So much is said about data these days that it can be easy to overlook the most important thing about it: actually using it.
While you're counting numbers and analyzing analytics, it can be hard to distinguish which are most relevant in relation to what. Especially if you're unfamiliar with what any of them mean in the first place.
We're going to go over which KPIs are the most valuable to sales teams looking to grow consistently and confidently.
What Is a Sales KPI?
Key performance indicators (KPIs) are the most important metrics for certain aspects of your business. Monitoring them allows you to know at a glance whether you are moving toward your goals in the way you want to.
In sales, KPIs are used by teams and management to track the effectiveness of relevant sales activities within their company.
Why Sales KPIs Matter
Sales KPIs are particularly important because so many of them can translate directly into revenue. They help in optimizing sales performance, sales funnel, and sales cycle length.
Even more importantly, they allow managers and teams to gain true visibility into their performances. They can judge how well they're doing beyond how consistently they're converting leads into customers (though that's a big part of it too!).
KPIs can provide a closer look at individual pieces of a strategy or practice and indicate opportunities to optimize efforts or fill in gaps.
Still, sales KPIs need to be looked at as part of a greater whole to be efficient. That’s especially true in a modern, inbound-focused organization where marketing and sales interface daily.
Defining the Right KPIs for Your Company
Sales KPIs are as subjective as to a company as supplements are to people. Sure, you have your standard vitamin C and iron. But some folks need an extra boost of magnesium or higher doses of others.
So, which sales KPIs are the most important for success?
You'll need to define that yourself. Here's how:
Set Large Objectives.
Think about what your company is trying to achieve as a whole. What's the main priority?
Whether it's revenue, customer retention, growth, or something else, it's important for your sales team to understand and align with that big, primary objective.
Ideally, this is already notated somewhere in your business plan, but if not, go ahead and define it now.
Narrow Down Your Goals.
Start big, then funnel down into smaller, more manageable pieces.
This is where you want to set specific sales goals for your teams based on what your company is trying to achieve. Take the broad goal and break it down into something more tangible.
For example, if your company is looking to boost its total monthly sales, then maybe your sales team will want to focus on shortening its sales cycle.
Always run your big goals through the filter of your industry and market in order to help you develop the specific, achievable wins you're looking for.
Implement Action Items.
Based off the goals you've set, you're going to have to develop a plan of action in order to reach them.
Keeping up with the example we set above, perhaps you'll invest in sales automation tools or leverage a paid search strategy for your business.
However you choose to pursue whatever goals you set for yourself, you'll need to take actual steps to see any changes that you can measure.
Prioritize Data by Importance.
That's right, we said measure. KPIs don't just roll in, ready for you to read off of a document.
At this point, you should be able to identify which ones are going to be more valuable. Look for the sales KPIs that target specific action. They're the most likely to reveal what's keeping you from reaching your goals.
From there, create a list of about five to 10 relevant KPIs to measure. You'll be able to focus on the data that's actually critical to your business.
Don't worry about being too hard nosed about which you pick either. You can swap them out, add, or remove them as necessary. Just make sure that you're selecting ones that are truly going to provide value.
Start Keeping Track.
Naturally, this is the next step. Having the right key performance indicators in front of you now means that you can start putting your effort and energy where they're most needed.
You'll need to consistently measure and analyze your chosen KPIs. They're not static variables. They'll constantly fluctuate and change, meaning you'll always need to be on the lookout.
10 Sales KPIs You Should Be Measuring
Sales KPIs come in all shapes and sizes in a modern enterprise. However, just like more web traffic won’t necessarily make your website profitable, not all sales KPIs are valuable at all times.
Plus, there can be too much of a good thing. A sudden influx in sales may give your business more orders than it can service. Likewise, a big jump in leads can leave you without the ability to follow up and get things done. Either way, your company’s brand image suffers.
So, which sales KPIs really matter across the board?
If you want to pare things down to the true essentials, start with these:
1. New Contact Rate
New contact rate is the KPI most sales managers have the best handle on. It directly shows how salespeople are contributing in their assigned territory.
It tells you who’s reaching quota and who isn’t – which can tell you if quota adjustment or talent development might be needed.
2. Client Acquisition Rate
On the inbound side of things, client acquisition rate has another name: conversion rate.
It’s the percentage of new contacts that actually convert into customers, taken as a function of sales efforts. Client acquisition rates can help you learn how many touches are needed for a sale.
3. Sales Volume Per Channel
This was formerly thought of as “sales volume per location.” Now, it’s important to compare the figures from physical locations as well as web properties. Determining which channels are the most valuable can elevate sales and marketing ROI.
4. Pricing Against Competitors
Pricing strategy is an important part of staying competitive in sales. When prices don’t differ much, a price-matching approach can be helpful.
When there are significant pricing differences, they become part of your brand positioning as the premium or affordable option.
5. Client Engagement Rates
Technology has changed the game on client engagement. These days, there are more ways for clients to engage than ever before.
Sales pros should be touching base with a regimented post-sale follow up plan. Data on customers’ website engagement should also filter down to sales.
6. Lead Response Time
It’s easy to get fixated on the lead’s response time, but lead response time actually flips the script.
It’s about how responsive your team is to incoming contacts. The faster you are, the more responsive (and therefore trustworthy) your company is perceived to be.
7. Rate of Follow Up Contact
Just as you should start building rapport with clients as promptly as you can, also try to look at follow up as an exciting opportunity.
Many sales pros never follow up with potential leads, but lots of sales don’t happen until eight or more contacts take place between a lead and salesperson.
8. Sales Email Click-Through Rate
Since technology gives us access to so much data, it makes sense to level the playing field by incentivizing your leads to use digital channels.
When the sales organization sends out a follow up email, click-through rates tell you how well the message is aligned to the prospects’ needs.
9. Net Promoter Score
Your net promoter score measures how likely a customer is to recommend your business to someone else.
In the form of a survey, you can have customers rank you, giving you real insight into what your customers think of your product or service. This is definitely a need-to-know KPI for sales teams who are trying to draw more prospects in.
10. Opportunity to Win Ratio
The percentage of actual sales to new opportunities is probably the most fundamental sales KPI of all and shouldn’t be overlooked. It’s the ultimate gauge of an individual’s performance, but its meaning might not be clear without all the others.
Good Sales KPIs Can Be One Part of a Big Picture
There are plenty of other KPIs you could zoom in on as well, depending on your business and the market you're in. The possibilities are limitless.
Still, there is such a thing as paralysis by analysis.
If you start tracking too much data, you’ll soon find that you need a new data expert to interpret it for you. New tracking and reporting requirements will make it harder to get the message data is telling you. Then, the very things you’re trying to learn become easier to overlook.
With all that in mind, it’s a good idea to narrow the field of action.
Keep your focus mainly on the KPIs that:
- Sales pros find most useful in planning their weekly, monthly, and quarterly efforts.
- Sales pros actually have influence over, so the data can truly guide their behavior.
No matter whether you have a fully inbound-focused organization or you blend inbound and outbound-based methods, the sales team remains vital.
While marketing builds and nurtures the lead relationship, it’s usually up to sales to take it to the next level by inspiring a conversion.
When everyone has the data they need, each part of the organization performs better.
Plus, you can easily see areas that are in need of improvement, which raises ROI across the board. With new digital analytics technology, tracking your sales KPIs is a sure step toward success.