Sales performance is at the core of most organizations’ growth strategy. However, when it comes to evaluating sales performance, if you cannot measure it, you cannot improve it. It is essential to know what to measure, how to measure it, and how to analyze the results. Today’s analytics tech has made it easier to collect and report on various sales efforts, define and manage sales performance metrics that matter. Evaluating these performance metrics can help you redefine your company’s sales strategy to best suit your growth vision.
Here are important metrics that can help you improve sales performance and maximize profits:
Total Sales by Period
For any business, revenue is the most important key performance indicator for sales success. Tracking sales will provide you with the information you need to set goals, forecast total sales per period, and prepare to manage the sales. To get a clearer picture of sales performance, you should consider breaking down your revenue instead of working with the gross income. Breaking down revenue will make it easy to determine the percentage of new business, repeat business as well as upselling and cross-selling.
Lead Response Time
In a business world characterized by stiff competition, your sales reps should respond to inbound leads swiftly and deliver the most valuable information to prospects. Getting valuable information to prospects will increase your conversion rate and subsequently, your bottom line. On the flipside, when you take too long to respond to a lead, there is a good chance the customer will lose interest, change their mind, or choose one of your competitors.
To improve sales performance, you have to know how members of your sales team use their time. The sales process involves not only actual selling but also looking for information and generating leads. Ensuring that the sales reps spend less time on repetitive tasks and more time selling will go a long way in ensuring success. Also, tracking and analyzing the non-selling activities that are slowing down your staff will help you address the issues and empower the team.
Sales Cycle Metrics
Once you have been in business for a considerable period, you will notice a certain pattern in your sales cycle. You will also obtain data on the average time it takes a lead to go through each stage of the sales funnel and how much time it takes the sales reps to close a deal. This information can help you predict the likelihood of a win or sale. Monitoring the sales cycles will allow you to streamline your efforts and shorten sales cycles, effectively improving performance.
Opportunity Win Rate
One of the most important factors to consider when determining your sales reps’ performance is their ability to close sales. It is necessary to look at how many of your total sales opportunities go on to become paying customers. Watching the opportunity win rate will help you identify specific areas that your sales reps need to improve on to increase sales. Tracking the metric will also help you motivate your team, forecast more accurately, and budget effectively.
Customer Acquisition Cost
You cannot measure sales performance without paying attention to how much it costs to expand your customer base and grow your business. To get the customer acquisition cost (CAC), you will need to add the total amount of money and time spent then divide this figure by the number of customers acquired. Knowing the cost allows you to allocate funds accordingly to minimize CAC and increase your profit margins.
Customer Lifetime Value (CLTV)
Measuring sales performance will also involve finding out how much value a new customer brings to your business. However, this should go beyond the initial purchase and cover the total value the individual brings in over their lifetime as your customer. The easiest way to calculate this value is to multiply the annual revenue per customer by the average customer lifespan in years and then subtract customer acquisition costs. Customer lifetime value should be measured regularly because it changes over time.
Sales Cost to Revenue Ratio
One of the main aims of any business is to improve the bottom line. When measuring your sales team’s performance, you should take time to determine whether the revenue earned exceeds the cost of the sale. While at it, consider expenses like salaries, commission, lost opportunity, travel expenses, and other costs used to close the sale. Monitoring your sales cost to revenue ratio regularly allows you to assess the efficiency of your sales team, empower your team, and identify financial trouble before it is late.
New vs. Returning Customer Sales
A healthy business will generally have a continuous supply of new customers while maintaining the old ones. However, the probability of selling to an existing customer is between 60 and 70 percent, while selling to a new prospect is 5 to 20 percent. In addition, happy customers can become brand promoters, helping you expand your customer base by submitting positive reviews and by word-of-mouth, translating to lower customer acquisition costs.
How to Measure Success When it Comes to Sales
In addition to tracking the metrics mentioned above, it would be important to actively measure your sales team’s success. Some of the factors you may want to focus on are the quality of engagement between your team and customers, going through reviews to see what your customers are saying, and finding out how to use social selling techniques to improve customer engagement. A good sales leader will not only look at data and reports to track weekly predictions but also stay engaged with the sales team to listen to their ideas and frustrations. This approach not only creates a cohesive work environment but also helps the sales team stay focused on their goals.
In a nutshell, you need to learn more about important sales performance metrics and use them to grow your business. Ascent works with a wide range of tech companies to help them learn, network, and grow. We organize virtual speaker talks, workshops, and roundtables to build skills and discover growth opportunities. Contact us today to learn more about our services.