Sales metrics: types, importance and main one’s for you to follow

Having well-defined sales metrics and constantly monitoring them is essential to know if your commercial area is healthy or not

Will we hit our goals for the month? Are my salespeople performing at their peak? Are they happy with the work? Where to invest training efforts?

Questions like these are common among sales leaders, especially those in Inbound Sales. And did you know that many of them can be answered by tracking the right sales metrics?

Having well-defined sales metrics and constantly monitoring them is essential to know if your sales area is healthy or not.

Then another question arises: what to measure? After all, measuring too little you don’t have answers, but measuring too much can end up spending more time creating reports than selling.

It was with this in mind that we created this article. In it, you’ll learn why sales metrics are important, which types exist, and which types cannot be left out of your monitoring.

Why Track Sales Metrics?

In the past, selling was very simple and was based only on the 3 S:

  • Selection: attracting and recruiting salespeople who had a high-performance potential;
  • Strategy: help these sellers draw ingenious plans for each of the accounts;
  • Skills: teach salespeople to put the necessary skills into practice efficiently.

Finding good people to build a sales team has become an increasingly sought-after role while devising a good strategy and having the right skills has become more sophisticated and complex in recent years.

Thus, although these 3 points are still valid as predictive factors for success, sales teams that work only with these points have lost market share.

In this scenario, sales managers, seeking to remain competitive, begin to look for other factors to be the pillars of their teams, at which time other 3 factors start to guide sales success, the 3 M:

  • Management: especially in relation to first-level management, represented by coordinators and supervisors;
  • Metrics: are raw, atomic and simple composition measures. Measures that go beyond business results and traditional activity measurements;
  • Methodology:  working with a systematic and disciplined approach that allows you to scale your team sustainably.

To keep to the main theme of this article, let’s just focus on the sales metrics part. Their role is apparently simple and clear: they make it possible to understand and improve the performance of the sales force.

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How to build a sales dashboard?

In the book cracking the Sales Management Code, authors Jason Jordan and Michelle Vazzana conducted a survey that identified no less than 306 sales metrics that are used by managers and proposes a very valid reflection on how to build a sales dashboard.

Some of these reflections that serve as a war plan for the sales operation are:

  • What does it take to get the right metrics?
  • How to select them?
  • How to test them?
  • How to use them to manage a high performance sales team?

You must always keep in mind the focus on the main functions of a sales dashboard, such as identifying trends (good or bad) and directing actions to the field, since it is easy to get lost in the midst of so many metrics and thus direct the team to the wrong strategy.

The multiplication of tools and the availability of data makes any report seem cool, insightful and, of course, the secret ingredient of sales alchemy. However, having a vision of an action is not the same as having control over it.

Control over the actions of the sales force is, in most cases, the ingredient that sales leaders are lacking—not the vision. The challenge in the future is probably more related to the excess of data than the lack of it.

What types of sales metrics are there?

So the following question arises: how to build a sales dashboard that clearly demonstrates what actions will drive the sales team to achieve their goals?

The basic question we need to ask when the goal is to build a sales dashboard that serves as an action indicator for the sales team is: how manageable are the numbers arranged in the “war room”?

From this it is possible to separate the sales metrics into 3 groups, according to the book by Jason Jordan and Michelle Vazzana that Blue World City mentioned earlier.

1. Business results in metrics

These are the outputs of multiple objectives, which are influenced by operational activities.

They present the result of what the organization does and are at such a high level that they suffer from influences from other areas of the company and even from outside.

In general, metrics related to business results serve to assess the overall health of the organization.

Examples of these metrics are:

  • Revenue growth;
  • Clients satisfaction;
  • Gross profit.

2. Sales target metrics

Between business results and operational activities are the metrics that serve as intermediaries between one point and another.

These metrics are like the compass for sales actions, ensuring they are being directed in the right direction for business results to be realized.

Examples of these metrics are:

  • New customers acquired;
  • Customer retention.

3. Sales Activity Metrics

They are metrics used to quantify and track the daily actions of managers and sellers.

