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Sales Metric & KPI: Why and How to Track Them

Understanding which metrics to track and when to track them, how to track them, and understanding why you need to track them is often confusing. Your team captures myriad data points throughout the sales process, and it can be overwhelming to determine which ones are most valuable to assess and how to pull those data from your database.

Business Meeting

By identifying and tracking the right metrics, your sales team can tell the right story, maintain visibility into operations and performance, uncover and resolve issues, and replicate wins. Whether you’re looking to enhance individual rep performance, team performance, customer satisfaction, or something else entirely, it’s crucial to know the breadth of metrics at your disposal. Then, you can focus on tracking, analyzing, and improving the right metrics to drive further growth and profitability.

Sales Metric and Sales KPI is Different

While both of these are usually interchangeable, Sales Metrics measure a specific part of your process. How many calls have been made and emails sent is an example of Sales Metrics. Sales KPIs on the other hand require a particular target or objective against which they are measured. Your team may be tracking the number of calls they do and how many meetings they are getting but are you tracking how many qualified people they are talking to? If your team did 100 calls and only got 1 meeting, it might look like the salesperson needs more training but this number does not accurately show if the salesperson's pitch is not effective.

 

A better number to track is to see how many qualified people your team spoke with. If they made 100 calls and only spoke to 2 qualified contacts and got 1 meeting, it means their success rate is 50%. This means you have to find out why out of 100 calls they were able to only reach 2 qualified contacts on the phone. 

The Most Important Sales Metrics

The sales metrics that will provide the most value to your organization will differ depending on a variety of factors, including your goals, use case, team structure, and more. Once you hammer down these details, you should choose the metrics that help illustrate the story you’re looking to tell or investigate.

Below, we’ve compiled a thorough list of the metrics that are most important to modern sales teams, and categorized them into several relevant buckets:

Sales Activity Metrics
Sales activity metrics reflect the progress of your team’s behavior. They’re vital for understanding how individual efforts contribute to the team’s overall success.

  • Number of Leads Created

  • Number of Emails Sent

  • Number of Calls Made

  • Number of Follow Ups

  • Number of Meetings Scheduled

 

Sales Pipeline Metrics
Keeping your pipeline as healthy as possible requires a deep understanding of how deals are progressing and any issues that might be holding things up. 

  • # of Qualified Leads - Filling your sales pipeline with under-qualified leads won’t do your team much good: In fact, it’ll muddy the waters and negatively impact reps’ close rates. Tracking the number of qualified leads (based on your team’s specific criteria) in your pipeline over a given period of time can help you better optimize your prospecting process.

  • Win Rate - Deal win rate is calculated by dividing the number of closed, won deals in a particular time period by the number of opportunities created during that same period. It’s a great way to determine how effective your team is at getting deals across the finish line and onboarding new clients.

  • Average Deal Size - Typically, smaller deals take a shorter amount of time to close than larger, enterprise-level deals, which generally require more decision-makers. Average deal size helps your team fine-tune their sales strategy, target accounts that will likely close in a desired amount of time, and increase pipeline velocity. Calculate average deal size by adding the value of all your closed deals, then dividing it by the total number of deals.

  • Customer Acquisition Cost - Your customer acquisition cost (CAC) is the amount it costs your sales and marketing teams to land a new client. If your CAC is high, your team can re-evaluate the efficiency of their spend, identify areas of unnecessary spend, and more accurately assess their growth capabilities. CAC is calculated by dividing the sum of your marketing and sales costs by the number of closed deals during a particular period of time.

  • Average Sales Cycle Length - The length of your sales cycle, or the time it takes for an initial lead to become an actual buying customer, helps teams evaluate the efficiency and effectiveness of their strategy.

  • Pipeline Coverage - Sales pipeline covers refers to the ratio between the dollar value of your sales funnel and your revenue targets. If, for instance, you have a pipeline coverage ratio of five, it means your total pipeline is five times your quota. Thus, you need to close 20% of the pipeline’s value in order to meet your sales goal.

  • Deal Slippage - If a deal doesn’t close within the intended or committed timeline, it’s considered “slippage.” Calculate your deal slippage rate by taking the number of deals that failed to close within their committed time period and dividing it by the total number of committed deals for that same period. This information is vital for identifying which deals should be prioritized in the upcoming period.

