The hard facts are in the numbers. A sales manager and sales representatives need to know that their sales targets, sales revenue, and sales efforts are hitting the mark for the entire sales team.
Modern sales teams often partner with the marketing team to help with sales strategy, to understand the customer lifetime value, to target key industries and personas, and to go to market effectively.
They also uncover the performance indicators for the team's performance, including sales growth, customer acquisition cost, sales KPIs, and much more. The data tells the story behind the sales funnel and can even help predict future sales.
But, looking at the correct numbers regularly and knowing how to interpret the data is imperative. It's also easy to get lost in the numbers, the rabbit hole of sales metrics, even if only looking at the average revenue, average purchase value, and sales volume. An effective sales manager understands which sales KPIs and metrics matter, "why they matter to your company, and how you're going to use them."
Introducing the 5 Key Performance Indicators
Before identifying the key sales KPIs, it's handy to know exactly what a Key Performance Indicator (KPI) is and how to use KPIs when tracking sales performance, including sales metrics on closing deals and sales opportunities. KPIs for sales (or anything) "is the critical (key) indicators of progress toward an intended result." These are the 5 characteristics that create good KPIs:
- It provides objective proof of progress toward the specific result.
- KPIs specifically measure something relevant "to help inform better decision making."
- It shows the changes over time to see how performance stays the same or is growing or shrinking.
- An effective KPI "can track efficiency, effectiveness, quality, timeliness, governance, compliance, behaviors, economics, project performance, personnel performance or resource utilization."
- KPIs are balanced. They show both "leading and lagging indicators."
Measuring a Sales Representatives Performance
Did you know that the average sales rep only spends 34% of their day "selling (on the phone, in person, etc.)" The managers and sales leaders need to know that most of the time, the sales metrics they are tracking result from a small portion of their sales team's day. So, how effective they are shows in the sales metrics or KPIs.
It's also essential to recognize the data for what it is and what it isn't. For example, if you only look at the number of calls and emails made by your sales reps, it does not showcase the team's performance. But when you combine that information with the number of meetings scheduled, what the conversion rates are, plus retention, and purchase value, it gives a better idea of gauging the sales department performance levels. Thus, sales KPIs are the foundation to understanding a sales representative's performance.
Combining all this data can affect sales targets and decide on altering or keeping the same strategy for revenue growth, customer retention, and even employee satisfaction of your sales team (because satisfied employees stay longer and perform better.)
KPIs for Sales
What are the best ways to evaluate sales KPIs? What are the key performance indicators in the sales representatives' performance each month? Performance indicators are essential for sales representatives to know and understand, but specific sales KPIs should be set for sales managers, as well as individual sales representatives.
The Right Sales KPIs
Remember, it's a combination of data, not the individual KPIs and metrics, that tells the whole story. Sales KPIs, when appropriately analyzed, provide insights into sales performance and the sales process. Here are some common KPI examples for a sales representative.
Calls, Emails & Meetings
The sales opportunities KPI shows which sales team members get the most sales qualified leads or most opportunities in the sales pipeline (also known as a sales funnel.) For example, "Who's reaching their quota? What percentage of your team is hitting their number? Is quota too high? Too low?" Hubspot suggests sharing this data with the sales and marketing teams because the competition keeps them motivated.
Reach and Response Rates
Reach means how large and wide the audience is that the sales reps are getting in front of. Next, the response is how prospects respond to sales team members. This KPI helps sales managers understand how the reps and sales teams are connecting with their customers.
Conversion Time (Average)
Part of your client acquisition cost KPIs, especially in creating a customer lifetime value, is the conversion time. How long from the first contact does it take for the sale to close in the sales pipeline?
Close.com explains that without knowing your pipeline value (in progress deals), "you won't hit your sales targets [and] by being able to get a quick read on your pipeline, deal status, and confidence, you're able to see if your reps have a chance of reaching their goals."
Sales Rep Productivity and Leaderboard
A leaderboard provides the competitive edge sales teams thrive on and love to monitor. It also makes it easy for sales leaders and the sales department to have an at-a-glance view of the sales team's performance.
No one knows if they achieved a goal without setting targets.
Sales by Contact Method
A KPI showing which contact methods are getting the most numbers tells both the salesperson and leaders which methods are the most effective for each sales rep. Some may do better in person, while others excel on the phone. Comparing the sales by contact method KPI with the conversion rates paints a clearer picture.
Lead Conversion Rates
"This sales KPI answers one of the most important questions for sales reps: How many leads are converting into sales?" This metric is crucial because it shows the best strategy for getting customers in the future.
Average Follow-up Rates
If a customer doesn't say yes on the first contact, the follow-up rates include how many customers are converting to sales with further contact. Plus, you can "keep track of how successful your strategies are. This way, you can easily change things up when the need arises."
