthly connects per sales reps
Sales Connections per sales representative is a measure of the frequency with which a sales representative interacts with a prospective customer. Connections can be face-to-face, email, phone, social media, and more.
Sales Connections are a valuable sales performance indicator. If your reps are connecting with prospects at a rate that is below the benchmark, your reps are either not doing their job or there is something about your prospecting process that is not allowing you to build a pipeline of leads.
#11. Average purchase value
The average purchase value is a metric that is closely related to the average order value. It is the amount of money spent by each customer in the total amount of money spent by a group of customers. This metric can be used to analyze your customers' purchase behavior and the amount of money you are making off of each customer. This metric can also be used as a research tool to help understand the purchasing behavior of your specific niche.
For example, if you sell organic fruit and vegetables, you may notice that the average purchase value is lower than that of a pet shop. This data can be used to help you decide what types of products you should be selling.
Average purchase value = Total sales / number of customers
#12. Average new deal size
Tracking a company's average new deal size is a great way to see how your sales team is performing. It's a simple formula: take your total deal size for the quarter and divide it by the number of deals you closed. If your average new deal size is $10,000, that means that on average, you are getting deals that are $10,000. If your sales team is getting smaller and smaller deals, you may want to take a look at your lead generation process.
Average new deal size = Total revenue/ Total number of deals
#13. Average cost per lead
Average Cost Per Lead is a way to measure a sales team's performance. It is an important metric to track because it shows the cost of acquiring a new customer. The lower the Cost Per Lead, the better. The higher the Cost Per Lead, the worse. The average cost per lead covers the cost spent by sales and marketing to acquire the lead.
An accurate Cost Per Lead will help a sales team make better decisions going forward. For instance, if a sales team is receiving $100 in Cost Per Leads, this team can make better decisions about which prospects to pursue and how to approach them. A low Cost Per Lead will also help a sales team know when it's time to try a different marketing strategy. A good rule of thumb for a sales team is to try to reduce their Cost Per Lead by 50%.
A sales team can track their Cost Per Lead using a CRM (customer relationship management) tool like Salesforce, Freshworks, etc.
Average cost per lead = (Sales campaigns + Marketing campaigns) / number of leads generated
#14. Retention Rate
If a company wants to know if it is making progress on its sales goals, it's a good idea to track the retention rate. It's also a good idea to track the profitability of the company's sales team. Retention rate is one of the most important metrics when it comes to the sales team. It's a measurement of how many customers have returned to make another purchase. So, if a company has a retention rate of 50%, it means that 50% of the customers who made a purchase in the first month bought again in the second month.
Retention rate = ((Number of customers at the end of the period – number of customers acquired during the period) / starting number of customers) x 100
#15. Churn Rate
Churn rate is a term in sales that refers to the number of customers that cancel or discontinue their subscription or service with the company. This is different from the total number of customers the company has, which is the gross number of customers. This is important because the churn rate can be a strong indication of the quality of a company's customer base, as well as the overall service or product. It is important to note that a churn rate is calculated by taking the number of customers that have canceled, divided by the total number of customers.
Churn rate = (Number of customers lost / Total number of customers) x 100
#16. Customer Lifetime Value (CLV)
Everyone wants to make money. But, for most companies, it all comes down to how you can retain customers and how much you can make from each customer, especially when the product is subscription-based. How much money you can make from a single customer is called the Customer Lifetime Value (CLTV). The CLTV is the amount of money you can make from a customer throughout their use of your product or service.
Customer lifetime value = Gross margin % x retention rate x average revenue per customer
#17. Monthly Recurring Revenue (MRR)
Monthly recurring revenue, or MRR, is one of the most important sales metrics, but in some ways, it can be very deceiving. MRR is essentially the revenue that is generated from your customers every month. This revenue is generated from recurring services, such as monthly software subscriptions, or from the lease or sale of fixed assets, like cars or office spaces. It is important to note that MRR is not the gross revenue of the business, but it is the net revenue that is left over after the costs of running the business are taken out.
MRR = (Average monthly revenue from total accounts / total number of accounts) x accounts created in the current month.
#18. Average Conversion Time
The sales conversion time is the time elapsed between a prospect opening your email and clicking on a link. It allows you to measure the performance of your sales team based on the number of sales leads that convert into customers.
Conversion time is important to measure because it's a key factor in the success of your business. In order to analyze the conversion time, you need to understand how a lead is generated, how prospects become customers, and the various steps involved.
For example, if you're sending an email to 100 prospects, what is the expected conversion time?
If you're sending an email to 100 prospects and 1 prospect is expected to convert, you can expect a conversion time of 1 day. That's all there is to it. By measuring the conversion time, you can track how your sales team performs and how your prospects behave. You can also measure the conversion rate of your leads and the conversion rate of your sales team. This will help you understand how to improve your conversion time.
Parting words
As a sales manager, it’s your responsibility to make sure your team is performing well. To do this, you must be able to track your team’s performance in a way that gives you relevant information. The key performance indicators (KPIs) in this post will help you take the guesswork out of measuring your team’s success.
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