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8 Top KPIs and Metrics for Sales Success in 2020

posted on 2020/03/16 08:09
Home KPI 8 Top KPIs and Metrics for Sales Success in 2020

In any organization, the sales team always has a lot going on. They're the final force, the ones that find leads, follow up on them, and (hopefully) make the sale. For the sales team of a large company, this can mean working on several jobs at the same time. It's a lot of work, and sometimes, it can be complicated to figure out the progress of so many assignments. Not knowing the status of certain projects can lead to mistakes being made within and outside the organization. 

Some organizations choose to use metrics to mark their progress. Metrics are measurements organizations, companies or individuals use to estimate their growth towards a particular goal. There are hundreds of metrics for measuring all sorts of things. These metrics do measure work done towards objectives, but they have disadvantages. They're not strictly accurate. The data needed to calculate them can take a lot of time to acquire. Also, it can take a lot of effort to arrange the data into understandable information. While there are apps to ease the process and they do show some results and information, the time invested in putting in data for the metric will be more productively spent elsewhere. 

So how does a company measure progress in its sales department? With a Key Performance Indicator (KPI). 

Defining Sales KPI

Some people say KPIs are basically business metrics, with no difference. That's not true at all. KPIs are different in a fundamental way. A KPI can be metric, but a metric may not necessarily be a KPI. Sounds confusing? We'll explain.

You can define a KPI as a way to measure the performance of a specific business metric. This metric will probably be indispensable to company growth and will have an end goal or objective that needs to be achieved within or before a specified date or period. A KPI will look at this metric over this period and make sure that the company is staying on track. 

A metric can just be a number, a bit of data or information within the grand organization of a Key Performance Indicator. This data may be all that makes a KPI, or it can be just a small bit of information on your graph or spreadsheet. 

Every department in an organization should have a KPI with a defined objective that must be met within a specific time frame. Objectives are different for every department, and so are the KPIs. The sales department usually has a lot of goals. Therefore, it follows that they'd have a lot to measure and a lot of data to keep track of. There are lots of KPIs, and more specifically, there are lots of sales KPIs. However, ideally, the sales department should only track a few to avoid getting confused and sidetracked. Setting objectives and making steady progress with a few is much better than chasing dozens of KPIs and getting lost in data. 

Picking the wrong KPIs can also be hugely detrimental for your team and company. Of the many KPIs, there are a few that should be tracked no matter what. Here, we've explained the eight most essential sales KPIs for any company, organization, or individual. 

1. Conversions 

An average sales team may get a certain amount of leads a month. Leads are potential clients or deals. Leads are precious to the sales team of any company, but conversions are the gold to their silver. Conversions are leads that turn into actual sales. The number of conversions a company can make per month is vital.

It's important to track conversions because the strategy for turning leads into conversions is important. Several KPI metrics can be tracked under conversion, such as the employee with the highest number of conversions, conversion rate, the average time taken from lead to conversion, etc. Each of these KPIs is essential in drawing up a strategy to increase the number of conversions gained every month.

Under conversions, companies can also watch their lead-to-sale percentage rate. Not every lead is a good one. Some people may call in as clients but ultimately turn out to be time-wasters. Some customers are drawn in by advertisement, word of mouth or other means. The sales team should be interested in what made these clients come to them and how they can optimize those means to reach more significant, more targeted audiences. 


All of these add up to a fact. The more research is done into conversions; the more your sales and marketing strategies are enhanced. And the more your sales and marketing are improved, the more solid leads that can be turned into sales will pop up. Even if your sales team doesn't keep track of any other KPI, conversions are one that should be followed as closely as possible. 

2. Percentage of Sales Growth

Every company has a plan for the next fiscal year. They usually work such plans out in the last month of the previous year or in the first few days of the new year. At such meetings, objectives, goals, and projected developments are discussed and set in each department for the year ahead. The sales department is heavily focused upon at this time because it is the department that brings in the money needed to run the business.

