For sales leaders, data isn’t everything. It’s the only thing.
Having too little data makes optimizing your sales team’s performance deeply inefficient. On the other hand, trying to take on every metric available will overwhelm your team and kill their chances of working the worthwhile data effectively.
The fastest-growing companies use analytics effectively. In order to do that, you need to strike that sweet spot between tracking too few metrics and trying to track them all.
The following 10 KPIs are that sweet spot. Use them to form the basis of a powerful sales analytics program. They’ll allow your growing sales team to thrive without burying them in numbers.
1. Sales Growth
It’s hard to think of any approach to sales analytics that doesn’t take sales growth as its foundational metric.
Analyzing sales growth involves measuring revenue increase over a fixed period of time. It can be measured using a simple formula:
((Current month’s total sales – Previous month’s total sales)/Previous month’s total sales) x 100
It is tied intimately to revenue and profitability. Reliable tracking of this metric can act as the foundation of a much broader sales strategy, including which other metrics you include in your sales analytics plan.
2. Sales Target
Sales targets should be second on your list. Targets help determine your company’s growth and form the basis of your company’s revenue.
Well-defined sales targets unify each level of your company, from executive to salesperson, behind a clearly understood objective. This kind of alignment, particularly between adjacent departments like sales and marketing, is fundamental to a consistently successful sales approach.
Calculate your sales targets, having assessed your performance to date against business objectives and the performance of your team, as well as any changes you’ll be implementing during your next sales period (new sales pods, the expansion of current accounts, investment).
It’s helpful to make your targets dynamic, with a general focus on short-term performance, in order to make the assessment of the likelihood of success easy and to ensure your sales team remains motivated throughout the process. Targets that are too far in the future can be as bad for motivation as targets that are unrealistically hard (or easy).
Visual aids like sales leaderboards are an excellent and easy way to track this metric. They are visible throughout your team/organization and a constant frame of reference for your sales team’s efforts..
3. Sales Funnel
Your sales funnel is of great importance, and you should assess the nature of yours rigorously to determine where the weak points are in your sales strategy.
Each stage of the buyer’s journey has a different dynamic, so measure your sales team’s success at each one. You will almost always find progressively fewer prospects at each stage; however, if you go from 40% agreeing to a demo to only 8% actually agreeing to buy, it's clear that the process needs to be amended.
Where you’re seeing opportunities close will determine your course of corrective action.
- Customer relationship management (CRM): A critical business tool, CRMs are used by sales teams to communicate with clients, manage your pipeline, log activity, and track deals through every stage. Almost any kind of company will benefit from a robust CRM, particularly because it can provide a foundation for other sales enablement tools.
- Loss in the early stages of a prospect: Is your content performing? Are you targeting the correct prospects, with the right approach, at the right time?
- Loss after a discovery call: Is your team up-to-date on best practices for on-the-phone selling? If not, address this deficiency in the coaching aspect of your wider sales-enablement program.
- Loss after a demo: The success of your demo is absolutely key to a sale. Is your demo intuitive and easy to use? Does it give your prospect a good feeling about the ease of onboarding and potential support? Most importantly, is it representative of what your salespeople are selling during the discovery call and what your content is advertising?
- Loss before buying: If you’re falling at the final hurdle, you may need to evaluate your team’s approach to negotiation and your wider approach to pricing (including things like baseline pricing, tiering, add-ons, etc.).
4. Pipeline Velocity
Measuring pipeline velocity is a sure way to bring targeted improvements to your sales process.
The calculation of your pipeline velocity (PV) will tell you how much money you have coming through your business per sales cycle length. Begin your measurement of pipeline velocity using the formula:
Pipeline Velocity = (Qualified Opportunities x Win Rate x Deal Size) / Length of Sales Cycle
Observe the rate of change, not only of the PV but of the metrics that compose it; consult your metrics to find the root cause of any unprecedented spikes or drops. Looking into each individual component metric of pipeline velocity allows you to see where process improvements will be felt most.
A better grasp of your conversion rate, especially combined with a robust understanding of your sales funnel, will allow you to see where the buyer’s journey is stalling. This will help you improve the number of qualified opportunities.
An understanding of where opportunities were lost will show you how to improve your win rate. Opportunities can be lost at any number of stages on the buyer’s journey, such as:
- Poor pricing: Are your price points effectively tailored to market rates and your customers’ likely budgetary constraints?
