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The 9 Essential Sales Metrics Every Team Should Track to Improve their Sales Process

Do you know how your reps are spending their time? Or which activities are eating away at their schedules? Or what your team’s strengths and weakness are off the top of your head?

Better yet, do you know how these variables are changing over time? How can you tell if an update to your sales process makes a difference (be it for better or for worse) if you don’t have the right metrics in place?

You can’t measure what you can’t track. Without tracking these essential metrics, you lack the ability to judge your team’s performance or take steps to improve your ROI.

This list of must-track sales metrics can help you make informed decisions about your sales process, so you can grow your business and keep your pipeline full.

9 Sales Metrics You Need to Start Tracking Today

1. Time Spent Selling

There are few things more valuable than your sales reps’ time – so it’s critical that you know how they’re using it.

Of all the activities and stages in your sales process, what are the biggest time-sucks? For example, lead generation might be eating up your sales reps’ schedules. Since many reps struggle to find sales-ready leads who are interested in making a purchase, countless hours are wasted researching and contacting prospects who aren’t ready to buy.

If you track time spent selling, you’ll be able to uncover these bottlenecks and address the issues that are slowing down your team. A CRM or sales automation software can help you track how much time your team is spending at each stage.

2. Lead Response Time

How quickly are your reps able to reply to inbound leads? The longer it takes your team to respond to interested leads, the greater the chance of that opportunity slipping away.

Think about it this way: if a prospect is actively seeking out a solution and contacting sellers directly, you’re likely not the only business they’ve reach out to.

So, if you take 24 hours to respond to a lead, they may have already connected with one of your competitors, lost interest, made a different purchase, or changed their mind altogether.

Although many B2B companies underestimate the importance of lead response time, those who do respond quickly are more likely to qualify a lead and successfully seal the deal. In fact, research has shown that contacting an inbound lead within one hour makes you 7Xmore likely to qualify the lead, while your odds of making the sale decrease dramatically (by 60X!) if you take 24 hours to respond.

3. Opportunity Win Rate

Opportunity Win Rate

Opportunity win rate is simply the percentage your total sales opportunities that go on to become paying customers.

For instance, if you have 100 new opportunities every week, how many of those will eventually result in a sale? If you close 20 out of every 100 sales opportunities, you’ve got a win rate of 20%.

Once you know the answer to this and are able to confidently predict your long-term win rate, you can forecast more accurately, set attainable yet challenging sales quota to motivate your team, and budget more effectively for the next quarter.

4. Sales Pipeline Coverage (SPC)

Sales pipeline coverage (SPC) is a valuable metric that reveals whether your team has enough opportunities coming down the pipeline to make quota for a given period.

Your SPC ratio compares how full your pipeline is relative to your quota for the period. Since not every opportunity will result in a sale, SPC helps you figure out how many opportunities you need to have ongoing at any given point.

You can calculate SPC using the formula:

Pipeline Forecast / Sales Forecast = (Average Sales Days / 90 Days) * (1 / Close Rate)

Your SPC ratio tells you how much value your pipeline should hold at all times. For instance, if your ratio is 5:1, then you should aim to fill your pipeline with opportunities with a total value at least five times your forecasted sales quota.

5. Customer Acquisition Cost (CAC)

Tracking customer acquisition cost (CAC) allows you to understand the costs associated with growing your business and expanding your customer base. This is especially useful for startups attempting to scale quickly or demonstrate their value to investors.

CAC for a given time period can be calculated using this simple formula:

(Money + Time Spent) / Number of Customers Acquired

Knowing your CAC makes it easier to analyze your marketing and sales ROI, so you can optimize your budgets and allocate funds accordingly. If you’re able to minimize your CAC, you’ll increase your profit margins and create more value for your company.

6. Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV)

The amount of a value a new customer brings to your business isn’t limited to the size of their initial purchase. Customer lifetime value (CLV) refers to the total amount of value a buyer provides over their lifetime as a customer – from their first purchase through to their moment of churn.

You should measure CLV at regular intervals to track how it changes over time.

The simplest way to calculate CLV for a specific customer is to multiply the amount of revenue you earn from a customer annually by the average customer lifespan in years and then subtract your customer acquisition costs.

This formula works best for companies with relatively flat annual sales per customer:

(Annual revenue per customer * Customer relationship in years) – Customer acquisition cost) 

However, if your annual profit contribution per customer is more variable, you’ll want to use the more detailed version of this formula instead. In this case, you’ll need to know your average gross margin per customer lifespan, your retention rate, and annual rate of discount.

Here’s how you can calculate CLV using these additional metrics:

Gross margin * (Retention rate / [1+ Rate of discount – Retention rate]

Regardless of which formula you use, customer lifetime value is best understood in relation to customer acquisition cost.

7. Sales Cost Ratio

This metric reveals whether or not a sale is profitable. That is, does the revenue earned from the deal outweigh the cost of the employee’s salary, commission, travel expenses, and other resources used to close the sale?

To calculate this ratio, you’ll want to look at how much your company is spending on sales compared to how much profit those sales are bringing in. This requires comparing your customer acquisition cost to your average deal size.

Tracking your sales cost ratio allows you to spot financial trouble before any serious damage is done. If your sales department is costing more to run than it’s bringing in, something needs to change ASAP. This could mean finding a way to reduce costs, shortening your sales cycle, or rethinking the type of customers you’re targeting.

8. Monthly New Leads

The number of new leads you get each month determines how many prospective customers you have in your pipeline. Depending on your business model and industry, a lead might be defined as a user who downloads a specific piece of content, someone who contacts your sales team, or someone who begins a free trial of your software.

Comparing your number of leads against your new customers gives you your average conversion rate for the month.

9. Monthly Sales

Measuring your monthly sales numbers over time provides a clear indication of whether your business is growing, shrinking, or stagnating. You can frame this crucial sales metric as a percentage of your monthly quota to see whether your forecasts are accurate.

Tracking your monthly sales also allows you to see how any changes to your sales process affects the end result. Take it a step further by comparing this year’s monthly sales to that of previous years to spot annual trends. For instance, is a particular month slower every year or is the recent dip related to some other factor, like budget cuts, product changes, or adjustments to your sales process?

Track These Sales Metrics to Better Understand Your Sales Process

Sales managers need to look beyond quotas and revenue to see which factors are influencing their team’s ability to succeed. Tracking the nine sales metrics listed above will help you identify the cause of any spikes and dips in your sales, so you can replicate whatever your team is doing right and fix any problems that are hindering your success.

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