15 critical sales performance metrics to watch like a hawk
Sales performance metrics can be an excellent way to evaluate the impact of a sales team.
There are, however, quite a few metrics and analytics tools from which to choose—making it difficult to know which ones should take priority.
Thankfully, we put together a list of the top 15 sales performance metrics so you don’t have to.
Properly preparing your metrics
Sales performance metrics are, unsurprisingly, designed to measure employee productivity and performance. The definition of “good performance” will depend on your sales team’s goals—which are determined by your organization’s strategy.
The business strategy will direct your sales department’s efforts and, as a consequence, act as the driving force behind your sales performance.
- In a company focused on organizational change and growth, teams will focus on scaling account size and revenue targets
- To optimize team performance, managers will analyze metrics that offer insight into the activities of team members
- When preparing for future growth, accurate performance metrics are used to forecast future trends
The more data that can be collected the better, since sales managers and business leaders will often be pursuing several goals simultaneously.
For this reason, it is a good idea to acquire a set of analytics tools that cover the spectrum of possible metrics, including:
- CRM platforms
- Dedicated sales analytics tools
- Task and process mining platforms
- Call analytics software
Used together, these tools can provide enough data to paint a holistic picture of the sales team’s performance.
15 critical sales performance metrics to monitor
After defining your goals, it will be easier to create objectives, KPIs, and metrics that can help assess progress. Here are fifteen of the most commonly used metrics:
- Sales Cycle Length. The sales cycle length refers to the average total time of a sales cycle—beginning with locating a lead and concluding by reaching the close of a deal. This metric can be used for goal-setting, financial forecasting, and measuring sales team performance.
- Customer Acquisition Cost (CAC). Divide the total number of customers acquired by the marketing and sales spend to find the average cost for acquiring each customer. The lower the cost, the more efficiently your sales and marketing teams are managing their customer engagements and budgets.
- Customer Lifetime Value (CLV). A customer’s lifetime value represents the average revenue brought in, which can then be further broken down into time periods, such as year, quarter, or month.
- Win Rate. This is usually a ratio of the number of deals won versus the number of deals lost within a given time period. It can also be calculated with other metrics other than deals, such as average deal size and average sales cycle length. Win rate is one of the most fundamental metrics that can assess a team’s progress and performance.
- Quota Attainment. Quota attainment tracks the percentage of deals that a sales representative has closed versus the amount they were expected to close for a given time period. This can be used to measure ongoing performance, as well as forecast future performance and financials.
- Pipeline Coverage. Pipeline coverage refers to the total number of opportunities in your sales pipeline compared to your quota. Measuring pipeline coverage can tell managers whether they are on track to meet their goals for that quarter—and, if not, to adjust tactics.
- Average Deal Size. The average deal size is obtained by dividing the organization’s revenue by the number of deals closed within a time period. This metric can be used for tasks such as financial forecasting or measuring the performance of individual representatives and teams.
- Annual Recurring Revenue (ARR). Recurring revenue tracks the amount of contracted revenue brought in during a specific time period, such as per year, quarter, or month. This is often followed by investors to measure the “health” of a business.
- Revenue by Product. Revenue by product refers to the average amount of income generated by a product or service.
- Revenue by Account. Revenue by account, or by customer, counts the average revenue generated by individual customers, customer segments, or the entire customer base within a given time period.
- Average Profit Margin. The average profit margin, as the name of the metric suggests, tracks the average amount of profit per deal, per customer, per product, etc. As with many of the other metrics here, it can be calculated as a flat rate or as a moving rate within a given time period.
- Revenue Churn. Revenue churn refers to the amount of revenue lost within a time period. This metric focuses on the recurring revenue that was lost in a given time period, such as one month, then divides that by the total recurring revenue at the beginning of the time period.
- Customer Churn. Customer churn refers to the number of customers lost during a time period. Along with the other metrics covered here, this metric can be used to identify areas for improvement with relation to customer engagement and satisfaction. Sometimes it’s the product, other times it’s the customer relationship or even the brand’s image. Be sure to keep your finger on the pulse of this metric as it can indicate issues in a number of areas of the company.
- Deal Slippage. Deal slippage calculates how many deals were pushed forward into the next purchasing cycle. The longer deals are delayed, the more they can impact sales and revenue forecasts.
- Employee Turnover Rate. While many of the metrics covered so far focus on customers, products, and sales targets, employee turnover rate measures the number of sales representatives that left the team in a given time period. Since turnover impacts productivity, this metric can also be used to paint a picture of the team’s health and projected performance.
Used correctly, sales data can offer deep insights, not only into a sales team’s performance, but also into the organization’s performance, financials, and its strategic outlook.
