A Guide to Sales Metrics: Definition and Why They Matter

Measurement matters. But it matters most if you measure what truly matters. And when it comes to sales, the sales metrics you choose can mean the difference between profit or loss. Between market leadership or dwindling share. Between success or failure. Let’s discuss what sales metrics matter most? First, let me define sales metrics:

When the right sales metrics are in place, the organization and its contributors know where they stand at the individual customer, territorial and companywide levels. Appropriate sales metrics also help identify the state of sales regarding time-based goals. Perhaps most importantly, the right sales metrics can help an organization make prudent decisions for any changes necessary to achieve both short-term and long-term objectives.

Leading indicators, on the other hand, are forward-looking and predictive measures of sales performance. Most useful for sales forecasting, they often include such essential real-time (or near real-time) metrics as the number of prospects in the pipeline, the value of those opportunities in a pipeline and time spent prospecting, as well as the number of customer visits, number of presentations made or proposals submitted. Current-data leading indicators can empower sales teams to make strategic and tactical adjustments to ensure that you can get back on track, rather than continue to head toward missed goals. Leading indicators can also make real-time sales coaching more meaningful.

What kinds of specific sales metrics can best help your organization meet its goals and objectives, both short- and long-term? Frankly, that depends on the nature of your industry, your market, your business and your sales culture. Every organization operates in a somewhat unique environment, so your best sales metrics may be just as unique. That said, here are some sales metrics commonly recognized as critical to optimum sales performance (including big-picture measures and more focused KPIs):

Again, these KPIs are general in nature; some of these sales metrics will have more relevance than others to your company. Beyond these measures, of course, you can drill down even deeper to really get to the core of where your sales team members spend their time and the effectiveness of their sales activities.

It pays to dedicate time and forethought to how your CRM is structured. Most high-quality CRMs have enormous capacity for detailed reporting. But if the burden of data input is too great, your reports will be incomplete or downright flawed. It is wise to identify and set up your most important KPIs and make sure your sales team members are diligent about updating the CRM. Remember, if your system is too complex, data entry and updating will be overly burdensome and become neglected. So, keep it simple, focused and targeted to truly meaningful data that can help you perform, attain and adjust as necessary.

Sales KPIs The 12 Key Sales Metrics You Should Be Tracking

Why are sales metrics important to track?

Sales metrics are important to track because they reveal how well an organizations or individuals outcomes align with the established goals. They provide useful data to assess whether goals are realistic and what an organization can do to improve the likelihood it will achieve its goals. Sales metrics are an essential aspect of the decision-making process to improve efficiency, growth, and ability and optimize the sales process. They may also provide clarity about expectations, potentially improving performance and employee engagement.

What are sales metrics?

Sales metrics are data points that represent performance based on a specific task or progress toward a specific goal. They may indicate the performance of a company, department or individual. Sales metrics are important because they may help organizations determine how to adjust current strategies, award bonuses or raise compensation, implement incentive programs, offer training programs and update their practices.

There are different types of sales metrics. Each type helps evaluate a particular concern or target. Six common types of sales metrics are:

1. Lead generation sales metrics

2. Outreach sales metrics

This may also include phone sales metrics, such as:

An organization may also track social media outreach metrics like:

3. Sales activity metrics

4. Sales key performance indicators

5. Sales pipeline metrics

6. Sales productivity metrics

What to consider when tracking sales metrics

Here are some elements to consider when tracking sales metrics:

Amount of data

Its important to limit the number of metrics you choose to monitor. Tracking too many metrics may result in too much data, making it difficult to analyze, interpret and use in the decision-making process. Instead, select the metrics that relate most to your industry, business model and current goals. Think about areas where your organization may need to improve and use the metrics to help you develop strategies to improve both short-term and long-term performance.

Current goals

Focus the sales metrics you select on your organizations current goals. The data you gather can be effective in demonstrating your progress toward a goal. Similarly, what you learn from the metrics may help you determine whether the goals you set are realistic or achievable.

Leading and lagging indicators

When evaluating sales metrics, its important to assess both leading and lagging indicators. Leading indicators help predict future results and may be difficult to measure, but they help you change and influence results. Conversely, lagging indicators report results and are easier to measure, but its difficult to influence them. However, by monitoring both, youre able to understand historical performance and the likely trajectory of future performance.

Representative perspective

Some sales representatives may view tracking sales metrics as a form of micromanaging. However, framing the practice correctly may help improve their mindset. Present tracking sales metrics as a way to understand team activities and ways to improve overall activities. Highlight that the goal is to help each individual improve and succeed to ensure the overall success of the organization.

Different levels

Approach your sales metrics as capable of providing insight into different levels of your organization. For example, on a process level, they may reveal the cause of certain trends within sales cycles. However, at the individual representative level, they may improve each sales representatives accountability for performance. Also, the metrics may provide managers with data-based points of improvement to discuss during coaching opportunities, making feedback objective rather than subjective.

Tools

Be sure to select the right tools to gather, organize and distribute data. Everyone within an organization should understand what metrics its tracking and has access to be able to understand the information easily. Some examples of tools you may use include:

Friendly competition

Consider using metrics as a way to create friendly competition among sales representatives. Using a sales dashboard or a leaderboard allows you to track progress easily. If you give sales representatives access to these boards, they understand their performance and can compare it with that of their peers. This may motivate them to succeed and highlight their strengths and areas of improvement.

FAQ

What are the 4 types of metrics?

Sales metrics are data points that represent an individual’s, team’s, or company’s performance. They help track progress toward goals, prepare for future growth, adjust sales compensation, award incentives and bonuses, and identify any strategic issues.

What are KPIs for sales?

The researchers have determined that only four key metrics differentiate between low, medium and high performers: lead time, deployment frequency, mean time to restore (MTTR) and change fail percentage.

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