Sales Lead Generation Metrics
Lead generation metrics help improve sales and marketing alignment to ensure both teams are working toward the same goals.

  • Cost per Lead - Cost per lead refers to the average amount of money your team spends to acquire a new lead. You can calculate this metric by dividing the amount you’ve spent by the total number of new leads you’ve acquired.

  • MQL to SQL - You MQL to SQL is the rate at which marketing-qualified leads (MQLs) are converted into sales-qualified leads (SQLs). This metric helps sales teams better target their intended audience and is calculated by dividing the total number of SQLs generated by the total number of MQLs generated over a given time period, then multiplying that number by 100.

  • Conversion Rate - Your team’s conversion rate is the number of qualified leads that result in closed-won deals. By consistently tracking this metric over time, you can better understand how efficiently your team turns new leads into paying customers. Calculate your conversion rate by dividing the number of leads converted into sales by the total number of qualified leads over a specific time period.

  • Average Lead Response Time - Your average lead response time measures the amount of time between new lead creation and when your team sends an initial response. It’s a metric that’s essential for evaluating lead follow up and determining how that follow up impacts conversion — both on an individual and team level. To calculate lead response time, take the total amount of time between lead creation and initial response (for each lead assigned to a specific rep), and divide that by the number of leads responded to.

 

Sales Productivity Metrics
It’s crucial to track (and improve!) the efficiency and productivity of your reps. Sales productivity metrics help you understand where your reps are spending the majority of their time so you can reduce any superfluous, time-intensive activities that hinder their success.

  • Time Spent on Selling Activities - Most reps spend only a third of their time actually selling. By measuring the average time each rep (and your team as a whole) spends on selling activities, you can identify areas in the sales process that hinder their productivity to better maximize their time.

  • Time Spent on Manual Data Entry - Manual data entry is a productivity-killing task for most sales teams. If your team still relies on manual data collection collections, you’ll likely be surprised at how many hours reps spend entering, transferring, and syncing information throughout the week. Use this metric to determine whether or not automation can add more value to your team’s days.

  • Average Numbers of Sales Tools Used Daily - If your reps need to toggle between apps and platforms throughout the day to complete their sales tasks, they’re likely wasting precious time. Take stock of the technologies your team relies on and decide if software consolidation would help your reps focus on what they do best: Selling.

Sales KPIs
It’s important to consistently track your sales metrics: But if one metric in particular is clearly driving or hindering performance, it may be time to bump that metric up to a KPI. Here are some valuable sales KPIs to get you started:

  • Annual Recurring Revenue - Annual recurring revenue (ARR) refers to your organization’s overall predictable revenue across the entire year. It’s essential because it demonstrates your company’s growth and helps you forecast future revenue moving forward. To calculate ARR, simply add up the monthly revenue your team brings in from each customer and multiply that total by 12.

  • Average Revenue Per User - Your business’s average revenue per user (ARPU) is the mean of revenue from each individual account or customer. It’s typically calculated per month or year, depending on your sales or business model (e.g. if your company offers monthly contracts, calculate ARPU on monthly basis; if you offer only annual contracts, calculate ARPU on a yearly basis). To calculate ARPU, divide your total revenue over a particular time period by your total number of users.

  • Churn Rate - Your churn rate refers to the percentage of your customers who cancel their recurring subscriptions or jump ship when it’s time to renew. Since boosting your retention rates by just 5% can increase your profits by 25% to 95%, understanding and ameliorating churn is paramount to your company’s success. Calculate your churn rate by dividing the number of customers lost over a specific time period by the total number of customers at the beginning of that period.

  • Net Promoter Score - Your net promoter score (NPS) helps you measure customer loyalty. To calculate NPS, ask your customers to rate how likely they are to refer your company to someone else, on a scale from one to ten. It’s a great KPI for identifying detractive or passive customers, enabling you to follow up and assess why they’re not promoting your company.

  • Buyer Sentiment - Buyer sentiment is crucial because it allows your team to measure a buyer’s emotional reaction to an engagement. It can help you shorten your sales cycle, break buyer silence, and indicate where your team should invest its efforts.

Leading and Lagging Indicators in Sales
Sales look to leading and lagging indicators to make predictions and evaluate their results.

