Selling isn’t about the numbers — it’s about the results. Unfortunately, many sales teams around the world are struggling with yielding an ROI for the work they put in.
This drives down productivity. For example, the time sales reps spend on pre-sales and post-sales is up 15% and 21%. But this comes at the expense of spending time selling to customers, which has decreased 26%.
What should these teams do to improve their ROI?
One option is to look at key sales performance metrics. Knowing which to look at and why will help you to make better decisions for your sales team.
So let’s take a look at what these sales performance metrics are.
First, Why Measure Sales Performance?
It’s critical to understand why you need to be measuring sales performance. Without sales performance data, you won’t be able to see how well (or poorly) your teams are performing.
But what’s more important than tracking metrics is analyzing it in a meaningful way. This way, you’re able to make the proper changes to help your sales teams improve.
Next, let’s take a look at what you should be measuring.
What’s Percentage of Your Sales Team is Meeting their Quota?
This is a more obvious metric and one your company may already be tracking. If not, then it’s time to start. This will tell you which of your salespeople are meeting, exceeding, or struggling with reaching their goals.
Depending on the monthly metrics, you can determine what the root problem is. For example, if a large number of your team aren’t reaching their quotas, then it could be it’s too high.
On the other hand, if your team is over-exceeding their quotas, then it may be set too low.
In other cases, it may be that you have some underperformers who need training (or the boot).
What’s the Average Size of Deals?
This is essential to look at because it can help you position your prices to meet the market you’re trying to reach. For example, if you’re targeting SMB clients, then you want your average deal size to go down.
In this case, your money stems from selling more by growing your customer base.
This metric can also help you to spot risky deals. For instance, if your salespeople are driving bigger leads with budgets five times what they usual leads have, then the sales cycle will be much longer, which can put your company in a tight spot.
Especially since there’s a possibility the deal will close lower. In this scenario, you’d have to ensure your other leads are sure bets.
The way to measure this metric is to divide your number of deals in a given month by the amount earned from each transaction.
You can do this on a quarterly or monthly basis to see if your contracts are growing, shrinking, or stagnant.
As for evaluating your salespeople, you want to see if there’s anyone with lower deal averages than the rest of the team. This is an indicator that they’re either struggling with landing bigger clients or are purposely picking the low fruit.
What’s the Conversion Rate vs. Win Rate?
Here’s a metric that’ll give you insight into how many leads are converting into customers. So if you’re generating 1,000 leads per month, and have an average of 100 customers convert, then your rate is 10%.
From here, you need to identify your revenue goals to see if you’re meeting them. This metric will help you to adjust your sales teams’ quotas.
For instance, if your goal is to make $500,000 for the month and the average deal size is $2,000, then your salespeople would have to close/win 250 deals monthly.
If your team is closing 10% of deals, then you need to bring in 2,500 leads.
It’s good to look back at conversion rates from the past to see how effective your sales teams were and whether they’re improving.
How Much Time is Spent Selling?
You don’t want your salespeople wasting time on non-sales-related tasks. Any repetitive tasks they have to deal with should be outsourced to virtual assistants or automated using software tools.
One of the major time-sucks salespeople deals with revolves around information (or lack thereof). Some studies show many hours are spent weekly searching for information to share with prospects.
For example, case studies to show prospects how a product or service has helped past customers. By focusing on generating sales enabled content, you can help your salespeople spend more time on selling (and become more efficient at it).
How Many of Your Salespeople Use Sales Enabled Materials?
If you’re going to include sales enablement into your process, then it’s essential to check whether your salespeople are using the content.
If they aren’t, then you wasted man hours, and your salespeople will be less efficient. This will, in turn, hurt your sales.
There’s evidence from the American Marketing Association that 90% of content goes unused by salespeople. And one of the reasons for this is because they’re unable to find it.
So when you check for this metric, it’s important to pinpoint why they’re not using it. It may not be a rebellion. But if it is, then you have to work on building a sales enablement culture.
It’s also critical to set it up so that sales enabled content is easy to find. You can use a CRM and other tools to assist with this.
How Long Does it Take Your Salespeople to Respond to Leads?
Qualifying leads shouldn’t be a long and daunting task. When you’re properly using sales enabled content, you can cut this time down significantly.
Marketing materials aid by nurturing leads through the sales funnel until they’re ready to purchase (or at least considering to do so).
Then when leads reach out, your sales teams need to be answering their queries quickly. For example, research shows that when salespeople call within 5 minutes compared to 30 minutes, the odds of reaching the lead improve by 100x.
This also enhances the qualification period by 21x.
Keeping an eye on lead response time is critical to determining whether your salespeople are moving fast enough to qualify leads and close deals.
How Many Customers Are You Retaining?
Customer retention is vital to the success of any business. The cost of acquiring new leads is much higher once you factor in the costs of marketing, advertising, and sales.
Then if you’re doing an excellent job of earning repeat business, you can remove all of these costs. Plus, you can increase the customer’s lifetime value by turning them into loyal fans of your company.
With this focus, your salespeople can easily convert happy customers into repeat customers vs. struggling for one-time sales.
What is Your Customers’ Lifetime Value (CLV)?
Speaking of customer lifetime value, what is the average lifetime worth of your clientele? This is good to know so you can factor this into your potential annual sales.
It’ll also identify how many new customers you need to bring in to sustain your company. You may find most of your business stems from repeat customers. And should place a heavy emphasis on marketing to them.
So how do you get this metric? You take your annual revenue per customer, multiply that by the number of years you keep customers and subtract it from the cost of customer acquisition.
You’ll need to do lots of tracking per customer to gather these KPIs.
This will let you know if your customers are worth more than you’re spending as well. If you’re paying more on advertising and marketing, and not getting a return, then it’s time to make some budget changes.
Now, if your annual contribution per customer varies a lot, then you can use another formula. You’ll need your average gross margin per customer life cycle, annual rate of discount, and your retention rate.
Once you have these numbers, you can use the following formula:
Gross margin x (Retention rate / [1+Rate of discount – Retention rate]
Start Using these Metrics to Improve Your Sales
Now’s always the best time to start making improvements in your business. Especially when it comes to your revenue.
If you find your sales performance is suffering, then your first step is to look at your data. However, if you’re not collecting the right metrics, then you should start as soon as possible.
Within just a month, you can begin analyzing how your salespeople and processes are faring. All you need is the right tools, sales enablement content, and adoption to boost your business income.
So make the decision today to start collecting and using these metrics to make your company better.
Already making moves?
Let us know about it in the comments!