In general, Close.com shares some relevant sales KPIs:
- Sales growth
- The number of calls and emails made/sent.
- What is the number of sales opportunities they create?
- How many demos are scheduled?
- How many completed onboarding calls?
- What are their lead conversion rates?
- How many sales per contact method (in-person, email)?
- What is the average conversion time?
- Customer acquisition costs
- Customer lifetime value
- New and growing monthly recurring revenue (MRR)
- The pipeline value
- Sales targets
- Sales by region
- Average purchase value
- What are their retention and churn numbers?
- How about product performance?
- Sales rep productivity and leaderboard
Many of the sales KPIs overlap between roles. For example, sales managers want to know KPIs on calls and emails made, sales opportunities created, pipeline value, and sales targets. In addition, leaders and sales managers include:
- Sales growth
- Onboarding/demo calls scheduled
- Sales by region
- Average purchase value
- Product performance
Analyzing the combination of these different sales KPIs creates a detailed and clear picture of the sales department as a whole, plus gives each sales rep information on how they are performing and how they can improve.
Examples of Effective KPIs for Sales Representatives (and Sales Managers)
Since effective KPIs "monitor, analyze, and optimize," it's essential to know what details matter and what questions to ask with setting up every KPI. Here are the prime examples of sales KPIs that provide the best performance indicators for sales reps and the sales team. Combining these KPIs gives the data to develop strategies in sales and marketing, plus how to develop strengths, improve weaknesses, and set clear sales goals for sales reps and the sales department. So let's examine these in more detail and determine how to calculate them in your business.
Monthly Sales Growth
While it says growth, it doesn't mean it's only growth metrics. KPIs are objective; this KPI "measures the increase or decrease of your sales revenue on a monthly basis." With businesses built on annual sales products, these monthly sales numbers offer projections for the future.
Use this formula: [(Sales for the current period - Sales for the previous period) / Sales for the last period] x 100
Based on planning and past sales, the sales target KPI shows how well each sales rep is doing each month. It's a compelling performance indicator to indicate whether the forecasted revenue is on track or not. Sales reps also can see if they need to adjust or change their strategy. "It's crucial for forecasting, and it lets you know if other factors can impact your bottom line."
Use this formula: New wins MTD vs. quota MTD or wins previous MTD
Sales per Rep
Helpful "in establishing a sales baseline (and setting personal goals)," it also calls to light the "strengths and weaknesses of each rep." Combining the average conversion time and customer retention rate offers a more robust statistic when reviewing this metric.
Use this formula: Actual sales per rep per time period
Sales by Contact Method
Simply put, this proves which contact method works for each sales rep. This data helps a sales manager decide if a particular contact method continues to be in the sales process. Plus, don't forget to include "the costs and time associated with each contact method."
Use this formula: Sales per contact method / Total revenue
Sales Closing Ratio
"The ratio between how many quotes your sales team sent out and how many deals they closed." First, it determines the amount of time on each opportunity. Next, it is a good indicator of whether the leads are qualified leads or not. Lastly, this ratio shows if "the sales team is spending far too much time trying closing each deal."
Use this formula: # of quotes / # of wins
Sales by Region or Location
Just like it sounds, this KPI provides data on the number of sales completed in different regions. Depending on the company size, this KPI may be very broad or very specific. Likely, it will be by country, state, city, or even by store locations. In addition, of course, external factors play a part in these results: a region hit by natural disasters affects the sales of certain products. For example, if the company sells water bottles, sales will rise while high-end clothing sales decrease.
Use this formula: Total number of sales / by region
Calls and Emails Per Rep
Depending on the primary contact methods used, these numbers can vary. Don't forget to consider the lead conversion rates, how long the conversion period is on average, the number of hours worked. If one sales rep works on the phone 5 days a week, while another representative only does 3 days of phone calls, their numbers will vary greatly.
Use this formula: Total number calls and emails sent per rep
Opportunities are qualified leads, not just several cold calls or emails. The amount of opportunities created with the conversion rates speaks volumes on the success of the sales rep. Of course, this one may be solely the number of opportunities, but to grasp the weight of this KPI, including the sale value, shows the potential for sales revenue and company growth.
Use this formula: Value of Sale * Opportunity Status Percentage
The longer it takes to convert a lead to a sale, the more money is lost on the deal. For example, "if you're selling a SaaS product at $9/month but it takes upwards of 6 weeks to close a deal, you're on the losing side of that deal." Remember to include other metrics like conversion rate, sales by contact method, and sales by region to understand what is happening with your conversion time.
Use this formula: Total number of days from the first contact to purchase
Your pipeline value is a form of forecasting. Using the potential sales numbers for each opportunity allows sales reps and sales managers to know if they are hitting the mark on their primary targets or other sales goals.
