Although salespeople are traditionally motivated by cash and prize incentives, sales leaders may be surprised by the power that data gives them to increase competitiveness and find the levers that lead to more closed-won deals from their teams. In addition to tracking sales performance, key performance indicators (KPIs) can be used to motivate sales teams and increase the revenue they produce.
As you establish KPIs for your team, you may find that some are more effective than others. Sales metrics also depend on the structure of your team, the goals of your organization, and the data you have available. Use these sales KPIs as a starting point for creating your own ideal report or dashboard.
A sales leaderboard is a powerful tool to encourage competition among your sales team. By showing how each rep is tracking towards sales goals, it’s easy for the sales manager to see who’s leading the pack and who’s falling behind. If you use an openly shared sales dashboard, the competition gets even fiercer as no one wants to be caught lurking at the bottom of the chart.
As a sales leader, you want your team to spend their time on leads that are most likely to convert to closed-won deals. Tracking sales by channel shows which lead sources are producing the most or biggest deals, including those managed by the marketing team as well as customer referrals, partner referrals, etc.
Opportunity-win ratio, also known as win rate, is an incredibly important performance metric that tells you how well your reps handle at-bats with qualified potential customers.
Most teams will have opportunity-to-win as a stage in their sales funnel, however, if your funnel is more complex—including SQLs, trial periods, etc.—you’ll want to track conversions between each of those stages so you can see whether you have “leaks” in other areas.
To learn more about how to break down the stages of your customer acquisition funnel, check out Lead to Loyal: 6 Steps to Mapping Your Customer Acquistion Cycle Using Your Salesforce Data.
To understand the revenue you earn from each sale, use total contract value (TCV) or annual contract value (ACV). While TCV looks at the total period of the contract, ACV only considers the 12-month value.
Two related metrics can tell you more about your sales revenue: average deal size and annual recurring revenue (ARR). Average deal size looks at the average sale price of all closed-won deals, and can be calculated as your average TCV. ARR is similar to ACV, but looks only at recurring revenue, not any one-time fees (implementation, training, etc.) that may be included in a contract.
ARPA, or average revenue per account, tells you how much revenue you earn on average from each account/customer per month.
How long does it take your team to close a customer? Calculating your average sales cycle is a valuable way to manage expectations and estimate close dates. Various factors can impact sales cycle, such as rep experience level, the specific product or service being sold, company size, geography, etc., and you may want to drill down on each of them.
You want your team to close a lot of deals, but you also want paying customers to stick around. An effective way to help your reps understand the importance of this principle is to track churn rate by rep. Remember, a salesperson who closes a lot of deals that end up churning may be costing the company more in the long term.
Growth rate can be a highly motivating metric, particularly in the early days of the company, when it’s much easier to see rapid, “hockey stick” sales growth. Over time, you’ll need to produce much more new revenue each month to sustain it, at which point growth rate may not be as useful for your team.
Your sales reps live by quota. As you set sales goals and identify targets, quota attainment is critical to consider: How many of your reps are hitting their number? How close are you to reaching your overarching team goal? Are your quotas and stretch goals high enough to maximize performance, but low enough to be within reach?
Tracking your monthly revenue against your sales forecast allows you see how you’re progressing towards your sales goal. Many teams depend on reps to self-report their revenue forecast, but for such an important sales metric, you should rely on data to calculate it.
Golden motions analysis isn’t necessarily a metric or formula, but it can help you better predict purchase by analyzing correlations between customer and rep behaviors. This analysis can help you set activity goals, such as number of dials or emails sent, to help your team close more deals.
Check out the webinar, 6 Sales Metrics You Should Be Tracking (But Probably Aren’t), or read the recap.
Revenue is the lifeblood of a company, and sales teams are critical to closing new revenue. As a sales leader, it’s your job to get the most out of your reps, and help them get the most out of every deal. The best way to accomplish this is to analyze and evaluate your team’s performance using data. Sales KPIs help your team understand and meet expectations, so you can focus on solving problems in the business.
If you want to truly motivate your team with data, you have to get the numbers in front of them on a regular (if not continual) basis. While you can send out emailed reports on a daily or weekly basis, this approach weakens the power of the KPIs to impact rep behaviors.
On the other hand, displaying KPIs on a sales dashboard amplifies that power, especially with your sales leaderboard. Never underestimate the power of public glory—or public humiliation. Everyone wants to see their name at the top, to be known as the top performer. Tracking the other metrics we’ve suggested can help you help your reps improve their individual performance and close more deals.