It is from them that the main results are generated and, therefore, the only numbers in the entire sales dashboard that can be managed based on the effort applied to its evolution.

Examples of these metrics are:

  • Number of calls per seller;
  • Percentage of salespeople using CRM.
  • The value used in training.

From this initial view of managing sales metrics, it is possible to explore in depth each of the proposed groupings.

It is important to emphasize that, in case of doubts about which group belongs to a certain metric, it is necessary to investigate its real nature and its measurement intention.

In the case of sales by salesperson, for example, the number of sales serves only as a numerator to assess the success of salespeople or the ratio between them and sales.

Therefore, this metric is a business result, which should and can be influenced by a sales objective, increased efficiency in the sales process itself and which can be managed through one or more activities such as hours spent by managers in pipeline review.

Theoretically, with an increase in activity, we will have an improvement in efficiency, which will lead to the achievement of a better business result.

It is noteworthy that it is the set of evolution in operational metrics (sales activities) that will be responsible for the final impact on organizational results.

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Do not know where to start? Learn about the top 7 sales metrics

Although each company has specific indicators, there are some sales metrics that cannot be left out, especially in Inside Sales. Are they:

1. Number of sales per seller

It is important to track sales by seller on a day-to-day basis. For this, it is useful to have a dashboard with the name of each salesperson and, besides, the sales made. It must be updated in real time and visible to everyone.

This metric is important because it gives the manager a quick view of who is on the road to reaching the goal and who may be in need of help. It also helps salespeople to know how their own performance compares with that of their peers.

The number of sales per seller can be measured weekly or monthly. Longer-term goals than this can undermine team motivation.

2. Average sales cycle and by salesperson

Do you know how long it takes your business to turn a Lead into a customer?

Keeping an eye on this number helps you understand which salesperson is taking a long time to close, which can hurt the company. A short sales cycle, on the other hand, impacts cash flow, increasing the team’s sales.

But beware: shortening the sales cycle too much can raise expectations that the company will fail to deliver, as well as bringing in less-than-ideal customers—those who are dissatisfied with the product or service and cancel shortly thereafter.

3. Conversion rates

Knowing bottlenecks and being able to work to improve them are the main benefits of knowing your sales funnel’s conversion rates. With these metrics, you know what percentage of contacts moved to the next phase, out of total Leads in that step.

If, for example, between the connection and evaluation phases, you have 35% conversion, this means that you can improve that conversion a lot.

4. Reasons for customer loss

As a potential customer moves up the sales funnel, it consumes more company resources. Seller hours, for example. Therefore, losing it at the bottom of the funnel is more expensive than at the top.

That’s why it’s important to know why your company is losing potential customers to work on these bottlenecks once again. Is it because of the price? Is it because of the competition? With this metric, you answer these questions.

5. Revenue per seller

This is the most important sales metric, and it helps you understand how much value your salespeople are bringing to the company each month.

But be careful: this metric tells you where the problem lies if the revenue target isn’t met. However, to understand the reason, it is necessary to investigate further.

6. Average ticket per seller

The average ticket per salesperson is calculated by dividing the revenue generated by the salesperson by the number of sales made.

There are sellers who are good at closing deals faster, and with lower values, and others with longer sales cycles, but which cost more. Therefore, it is important to know the profile of sellers. Thus, it is possible to direct the accounts to the right sellers.

7. Ramping time of new sellers

In sales teams that use Inbound Sales as a methodology, it is important to have a well-documented and structured sales process. This makes training new salespeople easier. And for the business to be predictable, it’s important to look at the time it takes these new salespeople to hit targets—the ramp-up time.

Based on this metric, it is possible to know the pace of growth of the team and when it will be necessary to make new hires.

If the idea is to increase sales by 20% in 6 months, for example, and salespeople take 4 months to ramp up, in 2 months it will be necessary to have 2 salespeople hired, so that within 6 months they are delivering the desired sales.

Tracking these and other sales metrics is easier using a Customer Relationship Management (CRM) tool such as RD Station CRM, which allows you to view salespeople’s performance in real-time. With it, you can track the performance of the team and each salesperson with visual and easy-to-interpret reports.