Where there is a performance involved, there should be a metric / standard to measure it. This is the basic rule and only if you follow this, you know where you stand and what you need to improve. The same applies to a sales team of a business. To create a highly productive team, you should find the right metrics for sales performance measurement. Once you use the sales metrics, you will realize that your sales team is more organized and productive than before. The transparency created by performance evaluation helps your team to set clear expectations and yield better results in the long run. Managing a sales team of a business is not that complex if you choose the right sales metrics.
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How Sales Metrics Improve Sales Performance?
To answer this question, let’s take an example. Say, David is a sales rep whose sales quota for the quarter is set for $20,000. He needs to know the average deal size so that he is aware of the no.of deals he should get to achieve the target on time. Also, he understands on which high paying clients he needs to follow up and spend more time with them than the others. Hence, the overall sales performance increases over a period of time by using the right sales metrics.
Benefits Of Sales Performance Measurement
Measuring your sales team performance using key sales metrics will fetch you the following advantages:
- Helps in tracking the progress
- Effective future goals planning
- Find out the areas of improvement
- Adjusting sales strategies
- Clear expectations & transparency in team
- Employee motivation & engagement
- Achieve targets on time
- Proper rewards & bonuses without any partiality
By now, you will be knowing the importance of using the sales metrics. Next, to know how to measure sales performance, you should know the 9 sales metrics used by the highly productive teams.
9 Sales Metrics For Highly Productive Teams
If you want your sales team to be highly productive, then start measuring the following metrics:
Quota attainment is an important metric that defines the productivity of the sales reps. It can be calculated by the formula,
Quota Attainment = Total Sales / Sales Quota
By measuring this metric, you will be able to understand your sales reps’ capacity and adjust the strategies accordingly. If the quota attainment rates are continuously decreasing, you can find the skill gaps and the needs for sales training sessions. Once you start measuring this metric monthly or quarterly, you can track the performance pattern. There may be variations due to market conditions but if it is falling drastically, you can correct it early.
Market Penetration Rate
Finding the relevant audience and targeting them is the major goal of a sales team. This metric measures how far your sales team worked towards achieving that goal. It can be calculated using the formula below:
Market Penetration Rate = (Existing Customers / All possible Customers) x 100
Though it is difficult to measure all the possible customers for a business, an approximate figure close to exact number will give you an idea to calculate this metric. By defining your ideal customer profile and targeting based on it, your sales team can work towards increasing this sales metric.
Lead Source Performance
Finding the source of your leads (where they come from) is crucial to know the effectiveness of your sales strategies. By tracking this metric, you know which strategies work best for your business and the areas that need more focus. The various lead sources for a business are SEO(Website traffic – blogs, careers page, backlinks), Social Media, email marketing, paid ads, etc. This metric gives you insights on ideal lead source, budget optimization for various sources, new markets, etc.
Sales Reps Activity Metrics
Activity metrics depend upon the effectiveness of various sales activities carried out by your sales team. No.of sales calls made, no.of emails sent, time spent on cold calling, social media engagement, referral requests, proposals, etc. are some of the examples of activity metrics. A sales rep can track this himself to know his strengths and weaknesses and the need for any tools that will enhance the performance.
Forecasts are made depending on the past historical data. This metric is a measure of how accurately the sales team attains the forecasted targets. It also involves the sales manager’s efficiency in forecasting and determining the sales quotas for his team members.
Deal slippage rate is the measure of unclosed deals from the forecasted sales cycle. Maintaining a healthy sales pipeline and working towards preventing the leakage are the ways to keep this deal slippage rate low.
If you are drawing a map with sales quota achieved by a sales rep vs time on the X and Y axis, then the graph should be linear, i.e constantly increasing over time. If there are frequent ups and downs, their productivity is low and the manager should take necessary action towards improving the same.
Pipeline Coverage can be calculated using the formula,
Pipeline coverage = Pipeline size (Total no.of opportunities) / Sales Quota
Tracking this metric will help you find whether the current sales strategies are good enough to achieve the sales quotas.
If you are able to increase your customer retention rate by a mere 5%, your profits may increase anywhere from 25 – 95%. How cool is that? That is the power of retaining the existing customers for your business. Personalized emails, regular follow-ups and timely offers are some of the ways to increase your company’s retention rate.
Though every small effort cannot be measured, tracking a few crucial sales performance metrics of your sales team will give you fruitful results towards achieving your revenue targets. Apart from the above mentioned examples of sales metrics, there are many others available. By choosing the right metrics and using the right tools to measure them can help your business growth. For example, Lystloc’s sales reports give you accurate business insights which improves your forecast accuracy. Also, you can track the employee working hours, distance traveled, etc by which the employee productivity can be determined. Track the right sales metrics to build a highly productive sales team and make your company progress in the right direction.