Apr 16, 2020
There’s no denying that metrics are important in every aspect of business. However, they’re particularly crucial in sales. Here’s why: Sales teams can’t rely on their intuition to improve. Instead, they must track essential metrics so they can evaluate their performance with accuracy, improve key skills, and increase visibility among management for planning and reporting.
While most organizations realize the importance of sales metrics, many of them struggle to understand how to use them in a meaningful way. Fortunately, there are several best practices for tracking and analyzing sales metrics that can help sales leaders understand and improve performance. There are a variety of metrics to choose from, depending on your organization’s size and industry.
What are Sales Metrics?
Sales metrics are points of data that represent the performance of an individual salesperson, sales team, or sales organization. They are often used by sales leaders to track progress, identify issues, and prepare for future growth.
When sales leaders pay close attention to sales metrics, they can incentivize their teams to hit their targets on a consistent basis. Metrics can also be used to fine-tune training and make any necessary adjustments to individual learning. Essentially, sales metrics aim to steer sales teams toward the right direction. They allow them to identify problems in the sales process, grow their revenue, and remain competitive in today’s marketplace.
The 5 Most Essential Types of Sales Metrics
Since there are a plethora of sales metrics available, it can be difficult to figure out which ones to track. Let’s take a closer look at five of the most essential sales metrics.
1. Sales KPIs
Sales KPIs are important because they allow organizations to measure their overall performance. They are specific sales metrics that are connected to company-wide goals or objectives.
Managers often depend on sales KPIs to make informed business decisions. Sales KPIs give them a lagging indicator idea of key gaps relating to product-market fit as well as their sales people’s ability to get the job done. They serve as a key input and indicator of any sales enablement program.
Total revenue is a common sales KPI that may be broken down to revenue by product or service, the percentage of revenue from new business, or revenue by market. Another is year-over-year growth, which can show managers whether the organization is on an upward or downward trend.
Your organization can analyze these metrics as a leading indicator of whether or not you’ll meet sales quotas and use that data to optimize your sales cycle.
2. Hiring and Onboarding Metrics
When it comes to success in sales, talented and experienced sales representatives are vital. Without them, it can be quite challenging for an organization to meet their targets and grow. For this reason, hiring and onboarding metrics are essential.
With the right hiring and onboarding observations and metrics, managers can fine tune job descriptions and reduce the risk of future hiring mistakes, which can cost them a great deal of time, money, and headaches down the road. They’ll have valuable data that informs them of when and how to recruit new candidates.
Sales ramp-up time is one example of a hiring and onboarding metric. It indicates the average amount of time it takes for new sales representatives to be completely productive. Managers can use this figure to make the ideal personnel decisions and set realistic expectations for new representatives.
Productivity itself should also be measured in order to track and analyze the ratio of sales to quota capacity. You can then determine the actual monetary impact of percentage increase or decrease in your sales productivity.
The success of new hires and the path to retention are also incredibly useful. When you hire a new rep, you want to start them off on the right path so they can become productive employees. That begins with hiring the right employees and providing them with valuable curriculum, which will eventually lead to retention. Measuring these numbers will allow you to make necessary adjustments to your overall onboarding process and materials to ensure that high level of retention.
3. Training and Coaching Metrics
Many organizations make significant investments in sales enablement. After all, without a strong sales enablement strategy, it’s nearly impossible to create and maintain a successful sales team. Therefore, training and coaching metrics are invaluable to those in sales, marketing, management, and just about anyone else who is involved in sales enablement. Unique from onboarding, training and coaching are ongoing and impact both new hires and seasoned reps.
Training and coaching metrics can answer important questions such as “Are we spending too much time on training?” or “How satisfied are our sales representatives during the onboarding process?” Another critical measure of coaching efficiency and effectiveness is measuring how much time and quality of interaction in manager driven coaching activities such as shadowing and ride-alongs, 1:1 reviews and conducting two two-way feedback loops.
Cost of training can show the average training cost per sales representative and include a money and time figure. The level of satisfaction level with training is important, as well, because it demonstrates whether or not sales representatives are excited and engaged while they’re learning the ropes. In addition, sales organizations need to be cognisant of engagement metrics with the training content, and how proficient reps are with that content through assessments, quizzes, coaching sessions, and missions. Once you have those numbers, you can fine-tune your training and coaching programs to ensure they’re as effective as possible.
4. Outreach Metrics
If your sales representatives focus on closing deals via phone, email, and social media, outreach metrics can be very beneficial, particularly when tied back to training content (learning) and skill building activities (practice). Managers and trainers can use them to determine which outreach methods require greater attention.