Use this formula: Total current sales opportunities value in the lead/opportunity stage
New and Growing Monthly Recurring Revenue (MRR)
Since there is a big difference between revenue (one-time sale) and recurring revenue, it's crucial to understand what the monthly recurring revenue looks like each month. You can calculate this KPI precisely by adding each recurring payment or taking the average amount of recurring revenue.
Use this formula: (Total Annual recurring revenue/12) + total new and current monthly recurring revenue
Alternative formula: Average monthly revenue per account x total accounts that month
Customer Lifetime Value (CLV)
"Customer lifetime value is the metric that indicates the total revenue a business can reasonably expect from a single customer account. It considers a customer's revenue value, and compares that number to the company's predicted customer lifespan."
Use this formula: Lifetime Value = Gross Margin % X ( 1 / Monthly Churn ) X Avg. Monthly Subscription Revenue per Customer.
Customer Retention Rate
"It is 6-7X more expensive for companies to attract new customers than to keep existing customers." So, understanding retention is critical to forecasting and strategy.
Use this formula: [(Total number of customers at the end of the set time period - Total number of new customers added within the set time period)/Number of existing customers at the beginning of the set time period] x 100 = Customer Retention Rate
Customer Acquisition Rate
Customer Acquisition is the number of new customers added, and this is essential to know how quickly the business is growing (or not growing).
Use this formula: (New customers added in a time period / Total customers in a time period) x 100
Meetings and Demos Scheduled
Adding up the number of meetings or demonstrations is only part of this equation. Likewise, the number of meetings and demos scheduled only tells part of the story. Combine this KPI with a dollar value of sales from those meetings and demos to complete the picture.
Use this formula: Sum of bookings $ Sales - (Average cost per transaction * Total # of bookings)
Average Follow-up Rates
How many times does your sales rep have to contact a lead before the sale is closed? The amount of time spent on the follow-up affects the profit from the sale. The more touches required plus the total number of days or weeks spent following up impact the bottom-line of that particular sale. If there is a noticeable pattern of extensive follow-up with low conversion rates, the sales reps may not be fully qualifying the leads.
Use this formula: (Number of follow-up calls, emails, or meetings/total purchase amount)/total number of days from lead to closing deals
Average Purchase Value
"This is an important sales KPI for your team to understand because it will help you develop revenue projections and forecasting." When you know the average amount of purchases, it enables sales managers and sales leaders to create strategies to boost more sales or higher-priced products.
Use this formula: Total sales / # of sales = Average sale value
Keeping the sales reps informed on what products are selling the most and the least provides the data to know where to focus and which areas are hitting sales targets. Depending on sales teams and marketing team strategies, there may be a push on certain products for a special promotion, and this performance indicator reveals the results of that push by the sales reps.
Rank top 3/10/25 performers by sales revenue
To incentivize your sales reps, many sales managers create a competition to increase upsell or cross-sells. This competition boosts commissions and increases revenue for the company.
Use this formula: Total number of upsells or cross-sells per sales rep in dollar value or percentage of total sales
Sales Rep Productivity and Leaderboard
Since sales reps are generally pretty competitive, a productivity leaderboard or dashboard gives some juice to that competitive side. "It's a way to quickly see how your team is doing as well as create friendly rivalry and motivate your reps." In addition, seeing their numbers compared with others may "inspire people to perform better," and it gives sales managers and sales leaders the data to see the sales KPIs whenever they need that data.
Use this formula: Dashboard of all sales KPIs by reps
The Sales Department
Each person is affected differently by reviewing the sales KPIs, depending on their role. For example, the manager or sales leader uses sales KPIs to measure individual and sales team performances, create strategies for future growth, and identify weaknesses in the sales process or sales team itself. However, when analyzed correctly, KPIs give a tremendous amount of valuable data for the CEO and other executives on where the company is heading and how far the company has developed and grown.
On the other hand, sales KPIs give sales reps data on how well they are hitting their personal sales targets, meeting their goals, and comparing to other sales reps in the company or for their region. A modern sales team knows what is happening with their sales, how it affects the company and analyzes those performance indicators to inspire action and keep themselves motivated.
Bringing all these numbers together in a meaningful way makes the numbers go beyond just another set of statistics. It showcases the sales department, annual sales revenue, sales costs and brings the typical sales metric to a new level of transparency. When KPIs are accurately tracked and objectively analyzed, they provide tremendous value to the sales department and the company as a whole. Whether it’s determining how many leads, total sales, or customer satisfaction, the numbers tell the story of business growth and are essential to understanding the sales cycle for sales directors to individual salespeople. It combines all of this critical data to provide the important sales metrics a company needs today.