- Timing of approach: Are you targeting companies that are at a point in their progression where your product can be of use to them?
- Poor targeting: Are you reaching out to people at prospect companies who have the authority to make a deal?
- Poor pacing in the sales funnel: Are you giving your leads enough time to review the materials/offers you’re sending them? Are you giving them too much time, resulting in a loss of momentum?
- Lowered demand: Is your product is no longer a priority for the customer?
You can see the break down of these different reasons for loss below...
To increase your deal size, consider the balance you’re striking between low-value and high-value deals. To reduce potential inconsistencies in pipeline velocity, keep that balance consistent and coach your team to prioritize either high- or low-value selling, depending on what best serves your needs.
5. Lead Generation & Conversion
Your understanding of lead generation and conversion metrics can never be too thorough. In order to track it, track several types of data, giving priority according to the scale of your company and your product.
Quality & Volume:
Your business’ sales focus will determine whether you prioritize high-volume leads or high-quality leads. Regardless of which you're geared towards, you don't want an avalanche of dead-end leads. Use lead scoring models to identify the most promising leads.
Leads by Lifecycle Stage:
Define your product’s lifecycle stages relative to your sales funnel. After making those definitions, measure the lead types and conversion rates observable at each stage.
Leads by Source:
Determine the differing lead sources you have bringing traffic in (direct, referral, organic search, paid social) and measure for success by offsetting it against the cost-effectiveness of each source.
Rate of Upsell/Downgrade:
Your existing customers count as leads too, and you neglect them at your peril. Assess the rate of upsell or downgrade among your existing customer base.
Applying sales analytics effectively to lead conversion also requires you to keep track of a few separate metrics, which can include:
Revenue Contribution vs. Cost of Leads:
While every new conversion will bring money in, you can’t make money without spending it. Take the percentage that newly converted leads are contributing to total revenue compared to existing accounts within the same sales period and offset the costs against the costs you incurred by finding, nurturing, and converting those leads.
Number of Conversions by Approach to Nurturing:
Speaking of nurturing leads, most leads need some nurturing before they can be converted. This is a source of expense, both financially and, especially, time-wise. When considering the quality of your nurturing approach, pay particular attention to things like sales scripts and content strategy and compare them against the time your salespeople spend on nurturing.
If your conversion rate is too low compared to the time spent, consider changing your approach.
6. Average Contract Value
As vital as newly added sales pods are to powering revenue increases, increasing average contract value (ACV) is, in fact, an even more powerful driver of exponential growth. Keeping track of your ACV is a vital sales analytics consideration.
Measuring and improving your ACV allows you to build revenue without having to constantly exceed your month-on-month customer growth numbers. It’s actually both easier and cheaper to sell to existing customers than to new ones. Some of the fastest-growing companies prioritize upselling in order to increase ACV and drive revenue.
As always in sales analytics, keep one eye on the market while you’re keeping the other on your own ACV metric. A lucrative way of increasing this figure is to mature your product and prime it for integration with adjacent platforms and basic enterprise functionality. This consideration is rarely taken into account, by young businesses in particular, and leveraging it can lead to a huge advantage in building early ACV.
Otherwise, observe the precedents your sales team is setting, especially in the early days of a startup. You can’t drive ACV higher if your sales team is accustomed to bargain pricing. Be daring, and calculate when it’s time to ask your clients for higher fees on an upsell and to present higher starting prices to prospects.
7. Product Performance
The best sales analytics program in the world is useless if your product is not performing. Product performance can generally be measured in terms of the revenue your product is bringing in and the volume of orders you’re receiving and fulfilling.
If your product suffers an otherwise unexplained slump (not accounted for by the metrics involved in measuring pipeline velocity), this may suggest a problem with your product’s functionality. Otherwise, issues with product performance tend to be contextually determined. The following three contextual cues are particularly valuable to keep track of.
1) Buyer personas are perhaps the most important piece of context to consider when trying to improve your product performance.
- Are your pricing tiers arranged for maximum appeal to your buyer personas?
- Are you tailoring deals to the separate needs of different buyer types?
If you have a product that serves both blue- and white-collar businesses, boutique startups and industrial-scale corporations, then you will have differing buyer personas with different needs and expectations to cater to.
2) Analyzing Competitors is another key piece of contextual information for the evaluation of product performance:
- Have competitors brought out a competing product selling at a lower price?