They may find that sales representatives send plenty of emails each day, but don’t invest in targeted calling into their key accounts. If low call activity is an issue, they can go over the call scripts and persona maps that are available, showcase best practices and provide tips on how to use them effectively.
The more prospects sales representatives contact, the more likely they are to meet their numbers. So, it’s a good idea for managers and trainers to set outreach benchmarks and measure each representative’s efforts against them.
Furthermore, if you’re measuring and analyzing the effectiveness of reps’ outreach, you can determine the best approach for contacting prospects.
5. Pipeline Metrics
A sales pipeline serves as a visual representation of prospects and where they are in the sales cycle. It can show managers how many deals sales representatives are likely to close in a given week, month, or year as well as how they’re doing with their sales quotas.
Through pipeline metrics, sales managers can gain a thorough understanding of their success throughout the entire pipeline. They can also provide insights on how their organization is dominating the market and what kind of demand there is for their products or services.
Win rate is one key pipeline metric. It shows the percent of opportunities proposed that sales representatives actually won. It’s based on the opportunities that enter the proposal stage, rather than all the ones in the pipeline. Win rate reveals the success of a sales team and shows managers in which stage representatives have the most difficulty converting opportunities.
Length of sales cycle is another valuable pipeline metric. It’s the amount of time from a sales representative’s first touch with a prospect to closing the deal, averaged across all won deals. Of course, the shorter the sales cycle, the better, so this metric can shed light into whether representatives need additional training on how to close deals at a faster rate.
The Importance of Tracking & Analyzing Sales Metrics
The importance of tracking and analyzing sales metrics cannot be overestimated. By making it a priority to do so, sales-driven organizations can accomplish the following.
Better optimize employee experience
Research has demonstrated that there is a direct correlation between employee experience and customer experience. When sales representatives are engaged and excited, they are better equipped to serve customers and more likely to meet their goals.
By tracking and analyzing sales metrics, organizations can gain valuable insight on what is working for their employees and what is not. These metrics may reveal weaknesses in the sales enablement program and motivate managers to make appropriate changes that make a positive difference.
Provide insightful training feedback
While sales leaders can ask their new sales representatives how they feel about their training, their answers likely won’t be thorough enough to accurately gauge how they’re doing. With sales metrics at their disposal, however, they’ll figure out exactly how effective their training program is and where they need to improve.
If most sales representatives have a low satisfaction level of training, for example, sales managers may have to think of a way to alter their training techniques.
Increase Customer Retention
Customer retention is essential because it increases customer lifetime value and boosts revenue as a result. To increase customer retention, sales representatives must engage existing customers to continue to buy an organization’s products or services.
There are a number of sales metrics such as customer churn, time between purchases, and loyal customer rate that can give sales leaders and the management team a close look at how well their organization is retaining clients.
If they notice a lot of time between purchases, their products or services may not stand out enough from what their competitors offer. Or, maybe their customers simply don’t need to buy them again. This provides meaningful insight that can drive business decisions and marketing strategies.
How Technology Can Help
An analytics interface is one of the easiest and most effective ways to track and manage key sales metrics. When shopping around for a powerful interface, organizations should be on the lookout for the following important features.
An interface should offer data that allows sales teams to change their performance based on real-time changes in the market. Out-of-date data makes the interface ineffective, as time is of the essence in the sales world.
Sometimes, organizations want a high-level view of their data. Other times, however, they’ll want to be able to drill down into more detailed information. Therefore, filters are essential. They can allow them to take a deeper dive into data by changing parameters. This feature can be useful for different members of sales teams looking to understand a multitude of data for any given goal.
To make the most out of an interface, most organizations will share them with departments and individuals. For this reason, they should be easy to share via email to internal parties as well as through public URLS for media or vendors.
Dashboards are tools that can be maximized through collaboration. They should give users the ability to make comments, share key metrics, and create slideshows. Automation features such as report scheduling and program notifications are important, as well. Your sales team members should be able to easily share ideas, feedback, and successes to drive engagement and learning.
Learn How Mindtickle Helps You Make the Most of Sales Data
If your organization is ready to track key sales metrics and use them to your advantage, Mindtickle is here to help. Mindtickle is a sales readiness platform designed to help you understand and quantify the strengths and weaknesses of your sales team, then take data-driven steps to improve sales capabilities.
Mindtickle offers built-in reporting and analytics to help you measure seller effectiveness and track progress against KPIs. Request a demo today to learn more about how Mindtickle helps you track key sales metrics on the path to sales readiness. Or, use our ROI calculator to determine just how valuable a readiness strategy could be for your business.