Growing your business can feel like a roll of the dice if you don't know what's working and what's not.
Managers and department heads can use sales metrics to better lead their teams to success — but it's crucial to focus on the right metrics, at the right time. If your team isn’t dialed in and driving home sales, this can result in losing up to 30% of your business to competitors.
What are sales metrics?
Sales metrics are data points used to measure and monitor the performance and effectiveness of a company's, or individual's, sales. There are dozens of sales metrics that can be analyzed to view a business's health, beyond knowing what your revenue is. These metrics can contain information about conversions, costs, customer behavior, or expenses.
Why track sales metrics?
Any business looking to expand or improve will need to monitor sales metrics. These metrics are used to help track goals and growth, and identify strategic opportunities. Monitoring sales metrics helps a company keep its finger on the pulse and optimize its approach.
By analyzing sales metrics, your company can save money and set realistic goals, ensuring that leads are effectively being turned into customers. You can also quickly identify when things aren't working or when there's been a sudden change in the market. There are plenty of opportunities that can be harvested from your customer data using analytics.
The top 5 sales performance metrics
So, where to start? Here are the top five sales performance metrics to monitor:
Revenue growth
Revenue growth reflects sales in a specific period of time compared to the previous period. Revenue growth can be an indicator of your sales effectiveness as a whole, and can identify trends in market demand and customer behavior.
Revenue growth compares two periods of revenue, to assess whether revenue is increasing or decreasing.
The simple formula is [(current period revenue - previous period revenue) / previous period revenue] x 100%.
There's a possibility that the current period of revenue is lower than the previous period of revenue. This generates a negative revenue growth figure, showing the rate at which revenue has declined. While this outcome isn't ideal, it does let you know that you need to investigate the issue further.
Sales conversion rate
Tracking your sales conversion rate can reveal the effectiveness of a campaign, your sales team's performance, and other acquisition strategies. This KPI (key performance indicator) can also highlight the quality of the leads you're receiving.
Your sales conversion rate reflects the efficiency with which you convert leads into sales. The formula is [total number of sales / total number of leads] x 100%.
Applying this conversion rate formula to different periods, products, or campaigns can provide many insights into what's working and what's not.
Average sales size
This vital performance figure can help your company set realistic sales goals and know how much revenue a single client can provide. With this number in mind, teams can strategize on how to increase their average sale size and make sure those numbers are being hit.
Measuring average sales size is easy — all you need is your total revenue and number of sales (or deals). Divide your total revenue by the number of sales to see your average sales size. The formula is [total revenue / number of sales].
Like the other formulas, you can use this for any period of time or even for certain promotions to gauge their effectiveness.
Using average sales size calculations your sales and marketing teams can strategize on how they can increase overall value. Adding promotions, bundles, or add-ons can create high-value customers that can benefit from your offerings.
CAC (customer acquisition cost)
Monitoring your customer acquisition cost is a great way to make sure that your sales and marketing efforts are efficient.
To measure your customer acquisition cost, you'll need your total sales, marketing expenses, and number of new customers acquired.
Your CAC reflects the amount you have to spend to gain one new customer. Here's the formula: [(total sales + marketing expenses) / number of new customers acquired].
Ideally, over time you are making more than you're spending and will be able to lower your acquisition costs while either maintaining or increasing your total revenue, number of sales, and/or average sales size. sales numbers or amount of customers. If you're unsure of what to consider as part of your cost of sales and marketing, you can include figures like ad spend, creative development, and promotions.
CLV (customer lifetime value)
A customer's lifetime value shows you what your average customer will spend with your business over the course of your relationship. CLV is an important indicator for gauging loyalty and churn, and can be directly influenced by your customer support team, extending the sales life cycle beyond the initial close. Fostering this relationship can lead to higher-value customers.
You'll need the customer value and average customer lifespan to calculate your customer lifetime value. Multiply those two figures to find your customer's lifetime value with the simple [customer value x average customer lifespan] formula.
This metric can show you which types of clients are your highest profiting and most ideal customers. This can be an indicator of the best type of industry or region for you to do business with. Comparing the CLV and CAC metrics gives you a good idea of what markets are worth pursuing, even if the cost of acquisition is higher.
Optimizing your time to improve metrics
Finding the time to work on your metrics and also take action on them can be hard to accomplish. For example, business professionals spend 2.6 hours on email alone each day — and much of that time could be spent on more crucial tasks.
Superhuman is the fastest email experience ever made. Teams save over 10 million hours every year, and sales teams win more deals with sales intelligence and deal collaboration directly in the inbox.
