Measuring sales team KPIs can be an overwhelming process.
You’re not just tracking revenues and quotas, but team productivity, selling motions, activities, conversation quality, and much more.
What’s more, not all sales metrics are created equal. Some of them are just vanity metrics and don’t give you any useful insight into the health or effectiveness of your organization.
So how do you know which metrics to track and which ones to ignore?
In this post, we’ll walk through the three main categories of sales KPIs and what they actually tell you.
What are sales performance metrics & why do they matter?
Sales performance metrics show you the success of your team by tracking their progress over time. By tracking these metrics, you can find out where your reps are succeeding, and where they’re falling short.
But measuring your sales metrics and KPIs shouldn’t just be an academic exercise. The goal is to drive results that move the needle:
- Figure out what the metric is telling you
- Identify the sale activity that’s driving that result
- Coaching reps to change their behaviors
3 categories of sales performance metrics
We’ve all heard the phrase “you can’t manage what you don’t measure.” But the inverse is also true: you should only measure what you can manage.
This means contextualizing specific sales performance metrics, understanding what they mean for the organization, and identifying the specific action that moves the needle.
The most important sales performance metrics will fall within one of the following categories:
- Activity — how much is the rep actually doing?
- Productivity — how are these activities moving the needle forward?
- Success — how are these activities translating into revenue?
By understanding which type of metric you’re looking at, you can better figure out how to address it. For example, if a rep is struggling with the quality of their calls, then coaching them to increase their activity isn’t going to help—because their calls will still suck.
Let’s walk through each of these categories of sales performance metrics and figure out exactly what each one is telling you.
1. Activity metrics
Activity metrics are the most basic and surface-level of the sales performance metrics—but that doesn’t mean they aren’t important.
Let’s say you have a rep with an exceptional 50% conversion rate on cold calls. But if they only make two cold calls a week, that means they’re only going to convert one prospect a week. Unless you’re dealing with exceptionally large contract sizes (seven figures or more), there’s no way you can fill a pipeline with those numbers.
There’s a minimum threshold of activity reps have to put in to be effective. By measuring activity, you can ensure that all your reps are meeting that threshold.
Here are some of the most important activity metrics to track:
- Number of leads created
- Number of calls made
- Number of emails sent
- Number of follow ups
- Number of social media connections
- Number of logged visits
- Number of conversations
- Number of discovery call summaries
- Number of meetings scheduled
- Discovery call to meeting rate
- Number of demos or sales pitches
- Number of proposals sent
- Close ratio
- Number of referral requests
- Number of attempted upsells
2. Productivity metrics
If activity metrics show you the quantity of sale activities, productivity metrics show the quality of each of those activities. After all, a rep could make 100 calls a week—but if they suck at calls, then it’s not going to help them.
When it comes to productivity, a metric that many sales managers prioritize is time spent selling. While balancing selling with other tasks is an important skill for reps to learn, it probably doesn’t do much to move the needle.
Here are a few important productivity metrics you should track:
- Sales cycle length
- Open vs.closed opportunities
- Pipeline Value
- Average Deal Size
- Win Rate
Let’s look at each of these in some more detail.
Sales cycle length
The length of a sales cycle should be directly proportional to the size of the deal. If a rep is spending twelve months for a four-figure deal, something needs to change. Measuring sales cycle length can help you recognize these patterns and respond to them.
Basic formula for sales cycle length:
{Average sales cycle length = Total number of days to close all deals / Total number of deals}
Open vs. closed opportunities
You should have a healthy mix of open and closed opportunities in your pipeline. Too many open opportunities betrays an inability to close. Too many closed opportunities betrays an inability to prospect.
Plus, if you have opportunities that are languishing in the pipeline, odds are your rep isn’t proactive enough at following up. That, or they don’t know when to cut bait and move onto greener pastures (yes, we know we’re mixing metaphors here).
Pipeline Value
Although pipeline value isn’t a perfect forecasting method (after all, it only takes one major deal falling through to throw the whole thing off), it can be helpful. At the very least, a low pipeline value means you have a lot of work to do.
Basic formula for pipeline value:
{Pipeline coverage = Potential sales in pipeline, in dollars x Win rate}
Average Deal Size
Average deal size is a revealing metric that can provide you with helpful information and help you to identify underperformers.
Generally, if deal size is low, it means one of two things. Either the rep is working with the wrong type of customer—which means there’s a problem in prospecting and qualifying leads—or it means that the rep isn’t equipped to sell to bigger customers.
Basic formula for average deal size:
{Average selling price = (total $ of closed deals over a specific time period) / (total # of deals)}
Win Rate
Win rates give you a conversion rate of how many leads overall are being closed during certain periods of times giving you the huge advantage to see your sales reps productivity metric at a given period of time.
A high win rate but low pipeline value means that your reps are going after customers that are too small. A low win rate usually means that a rep is good about generating excitement on the front end, but not following through on turning that enthusiasm into a sale.
Basic formula for win rate:
{Win rate = (Number of wins / Number of quoted opportunities, lost and won) x 100}
3. Success metrics
At the end of the day, sales is about dollars. If a rep isn’t profitable, then it’s not worth keeping them on board. Success metrics help you quantify a rep’s value.
Keep in mind, however, that success metrics are lagging indicators. If you spot a problem here, then odds are the actual issue happened much earlier in the sales cycle.
Here are some success metrics to track:
- Quota attainment
- Pipeline lifetime value (LTV)
- Annual / monthly recurring revenue (ARR / MRR)
- Average revenue per user / account
Final thoughts on sales performance metrics
Tracking sales performance metrics is important. But even more important is responding to those metrics, coaching reps to change behaviors, and moving the needle in the right direction.
For most sales reps, problems in their selling motions come up during conversations with prospects. Having coaching intelligence software to surface these coachable moments is critical to turning sales performance metrics into actionable insights.
Click here to download our free guide on coaching intelligence, and how it empowers you to make your team better.