Sales Metrics You Need To Know
Business performance depends on monitoring and measuring productivity, and for sales teams, every activity has to be measured and tracked to achieve the desired results. Sales Metrics help you with exactly that.
In the field of business, metrics are used to ensure that outcomes align with the business objectives. However metrics also measure performance, they also help in planning and decision making, tracking, analyzing, and course correction.
Sales metrics give you an update for the sales process and whether it’s making the difference or not. If you want to measure your performance them you must track it. And of course, to do the tracking you need these essential tracking metrics to measure performance and productivity as well as helping you to make informed decisions that will help you to grow your business.
Sales metrics are more important in sales as compared to other kinds of businesses since sales representatives deal with a lot of information, it becomes hard for them to take decisions without guides or call them performance indicators.
According to AJA FROST a content creator and a writer at Hubspot, sales metrics are data points that represent an individual’s team’s or company’s performance. They help track progress towards goals, prepare for future growth, adjust sales compensation, award incentives, and bonuses, and identify any strategic issues.
Sales metrics are of various types and are broadly categorized under the different stages of the sales process they measure. Some of these metrics include; sales performance metrics, sales productivity metrics, sales activities metrics, and sales funnel metrics.
Let us break down these four categories as we look at the sub-categories that could be under each one of them.
SALES METRICS YOU NEED TO KNOW
PERFORMANCE SALES METRICS
AJA FROST a writer at Hubspot, says, Sales performance metrics are a measure of a business or employees’ tasks and activities. They are often quantifiable and can be measured over days, weeks, months, or years. These metrics are tracked and ranges are selected to identify ideal performance. A business uses performance metrics to determine if their outcomes align with the goals that were set. If a performance metric falls below the range that was set, this indicates underperformance. And if an outcome falls within the range or above it, the business is meeting its goals or exceeding them.
Performance sales metrics are vital since they support businesses in performance evaluation and making informed decisions based on the analysis made. For instance, if you have a technology-based business and monthly recurring revenue keeps reducing you might want to find out why this is happening, auditing can be done to find out what the problem is and how it can eventually be addressed. Performance sales metrics are many however we are going to discuss a few of them and these include; conversion or win rate, revenue, percentage of sales hitting quota, average deal size, sales funnel leakage, and many others.
Percentage of sales team hitting quota
This is usually a 3 months target set and to be met by all sales representatives, in this you expect representatives to have hit the goal, under-performed or over-performed. This helps you to know whether your quotas are high or low. If you find out that your quotas are low then you just have to understand that your sales representatives are performing badly and you would need to hire others and if they are performing well as you expected or more than then you need to reward them accordingly and maybe you can even increase your targets if possible that is if about 85% are over performing.
Average deal size
This looks at the deals you expect to close at the end of a certain period; this can be a year, quarter, month, week, or a day. To calculate the average deal sizes simply divide the total number of deals by the total dollar amount of those deals.
The deals you attain attend of a month or quarter tells you whether your deals and the number of contact customers are expanding or getting smaller or just constant. If there is a market, your average deal size might increase and if the market is limited the average deal size might also be reduced.
Conversion rate or win rate
As the name suggests, conversion or wins you either convert leads into buyers or win their hearts to become buyers. The conversion or win rate looks at the percentage of leads that are turned into real buyers. To measure the conversion rate simply get the number of leads you get per month then divide it by the average of those who buy. This can help you know how many deals you need to make to hit your revenue targets. Conversion rates can also help to show the performance of sales representatives by showing their win rate and the rate at which they have been converting leads into buyers. If the win rate is high then it shows that sales representatives have been active and are performing and if it’s declining there you know that the win rate is low and you have to check out with your sales team.
For every business, the most important indicator of performance is revenue even if other things might not be working out well but as long as the business is earning revenue then it can continue to survive. There is gross revenue and net revenue, gross revenue is the amount of money a company makes with expenses included while net revenue is the amount of money a company is left with minus all other expenses.
