As every sales professional will attest to, there’s no one way to be a successful salesperson. Sales teams are often run differently from business to business, and what makes a person successful in one company may not work at all in another.
With that being said, every salesperson needs to know about sales KPIs and why they’re being tracked. Whether they want to improve their sales or help to develop their sales department, this article will help every salesperson understand the most commonly tracked KPIs and their significance.
Salespeople need to follow up with leads promptly, particularly in the B2B sphere. Research shows that responding to leads within 5 minutes is 21 times more effective than if responses take 30 minutes. Understanding and tracking lead response time can help to explain a variety of other KPIs, like the number of accounts engaged or the average time to conversion.
In addition, if the sales team uses asynchronous selling to engage new leads, this KPI is vital in understanding how well these processes work with the in-house sales team.
For sales teams that schedule calls or presentations with leads, it’s important to track how often leads attend these calls. Salespeople should aim for a high call-show rate where possible. A low call-show rate often shows that there’s a problem with the sales process, or some degree of friction, that’s preventing leads from showing up to sales calls or presentations.
If the sales team is using virtual selling as part of their process, this KPI is vital to understanding how well it works.
This KPI tracks how many new leads have reached a specific point along the sales pipeline. Before tracking this KPI, sales teams must define when an account is considered to be ‘engaged’. While a high number of engaged accounts can translate to a higher total revenue further down the funnel, this isn’t guaranteed.
Rather, this KPI demonstrates how effectively a salesperson can open a sales pipeline with a new lead.
New logos acquired refers to how many new customers a salesperson has closed. This KPI isn’t always used in every sales team, as some processes may focus on building the spend of existing accounts over closing new ones. However, this KPI is still a valuable metric to track in tandem with things like number of accounts engaged to gauge the ratio of engagement to closing.
Average transaction size tracks how much revenue each new customer brings in upon close. For sales teams that focus on generating a high amount of revenue from fewer accounts, such as those in the B2B sphere, ATS is a valuable KPI to track. Not only does it allow for easier tracking and goal setting for salespeople, but it also can highlight issues or friction in the sales pipeline that needs to be addressed.
This KPI typically goes hand-in-hand with number of accounts engaged, as it tracks how many engaged leads are closed with a sale. Measuring the relationship between these two KPIs helps salespeople to understand if there are any problems with the latter half of the sales funnel, particularly if the ratio is particularly low.
However, if the ratio is high, it’s a good indication that the salesperson or team has done a good job with their enablement processes.
This refers to the overall revenue loss from customers or accounts that have stopped spending. Salespeople can track this KPI with their accounts only, or sales teams may want to track this metric across their department. Either way, if this KPI is high, it indicates that the after-sales process needs improvement.
On the other hand, net expansion revenue tracks the revenue gain from expansion (accounts that have increased their spend), minus any losses from revenue contraction or churn. Like with gross customer churn, salespeople can track this individually, or it may be tracked across the whole department. Salespeople should aim for this KPI to be at the very least in positive figures, as negative figures is a serious indicator of a wider issue.
This refers to the total revenue generated from new accounts, minus any expansion, shrink, or churn from existing customers. Measuring this KPI is valuable because understanding new revenue is a good indicator of growth, particularly if sales leaders calculate the ratio of this new revenue to existing sales.
Salespeople will need to track this KPI individually as it measures their individual performance. Individual quota attainment tracks the percentage of each salesperson’s quota that’s been achieved. Whether that quota tracks new accounts, revenue generated, average transaction sizes, or any other metric, individual quota attainment is regularly used to measure performance.
As with the other KPIs listed above, this metric can either be tracked to measure individual performance or as an average across the department. As a performance metric, average time to conversion is a good measurement of whether a salesperson is able to convert new leads within the target timeframe. Not only that, but it’s a useful measure of how well that salesperson can help leads down the pipeline, and keep them within the pipeline as a prospect.
Salespeople need to keep track of their closed-lost rate to better understand where leads are leaving the sales pipeline and why. However, it’s important to understand that closed-lost isn’t necessarily a negative indicator. More often than not, closed-lost leads are those that have been disqualified from the pipeline because they’re not currently interested in making a purchase or they don’t have the available budget.
With that being said, salespeople still want to ensure their closed-lost rate doesn’t overtake other metrics like the amount of accounts engaged or their closure rate, otherwise this can indicate a wider problem with their sales approach.
This is one of the most important KPIs in sales, as it represents how many leads the salesperson has closed sales with. This metric is often given more weight when the sales goal is to grow a client base, however, that’s not to say it’s not important in companies that value fostering loyalty with existing clients. Tracking this will help salespeople to understand if they need to make improvements to their sales technique, but they will need other KPIs and metrics to understand where those improvements are needed.
As mentioned above, churn is an important metric to measure to understand where a sales team is losing revenue. To narrow this down further, churn by rep is a valuable KPI for salespeople to track because it helps them to understand if there are any areas they need to improve in. Ideally, sales reps should aim for this number to be as low as possible, as a high churn by rep individual rate can indicate that salespeople aren’t asking the right questions or helping their accounts thoroughly enough.
Finally, salespeople should keep track of how often they communicate with leads and existing clients with this KPI to avoid shrinkage or churn. Each sales team and business will have different expectations for how to build and maintain a communication link with clients, so salespeople should work to understand how often their clients prefer to be contacted, and for what reasons.
Following up with leads is key to closing new business, as is keeping in communication with existing accounts to see if they need any additional support or products from the business. Maintaining an average time between communications in line with the client and business’s expectations is key to maintaining a high closure rate and low churn rate.
KPIs will always be synonymous with sales because salespeople will always need metrics to understand how to perform their role better. These 15 KPIs are by no means an exhaustive list, particularly as many businesses will have their own preferences for how to conduct sales depending on their goals.
Rather, the above list represents common KPIs that tend to be used regardless of a business’s goal, because they’re a good indicator of a salesperson’s performance.
To improve their performance, salespeople should pay close attention to these KPIs and understand what they mean, both in terms of individual performance and in relation to business goals. Given that some businesses will have the aim of growing their client base, while others will want to grow existing accounts, the goal metric with each KPI will differ from business to business.