  • Leading indicators help you predict the results of your team’s performance. They offer insights into where your team is headed while there’s still time to course-correct if needed. This might include the number of new opportunities created, the number of new quotes, or the average opportunity size.

  • Lagging indicators, on the other hand, are unchangeable and reflect your team’s results. This can include revenue generated, the number of closed won opportunities, or quota attainment over a given time period. Sales teams use lagging indicators to adjust their sales plans for better outcomes moving forward.

The Most Important Sales Metrics

The sales metrics that will provide the most value to your organization will differ depending on a variety of factors, including your goals, use case, team structure, and more. Once you hammer down these details, you should choose the metrics that help illustrate the story you’re looking to tell or investigate.

Below, we’ve compiled a thorough list of the metrics that are most important to modern sales teams, and categorized them into several relevant buckets:

Sales Activity Metrics
Sales activity metrics reflect the progress of your team’s behavior. They’re vital for understanding how individual efforts contribute to the team’s overall success.

  • Number of Leads Created

  • Number of Emails Sent

  • Number of Calls Made

  • Number of Follow Ups

  • Number of Meetings Scheduled

 

Sales Pipeline Metrics
Keeping your pipeline as healthy as possible requires a deep understanding of how deals are progressing and any issues that might be holding things up. 

  • # of Qualified Leads - Filling your sales pipeline with under-qualified leads won’t do your team much good: In fact, it’ll muddy the waters and negatively impact reps’ close rates. Tracking the number of qualified leads (based on your team’s specific criteria) in your pipeline over a given period of time can help you better optimize your prospecting process.

  • Win Rate - Deal win rate is calculated by dividing the number of closed, won deals in a particular time period by the number of opportunities created during that same period. It’s a great way to determine how effective your team is at getting deals across the finish line and onboarding new clients.

  • Average Deal Size - Typically, smaller deals take a shorter amount of time to close than larger, enterprise-level deals, which generally require more decision-makers. Average deal size helps your team fine-tune their sales strategy, target accounts that will likely close in a desired amount of time, and increase pipeline velocity. Calculate average deal size by adding the value of all your closed deals, then dividing it by the total number of deals.

  • Customer Acquisition Cost - Your customer acquisition cost (CAC) is the amount it costs your sales and marketing teams to land a new client. If your CAC is high, your team can re-evaluate the efficiency of their spend, identify areas of unnecessary spend, and more accurately assess their growth capabilities. CAC is calculated by dividing the sum of your marketing and sales costs by the number of closed deals during a particular period of time.

  • Average Sales Cycle Length - The length of your sales cycle, or the time it takes for an initial lead to become an actual buying customer, helps teams evaluate the efficiency and effectiveness of their strategy.

  • Pipeline Coverage - Sales pipeline covers refers to the ratio between the dollar value of your sales funnel and your revenue targets. If, for instance, you have a pipeline coverage ratio of five, it means your total pipeline is five times your quota. Thus, you need to close 20% of the pipeline’s value in order to meet your sales goal.

  • Deal Slippage - If a deal doesn’t close within the intended or committed timeline, it’s considered “slippage.” Calculate your deal slippage rate by taking the number of deals that failed to close within their committed time period and dividing it by the total number of committed deals for that same period. This information is vital for identifying which deals should be prioritized in the upcoming period.

Sales Lead Generation Metrics
Lead generation metrics help improve sales and marketing alignment to ensure both teams are working toward the same goals.

  • Cost per Lead - Cost per lead refers to the average amount of money your team spends to acquire a new lead. You can calculate this metric by dividing the amount you’ve spent by the total number of new leads you’ve acquired.

  • MQL to SQL - You MQL to SQL is the rate at which marketing-qualified leads (MQLs) are converted into sales-qualified leads (SQLs). This metric helps sales teams better target their intended audience and is calculated by dividing the total number of SQLs generated by the total number of MQLs generated over a given time period, then multiplying that number by 100.

  • Conversion Rate - Your team’s conversion rate is the number of qualified leads that result in closed-won deals. By consistently tracking this metric over time, you can better understand how efficiently your team turns new leads into paying customers. Calculate your conversion rate by dividing the number of leads converted into sales by the total number of qualified leads over a specific time period.