Companies get revenue in different ways thus some can be able to tell how much they can earn monthly, quarterly, or yearly depending on what services or products you offer for example subscription businesses those that use the software as a service can be aware of their monthly (monthly recurring revenue, quarterly or annual revenue (annual recurring revenue) and thus they can be able to predict how much they can earn with a certain period. For example, if Monkeypesa has 10 customers and each of them pays 2,000,000 per month then they can be able to tell their monthly revenue, quarterly, and annual revenue. For instance monthly revenue you just get the number of customers and multiply by the amount paid per person/ customer.
Sales funnel leakage
The sales funnel linkage shows the number of customers that are dropping out and those that are still on and the rate at which they are dropping out or the retention rate. If you want to know your leakage rate then you can decide to the conversion rate stage by stage for example how many have been convinced and are likely to become real and potential buyers or how many are likely to qualify to be qualified as potential buyers. What you can do is to observe each one of them closely to determine if they are likely to become potential supporters or not. And after finding such clients then you know where you should spend more time and where you shouldn’t.
SALES PRODUCTIVITY METRICS
Sales productivity metrics are meant to measure the rate at which sales representatives achieve their revenue targets and also know the activities of your sales representatives and what those very activities are leading to productivity. There are various sales productivity metrics and some of these include;
Lead response time
This looks at the time your sales representatives take to respond to respective leads. The quicker and how fast your sales representatives try to respond to respective leads or how slow they are. The longer sales representatives take to respond to respective leads the more it increases the chances of quitting and withdrawing support. For example, if the prospect is looking for a solution within 5 minutes and the sales representatives are not responding such a prospect is more likely to withdraw from your business and support someone else thus you are losing out on the business. So, if you take 24 hours to respond to a lead, they may have already connected with one of your competitors, lost interest, made a different purchase, or changed their mind altogether.
The more active you become in trying to address the needs of each prospect the more you are likely to win their business and seal deals with them. Research has shown that contacting a lead within one hour or below makes you 7Xmore likely to qualify the lead, while your odds of making the sale decrease dramatically (by 60X!) if you take 24 hours to respond.
Other types of sales productivity metrics include;
Percentage of time selling
Percentage of time on data entry
Percentage of time in content creation
Percentage of marketing collateral for use by sales representatives
Number of sales tools used
Percentage of high-quality lead follow-up
ACTIVITIES SALES METRICS
These are actions taken to change leads to potential buyers. Once you identify a potential buyer then you need to take various actions that will finally turn the lead into a supportive buyer. Sales activity metrics portray the daily work of your sales representatives and weakness of sales representatives which can be improved by sales leaders for better productivity. Activities sales metrics include;
Make emails are usually sent to prospects by sales representatives or those in the marketing department and it’s always important to measure the effectiveness of email performance.
The number of calls made for conversations and later the appointments. Calls are one of the ways that sales representatives usually use to hits conversations that later yield into physical appointments.
Other activities sales metrics include;
Social media engagement
SALES FUNNEL METRICS
Sales funnel refers to the process in which a prospective lead becomes a potential customer. Leads are qualified by marketing before being handed over to sales and these leads are likely to be turned into opportunities who later become customers.
Sales funnel metrics include; volume, velocity and conversion rates
Volume funnel metrics are a count of the number of leads going through any stage in the funnel.
Velocity funnel metrics are the time, usually counted in days, spent in each stage of the funnel.
Conversion Rates are the percentage of leads that move from stage to stage.
In conclusion, sales metrics are used to measure individual performance or company performance and productivity and also used by companies and sales representatives to make data concerning decisions, since companies are always piled up with a lot of data it becomes hard to make decisions using their instincts or minds thus the necessity of such metrics are vital.
MonkeyPesa is here with a ready-made Business Management Suite that helps streamline everything from Leads to Deals, Tasks, Accounts, and contacts.
MonkeyPesa is genuinely built for Sales teams. It is simple but well streamlined and organized.
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