- Have they targeted more accurately to buyer personas?
If so, you may need to consider expanding your range of services or modifying your pricing.
3) Assess your approach to customer relationships and how it might be affecting your product performance:
- Consider whether or not your content strategy is adequately tailored to the buyer’s journey with your product.
- Observe whether or not your sales team, while nurturing existing client relationships, is seeking the right kind of constructive feedback that will allow you to make the right improvements to product performance.
Understanding your customer’s relationship with your product is key to improving your relationship with them. If necessary, press them on providing constructive critical feedback about your work.
8. Real-Time Competitive & Market Data
Experience has traditionally acted as the guide to pricing decisions within B2B sales teams, but data-oriented sales analytics needs to play a role in making decisions reliable again. Taking on competitive and market data as sales analytics metrics can lead to more dynamic pricing.
Your team will benefit from having an eye on other deals being made in your field. Identify and track these similar purchases, and use the information you gain to shape your approach to selling. There are a number of algorithmic analytical procedures (e.g., decision trees) that can make digesting this data simpler.
When your product might be fairly new and without a lot of comparable purchase information to use as a yardstick, look to track real-time competitive and market data instead. The use of dynamic-pricing engines that combine these metrics with sales strategies can lead to a sharper approach to sales.
The purpose of tracking metrics for real-time competitive and market data is to allow you to set more ideal price points, as well as targeting greater volume. This should lead to increased customer satisfaction, as customers are satisfied that they have paid for value.
9. Selling Time
Finding and nurturing leads, maintaining and upgrading existing customer relationships, offering support — there’s a lot that your sales team does aside from the actual business of selling. Maximizing their selling time, and optimizing their use of it, is the most decisive factor in the immediate improvement to your sales team’s performance.
Observe your team’s workload and account for the proportion of their hours that are devoted to selling time. Ensure that sell time logs are implemented and outcomes tracked. Too much time spent on a single stage in a deal or repeated time spent on a potential deal leading to a closed opportunity can be red flags that your customer targeting is flawed.
Pre-sale actions like information gathering have been shown to take up significant portions of a sales team’s time — a well-integrated CRM at the base of your tech stack can make looking for key customer information, like POCs and pain points, a quicker and more painless process. This will also help declutter your sales team’s minds during sales periods — the less they feel they have to keep practical track of, the better they can execute mission-critical tasks like selling.
Lastly, as part of your sales-enablement strategy, implement tools that allow salespeople to outsource or automate administrative/non-selling tasks where possible to allow them to make the most of their selling time. Particularly if you’re looking at fulfilling a high volume of low-quality sales, being able to automate actions like email marketing can be decisive.
10. Team Performance
We said not too long ago that sales enablement, and particularly training, is a process that should never stop.
A key aspect of sales data analysis is looking in at your own team in order to make those important internal calls. Who’s performing particularly well? Who has flaws in their game and could use some coaching to improve?
What Your Team Places Importance On
Your sales team is smart — in a lot of cases, they’ll know where they’re thriving and where they’re struggling and need some coaching. Ensure you establish touchpoints within your team where people can leave coaching comments with specific requests for areas they need help with.
When analyzing thousands of coaching-related comments from sales reps, we found that a huge range of topics was typically requested for training, with “the questions reps ask prospects” the most frequent topic request.
Take care to make your targets realistic — if less than 60% of your team is hitting them, it’s highly likely that the quotas themselves are bust, not your salespeople. The same goes if 100% of your team is hitting the marks without breaking a sweat.
Your Sales-Enablement Strategy
Use performance over time to assess the effectiveness of your sales-enablement strategy — did the wider team’s performance improve after those changes to the tech stack or degrade? Are your on-site workshops working for targeted reps?
The Team’s Approach to ACV
Consider your approach to increasing your average contract value and tailor your expectations of your team’s performance accordingly. If your approach to ACV is to cultivate client relationships and upsell, then ensure your team is making this a priority. If you're looking to focus on converting a lot of new business within your next sales period, then what are your team’s respective win rates on converting leads and how can they be improved?
Sales metrics are a matter of data, and sales is a matter of time — the right sales analytics program will help you get the very best out of both your data and your sales team’s time.
Sales analytics doesn’t stop with these 10 metrics - there’s plenty more to explore to improve your sales performance.