13 KPIs Every Sales Manager Must Track To Measure Sales Growth
What do most of the successful businesses have in common? Their hunger for success and continual outlook on improvement. Every industry has certain standards or benchmarks to track its progress. The performance of a business despite the scale or industry, is analyzed in terms of certain indicators known as KPIs. All the primary business activities like Sales, Marketing, Strategy, or Finance have their KPIs in place. If you’re a business manager or owner, this article is for you. We are going to deep dive and explore the ‘what’s, how’s and why’s’ of having sales KPIs. This will give you a clearer picture of how to track KPIs, measure them effectively and implement them practically in your business.
1. Lead Response Time
Leads are often called as warm or cold. It is usually based on their turnaround time after a lead has been contacted by your sales rep. It should be lesser ideally to have better conversion rates. It can be automated using MarTech tools like LinkedIn Sales Navigator or Adobe Marketo Engage.
2. Lead-to-Opportunity Ratio
It is a simple but significant metric to measure the efficacy of a sales force. It indicates what proportion of leads are being converted to a potential opportunity that could be closed as a sale order. It can be managed within an excel spreadsheet or bigger organizations do it in CRM software for each team.
3. Sales Closing Rate (Opportunity Win Rate)
Closing Techniques are greatly discussed amongst sales personnel but it is a metric that should be tracked inevitably to determine the top performers and outliers in your sales force. The highest closer must be rewarded and incentivized to keep everyone motivated.
4. Average Revenue Per User (ARPU) or Ticket Size
It is also called as Average Order value by a customer or user. Loyal users often have higher ARPU than newly acquired users. It aligns with the business principle of selling more to the same customer via upselling, incentivization or premiumisation.
5. Customer Acquisition Cost (CAC)
It is the average amount spent by your business or sales rep to acquire or acquaint a new customer. Getting entry in a lead or prospect with initial order is difficult & costly, but it should be minimized on an average when compared to their CLV. Hence, IT/ITES service providers with high retention rates have lower CAC’s and much higher profitability.
6. Customer Lifetime Value (CLV)
CLV > CAC for any sustainable and profitable business. Sales teams must align their energies in retaining a loyal customer with best possible service levels and after-sales support so that the buyer ends up relying on you completely. There is a huge scope of innovation and upselling with such mutually beneficial client-supplier relationships.
7. KPIs to Increase Business
Sales can primarily be increased by 3-approaches:
Penetration: Selling to more (new) customers
Upselling: Selling more to existing customers
Premiumization: Selling at more price
Distribution: Selling via more channel partners
8. Net Promoter Score (NPS)
It measures customer satisfaction (C-Sat) on a scale of 1 to 10 (or as a percentage). It is a qualitative aspect that is difficult to measure but effective feedback mechanisms and standardized approach to service ensures a higher NPS leading to customer retention.
9. Upsell/Cross-sell Rates
Retailers or CPG brands often track same store sales or sales per sq. ft. but it should be the average order value that should be focused upon. Atleast with repeat business, one should always look for selling more value-adding product offerings.
10. Average Sales Cycle Length
Sales cycles may have different number of stages as per sector or industry and nature of offering to be sold. But it should be kept shorter, crisper and effective to have better returns and effective close rates before the sales funnel starts leaking out leads.
11. Customer Churn Rate
Simply, it can be the attrition or loss of customers after transacting ones. Focus should be on fostering long-term relationships with regular interventions and highest support levels to minimize churn. It leads to higher retention and ease of conducting business or close sales orders.
12. Sales Pipeline & Revenue Tracker
Apart from leads, a manager must keep potential prospects in terms of a sales pipeline. It can be maintained on Sharepoint list, MS Excel or Google docs and must be centrally accessible via a CRM. Similarly, revenue streams must be tracked from each sale order from lowest to the highest levels against their allocated quotas.
13. Average Sales & Gross Margin Per Sales Rep
Quotas allotted to each sales reps can be measured against their quarterly or half-yearly sales data to ensure consistency, prevent any seasonality impact and keep a check of underhand practices like undercutting, low-margin orders etc.
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