Identifying sales key performance indicators (KPIs) can feel like finding a diet that works: everyone claims their diet is the best, resulting in all manner of conflicting advice regarding ‘superfoods’ and other foods to banish entirely. It’s really quite confusing and frustrating since the ‘best’ is highly subjective both for food and KPIs. The real question is what’s right for you? What sales metrics will help you achieve your company goals?
KPIs are never one-size-fits-all.
So instead of trying to persuade you that certain KPIs are the best, I want to empower you to define the right metrics for your sales team. Then we’ll look at a list of the most common sales KPIs.
Defining the right KPIs
1. Start big. What are your company-wide goals? Revenue? Growth? Customer acquisition? Customer Retention? Typically, companies have one primary objective with one or two secondary goals that provide context and support the primary objective. Ideally, everyone in the company should know this off the top of their head. For example, the company goals might look like this:
- Primary goal: Increase annual revenue to X amount
- Secondary/supporting goal: Grow 6% month over month
2. Get specific. What sales objectives will help your company reach their overall goals? Take a broad goal such as total monthly sales and break it down further. What is your average deal size (or purchase value)? What is your average sales cycle length? What is your cost of sales? It’s important to view your primary goal (e.g. total monthly sales) in the context of your industry and specific business.
Sales Specific Goals
- Primary sales goal: $ Monthly Sales
- Secondary sales goal(s): % growth month over month
- Average deal size ($)
- Average sales cycle X days/weeks/months
- Cost of sales ($)
- Opportunity win rate (%)
3. Focus on action. Take the goals and contextual metrics you outlined in step 2 and distill what your team needs to do to reach those goals. Work backwards. How many deals do you need to close to hit your target? Based on that number, how many opportunities should be in your pipeline? How many calls/emails/meetings will be necessary? How many leads or contacts will your marketing team need to generate? Keep drilling down until you have a solid understanding of the key activities driving your revenue.
KPIs are most effective when they target specific actions for two reasons. One, action-oriented KPIs inspire action. And two, KPIs focused on action help uncover possible causes when the overall goal isn’t met.
- (#) of wins
- (#) of deals/opportunities
- (#) of sales qualified leads
- (#) of marketing qualified leads
- Send X outreach emails
- Send X follow-ups
- Make X calls
- Conduct X meetings
- Send X proposals
4. Prioritize your metrics. After completing the exercise in step 3, the most critical metrics should become obvious. I recommend compiling a short list of 5-8 sales KPIs that include both contextual metrics and activity-based metrics. This helps you focus on the most critical data without distorting their impact (this can easily happen if you only focus on 1-2 metrics). You can always adapt, add, or remove this list later.
- Contextual example: Monthly Sales $ to date vs target monthly sales $
- Activity example: X follow-ups vs (#) sales qualified leads
5. Monitor your metrics. This one is really a no-brainer, but it’s far too important to skip. Having the key metrics in front of your team on a daily basis will help them track progress and prioritize actions. Defining your KPIs will be a waste of time and energy if you archive them in a static document or spreadsheet. KPIs are living metrics meant to be shared and monitored regularly. Obviously, we believe a great way to do this is by getting them on a TV dashboard on your sales floor and you can see an example of what that dashboard might look like below.
Tracking your sales KPIs
Now that you’re equipped to define the right sales KPIs for your team, here are the most common sales metrics that are tracked.
Most common sales KPIs for sales executives and managers:
- Monthly Sales Target ($) (with goal & percentage for context)
- Cost of sales to revenue ratio
- Marketing Qualified Lead (MQL) to Sales Qualified Lead(SQL) Conversion Rate
- Sales Qualified Lead (SQL) to Win Conversion Rate
- Sales growth vs goal
- Activity per rep vs wins per rep
- Deals closed (#) vs goal
- Average sales cycle
- Average follow-up attempts
- Product performance (list of top performing products/services)
Most common sales KPIs for account managers, business development associates, and sales representatives:
- Individual Monthly Sales Target ($) (with goal & percentage for context)
- Opportunity funnel
- Lead response time
- Individual Win/loss ratio
- Individual Sales activity (# calls/emails/meetings) vs efficiency
- (#) Qualified opportunities (with goal & percentage for context)
- Value of closed deals this month ($) vs target
So, now that you know how to define your sales KPIs, you might also be ready to create your own sales dashboard)! Get inspired with these example sales dashboards.
If you’re ready to create a sales dashboard, sign up for a free Geckoboard trial (no credit card required) and start building a live TV dashboard in seconds.