  • Average Lead Response Time - Your average lead response time measures the amount of time between new lead creation and when your team sends an initial response. It’s a metric that’s essential for evaluating lead follow up and determining how that follow up impacts conversion — both on an individual and team level. To calculate lead response time, take the total amount of time between lead creation and initial response (for each lead assigned to a specific rep), and divide that by the number of leads responded to.

 

Sales Productivity Metrics
It’s crucial to track (and improve!) the efficiency and productivity of your reps. Sales productivity metrics help you understand where your reps are spending the majority of their time so you can reduce any superfluous, time-intensive activities that hinder their success.

  • Time Spent on Selling Activities - Most reps spend only a third of their time actually selling. By measuring the average time each rep (and your team as a whole) spends on selling activities, you can identify areas in the sales process that hinder their productivity to better maximize their time.

  • Time Spent on Manual Data Entry - Manual data entry is a productivity-killing task for most sales teams. If your team still relies on manual data collection collections, you’ll likely be surprised at how many hours reps spend entering, transferring, and syncing information throughout the week. Use this metric to determine whether or not automation can add more value to your team’s days.

  • Average Numbers of Sales Tools Used Daily - If your reps need to toggle between apps and platforms throughout the day to complete their sales tasks, they’re likely wasting precious time. Take stock of the technologies your team relies on and decide if software consolidation would help your reps focus on what they do best: Selling.

Sales KPIs
It’s important to consistently track your sales metrics: But if one metric in particular is clearly driving or hindering performance, it may be time to bump that metric up to a KPI. Here are some valuable sales KPIs to get you started:

  • Annual Recurring Revenue - Annual recurring revenue (ARR) refers to your organization’s overall predictable revenue across the entire year. It’s essential because it demonstrates your company’s growth and helps you forecast future revenue moving forward. To calculate ARR, simply add up the monthly revenue your team brings in from each customer and multiply that total by 12.

  • Average Revenue Per User - Your business’s average revenue per user (ARPU) is the mean of revenue from each individual account or customer. It’s typically calculated per month or year, depending on your sales or business model (e.g. if your company offers monthly contracts, calculate ARPU on monthly basis; if you offer only annual contracts, calculate ARPU on a yearly basis). To calculate ARPU, divide your total revenue over a particular time period by your total number of users.

  • Churn Rate - Your churn rate refers to the percentage of your customers who cancel their recurring subscriptions or jump ship when it’s time to renew. Since boosting your retention rates by just 5% can increase your profits by 25% to 95%, understanding and ameliorating churn is paramount to your company’s success. Calculate your churn rate by dividing the number of customers lost over a specific time period by the total number of customers at the beginning of that period.

  • Net Promoter Score - Your net promoter score (NPS) helps you measure customer loyalty. To calculate NPS, ask your customers to rate how likely they are to refer your company to someone else, on a scale from one to ten. It’s a great KPI for identifying detractive or passive customers, enabling you to follow up and assess why they’re not promoting your company.

  • Buyer Sentiment - Buyer sentiment is crucial because it allows your team to measure a buyer’s emotional reaction to an engagement. It can help you shorten your sales cycle, break buyer silence, and indicate where your team should invest its efforts.

Leading and Lagging Indicators in Sales
Sales look to leading and lagging indicators to make predictions and evaluate their results.

  • Leading indicators help you predict the results of your team’s performance. They offer insights into where your team is headed while there’s still time to course-correct if needed. This might include the number of new opportunities created, the number of new quotes, or the average opportunity size.

  • Lagging indicators, on the other hand, are unchangeable and reflect your team’s results. This can include revenue generated, the number of closed won opportunities, or quota attainment over a given time period. Sales teams use lagging indicators to adjust their sales plans for better outcomes moving forward.

Sales Metrics by Team

Now that you have a better understanding of the purpose of a variety of metrics and KPIs, let’s outline some common metrics used by each type of sales team.

Inside Sales Metrics
Unlike their field sales counterparts, inside sales professionals generally engage prospects via remote methods. Though the process is inside sales reps follow is simpler and more predictable by comparison, their progress is measured using many of the same metrics:

  • Number of deals closed (over a given time period)

  • Number of calls

  • Number of meetings

  • Number of emails

  • Number of demos

SDR Metrics
Sales development representatives (SDRs) are typically measured against these common metrics:

  • Number of meetings

  • Number of calls

  • Number of demos

  • Number of deals closed

  • Number of opportunities created