As companies begin to scale their operations, staying on top of departmental performance can be challenging for CROs and Sales VPs. This is especially the case when it comes to tracking the effectiveness of growing sales and account management teams.
For executives that do find time to prioritize goal setting and strategic sales development, it can be challenging to decide which KPIs (key performance indicators) will shed the most light on the overall effectiveness of their sales and marketing teams. It’s essential that CROs and sales executives closely monitor the productivity and success of their sales teams by focusing on areas that directly impact the short and long-term goals of the company.
Here are seven crucial sales metrics that every CRO should obsess about when measuring their sales effectiveness:
1. Fluctuations In Sales Team Activities
Monitoring fluctuations in sales activities by team or department can give sales leaders a quick, daily, quantitative bird’s-eye view of your salesforce’s current “effort.”
Why is this important?
Sure, quality matters; but so does sales velocity. While most companies may think that they’ve developed a sound approach to B2B selling, most executives revert to the conclusion that sales is a numbers game.
Steven Benson, CEO of BadgerMaps has found that “For an inside sales team, the number of calls or amount of time spent on calls are critical metrics to monitor. Whereas, for a field sales team, it might be the number of in-person meetings.”
By keeping a close eye on your team’s average number of calls made, emails sent, notes logged, and meetings booked, CROs and Sales Leaders can ensure their teams are operating at maximum efficiency and hopefully predict (and course correct) if they’re going to miss their number.
2. Length of Selling Cycles
Better understanding your sales pipeline is an effective way to identify and address any issues causing delays in your selling cycles.
Bottlenecks in the sales funnel are nearly impossible to avoid as companies explore new selling verticals and the challenges that come with them.
However, by monitoring the average length of your selling cycles and time spent in each stage, you’ll be able to address these issues immediately, coach sales teams through effective solutions, and help them close more deals.
3. Sales Lead and Customer Response Times
“Silence is death.”
Fahad Shoukat, VP of Business Development at the software development company, Skiplist, “Personally monitors metrics around last time a salesperson spoke to a client and how often. Simple. If a customer is highly engaged with the sales rep then the deal has a high likelihood of it being real, and closing.”
At People.ai, we’ve found that there is a direct correlation in customer responsiveness with rep responsiveness. Building and maintaining momentum in the deal-cycle is essential to the deal progress and increasing overall close rates.
Furthermore, there is nothing worse for a growing sales organization to do than to not follow up and capitalize on the value that inbound leads present.
Warm leads have a considerably higher chance of success, and each one should be treated with the attention it deserves. Sales leaders should closely monitor lead response time and actively promote proactive follow-up schedules/cadences. While lead response times may vary by industry, it’s important to establish benchmarks for the sales team to follow, ensuring that all prospects are contacted within an appropriate time frame.
4. New Customer Acquisition Rates
When measuring the individual performance of your sales reps, new customer acquisition rates are a great way to see a snapshot of the employee’s overall selling success.
To measure this metric accurately, sales territories should be identified ahead of time with sales reps or teams assigned to them accordingly. Tracking monthly acquisition rates between territories will help sales leaders recognize higher-demand areas and help inform decisions around the amount of sales team members needed to support it. While this metric can also help to identify gaps in skill sets and selling experience in different sales reps, it can also help to understand better the specific needs of the territory and potential improvements that should be made to it.
5. Customer Attrition Rate
Equally as important as metrics tracking customer acquisition are ones that monitor attrition.
Customer turnover rates can be very telling when calculated as a percentage against new business development and sales growth. It’s very healthy for every business to experience certain levels of attrition over time, especially in dynamic markets and as companies change their product offerings and services.
However, identifying dangerous trends in lost business opportunities early in their development can help avoid disastrous financial consequences when comparing revenues year over year.
6. Revenue Growth
Although it may seem like a no-brainer, monitoring revenue growth over time is the most significant identifier of your overall business success. One area of caution that CROs should take, however, when watching their revenue is not to focus too strongly on forecasted numbers.
Changing needs of customers and internal departments may mean significant amounts of flexibility could be required to maintain the sustainability of your business down the road.
7. Net Profitability
It’s important to remember that just because you see a spike in revenue year-over-year doesn’t necessarily mean you’re making more money. As business operations scale, so do the costs to manage and maintain that growth over time. Net profitability isn’t the most natural concept for every business owner to grasp. It’s easy to become mesmerized by a growing number of accounts and growing sales teams.
At the end of the day, if you’re not adequately analyzing customer acquisition costs, operating expenses, and resource allotments, your growth may not be sustainable over time.
Performance metrics can help to generate impactful business insights that give CROs, executives, and department managers the information they need to make better-informed decisions about the development and direction of their company.
Sales and marketing consultant and industry thought leader Pam Didner states that “Ultimately, you need to define what ‘effective’ means to you and your team, then identify the metrics to align with your definition and business strategy. After that, it’s a matter of monitoring the performance and optimizing the processes.”
However, spreadsheets, charts, and smart dashboards don’t provide any real value for performance management unless they’re monitored effectively and prioritized based on the needs of the organization. By focusing on the KPIs mentioned above and working with sales teams to improve their business processes, you will ensure that you’re maximizing your sales performance efforts.
Are you looking to gain visibility into your sales team’s effectiveness?
Monitoring your company’s sales activities and leveraging the power of artificial intelligence, the People.ai solution grants sales and marketing leaders the ability to derive deep insights, and visibility into their team’s overall sales effectiveness.
Find out how People.ai helps CROs gain visibility into their sales and marketing teams, as well as increase the overall productivity of each sales rep by scheduling a demo of the People.ai solution today.