Essential Sales Metrics You Should Track
Now that we’ve explored the definition of sales metrics and looked at why they’re so important, we need to look at specific metrics that can help your company’s growth.
And since three are so many to choose from, narrowing down your focus isn’t always easy. However, these ten metrics will help you discover more about your audience, your company’s current growth rate, your sales team’s performance, and the effectiveness of your existing sales funnel.
Let’s dig into these sales metrics below.
Monthly Sales Growth
Your business is only as successful as the number of sales you can bring in each month. Sure, sales can fluctuate for various reasons, and it’s not always a bad thing, but it’s still a vital KPI to track if you want to ensure you don’t fall behind your quotas.
Most SaaS companies focus on tracking sales annually, but a monthly overview of sales performance will give you actionable insights you can apply right now.
It will also allow you to spot trends and fluctuations in your sales performance, enabling you and your team to make adjustments and get ahead of more significant issues in sales numbers before they can develop.
Lead Conversion Rate
The total amount of new sales is important, but it doesn’t provide a complete picture of your sales team. To better understand sales performance, you also need to track how many leads you were able to convert into customers.
That’s why the lead conversion rate is another crucial sales metric that helps you learn more about where your best customers are coming from, how you can improve your processes, and whether you are getting enough leads in the first place.
If you find that your lead conversion rates are low, you will probably have to rethink how you generate leads as a whole. Acquiring each lead costs money, so you need to constantly monitor that the leads you bring in convert into customers at a reasonable rate.
Average Conversion Time
Lead conversion rate should be a primary metric you look at. But the time it takes for a lead to become a customer is also an important consideration, as that will determine how many leads your sales team can handle at any given time.
It will also help you figure out how much time you can allow yourself when converting leads into customers. If you have a lower-priced product such as a SaaS tool, you can’t have a long time to convert leads if you want to sustain business growth.
At the same time, if you notice that your lead conversion time is fast, you can consider expanding your lead generation efforts and increasing the number of leads you work with each month.
Customer Lifetime Value
For most companies B2B businesses immediate sales keep the company moving forward, providing immediate cash flow that can be reinvested into growth.
However, to accurately measure how much you can spend on acquiring new customers, you need to have a process for calculating how much you can expect to make from each customer over the lifespan of their relationship with your company.
And that’s where sales metrics such as the customer lifetime value are so irreplaceable. As you collect more data, you can begin accurately predicting how much each customer will bring in, which will help you plan future revenue much more accurately.
Sales Rep Productivity
If you want to put your sales team in a position to succeed, you must not only track the overall performance but look at individual productivity as well.
Most sales reps want to do well, but sometimes some will face challenges that could hinder the company’s progress if they are not resolved.
By tracking the individual performance of sales reps, you can develop a more personalized approach to helping your team members succeed. Consider training to establish best practices, and use the time management methods of your most successful salespeople as a benchmark you can build on.
Customer Acquisition Cost
Acquiring customers is hard. For new companies, it can also be very expensive. But while some companies are willing to operate at a loss initially, you need to know exactly how much you’re spending if you want to create a sustainable business.
That’s why CAC (customer acquisition cost) should be at the very center of your sales efforts. When you know how much it costs to acquire a customer, you can look at how it relates to your customer lifetime value and work towards making each acquired customer profitable.
And as your customer lifetime value increases, you can also allow yourself to spend more on acquiring each customer, which will enable you to be more aggressive in how you pursue new leads.
Average Purchase Value
Average purchase value is similar to customer lifetime value, but it measures the average value of each order instead of how much a single customer typically spends over time.
That can be helpful when you need to have a figure for each sale that occurs, using it as a more immediate estimate of how much you can expect to earn.
This sales metric is also essential for calculating acceptable CAC and can be used to adjust the sales strategy or sales channel focus.
Sales Funnel Leakage
If you have a process for tracking conversions throughout your sales funnel, you can also collect data about sales funnel leakage.
It can tell you where the most significant drop-offs occur on your funnel, informing you about potential weak spots and giving you ideas on how quick fixes could potentially positively affect how many people end up becoming customers.
Some of the insights you can expect to discover are whether the leads you’re attracting are actually a good fit, if you’re spending enough time nurturing them. What types of offers might work better to different audience segments.
Lead Response Time
If you want to ensure that you convert as many leads as possible, you need to keep track of whether your team is providing a quality service to prospective customers.
And one of the best sales metrics for measuring that is lead response time, which calculates how long it takes for your sales rep to follow up with a lead after they enter your funnel.
For instance, once someone submits a form or subscribes to a list, they should be assigned a sales rep that needs to reach out and guide them forward.
The time it takes until the contact is established is crucial, since the longer you wait, the less chance of the lead still being interested.
Sales Pipeline Coverage
If you want your sales team to close more sales and meet quotas, you need to make sure that they are getting enough leads to work with in the first place. That’s where the sales pipeline coverage KPI can be so helpful.
It’s calculated by seeing how many sales days you have, how many leads are coming in, and how many of them you can realistically close according to past performance.
You can then use this data to see if, at the current rate, you will have enough leads to reach your sales targets. If you find that’s not the case, you can up your lead generation efforts and provide your sales team with enough opportunities to succeed.