Sales Metrics From A to Z
Sales metrics are any of the various metrics that sales management uses in their sales forecasts to see how much sales revenue they can expect to close in a given period. In particular, managers want to see if their team is on track to meet quota. Sales metrics are also used by management to keep sales representatives accountable and measure whether they’re accomplishing the sales activities specified in the company’s sales plan. This is important because sales is generally viewed as a numbers game, where more activities lead to more deals won and revenue closed.
Classic sales metrics include the number of calls a rep makes in a day, the average deal lifetime (how long a deal takes to close) and the average deal size (how much revenue a deal generates). In addition to the classics, sales managers are increasingly looking at more granular metrics as sales becomes more competitive.
For example, many sales leaders find that the unique sales metrics surfaced by People.ai – such as the amount of time that reps spend in internal meetings versus actually selling – help them better manage their teams and stay ahead of the competition.
Sales KPI: The Way to Leverage Sales Metrics
We mentioned that management uses sales metrics to keep their reps accountable. This is done through the use of sales KPI’s. A sales KPI (key performance indicator) is a specific sales metric that management uses to gauge how their reps are doing. Maybe you’re a sales manager who knows that prospects are more likely to close if reps engage with them quickly. With this in mind you can set a goal for your reps to respond to all prospect emails within an hour of receiving them. You can then incentivize your sales reps to make sure that this happens, such as by providing a bonus to your fastest-responding rep.
As you might have guessed, sales metrics also form a key part of sales training. As a sales manager it’s your responsibility to provide your team with the training they need to grow revenue. To do this you’ll sit down with your reps in 1:1 coaching sessions, go over their metrics, point out what they’re doing well and find areas for improvement. Sales metrics allow you to pinpoint how your reps can do better without having to guess.
Potential Pitfalls of Sales Metrics
Despite their power, sales metrics can actually be detrimental if your numbers are incorrect or you don’t focus on the right ones. That’s why data hygiene is so important. You might have heard the expression “garbage in, garbage out.” That applies to sales analytics too. If your data is inaccurate or incomplete you’re in danger of drawing the wrong conclusions about what’s actually generating revenue at your business.
You also want to make sure that you’re focusing on the right metrics for your business. These might not be the same as for your closest competitor, much less someone in another industry. Remember, your business is unique. So are your sales metrics. That doesn’t mean you can’t draw inspiration and insights from colleagues at other companies, but it does mean that a deep understanding of your own company’s sales metrics is more important than anything else.