There is always an objective, a certain percentage of growth that Sales are meant to achieve yearly or monthly for the company to grow. That is why it's essential to keep an eye out for growth or decline in the sales percentage. If the sales team or the company notices a decrease in growth percentage, it means that the sales revenue is declining. In this case, if discovered early, there will be steps taken to find the reason and try to solve the problem and avoid a disaster. The problem could stem from something like some bad marketing decisions, bad publicity, or a crisis. 

However, if the growth percentage is increasing, the company must also take some measures. They must find out what they're doing differently (if they don't already know) to earn such an increase and incorporate it into their future plans. It's best to check the percentage of sales growth at regular intervals to catch any problems while it's early. 

3. Customer Acquisition Cost (CAC)

People use products and services as they need them. They don't buy items that they don't want or need. But when they buy products and services, they usually have preferred brands, stores, or items. These companies must have done something to acquire these people as customers. They must have done something to make an individual or company try their products or service for the first time. That first time eventually leads the individual or organization to make a comparison between the brand they just tried and others they've tried before or are still untried. This may eventually breed loyalty.

The amount a company spends to get the customer to try their goods or service for the first time is the Customer Acquisition Cost (CAC). The employees in the sales department make individual calls to individuals they think may be interested in buying the company's product or using their services. This personal touch makes a large number of people give the product that first try, the first chance to gain their loyalty. Obviously, not all the people your employees reach out to will respond favorably, but some employees do better than others in convincing prospective customers to give the company's product or service a chance. This is absolutely normal. However, a large difference in conversion rates between sales personnel is concerning and should be investigated. 

Different businesses factor different things into their CACs. It might mean marketing costs, your workers' salaries, sales costs, etc. It's important to find out what made the customer choose your product. But it's also important to note that you should be able to make back your CAC within the first year of doing business with that particular customer. Otherwise, your company stands a chance of running a loss. 


4. Customer Lifetime Value (LTV)

This KPI is closely related to Customer Acquisition Cost (CAC) and depends on many, many factors. A Customer Lifetime Value is the estimated amount of money a company can expect to gain from a customer during their life. It basically calculates how much the company stands to gain from certain customers.

A company may have hundreds of customers, but that doesn't mean much if those customers only buy the bare minimum of products. Calculating the Customer Lifetime Value of customers can help your company identify the customers that'll bring more funds in. It will also help you to identify customers that are not currently buying a lot from the company but have the capacity to do so. Such customers can be coaxed into investing more if a little extra service or value is added to their current packages. Sometimes, just a bit more communication between customer and company representative is enough to get a customer to start buying more and increase their lifetime value.

Identifying such customers can give you a target market to boost revenue. Talking to and acquiring customers from this target market can make for good competition for your sales department. This KPI is extremely useful in creating an avenue for new customers, and it serves as a way to increase revenue while not necessarily increasing the number of customers. The competition to increase the income of the organization, company, or individual can lead to an unexpected boost in revenue without spending a dime on marketing. 

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5. Upsell/Cross-sell rates

Your best bet at increasing your company's revenue is already at your fingertips. What are they: your customers. Your already existing customers could be the difference between meeting that sales objective and not seeing any growth. Your existing clients have a huge advantage over new clients: they're already buying what you're selling. You already have a rapport with them because your brand name is already somewhere in their homes, offices or cars. Your company gets bonus points if the customer is already loyal to your goods or services. 

A paying customer can always buy more of a particular product, but if they don't need any, you can't sell them the same product. What you can sell them is something to make the product they're currently using better. For instance, if you sold them some barbells before, you can mention that you also sell weights of different sizes. This mode of revenue generation is called upselling. Another method is cross-selling. Cross-selling simply means pitching your other products to your clients. You tune in to your clients' needs and offer up a product that may help. 

Both of these methods require a deep rapport with your client, intense research, great timing, and luck. Many salespeople have problems with defining the right period to pitch, but some people have a knack for it. As you continue to use this KPI, your employees will also get better at upselling and cross-selling.

6. Churn/Customer Turnover Rate

The churn rate should be a vast KPI in every business organization. A churn or customer turnover rate is simply the percentage of customers that stop patronizing the business within a specific period. It can also be called attrition. Customers can stop patronizing for a number of reasons. They could be personal or logistical reasons (they don't live in your primary area of operations anymore), but it should never be because of the company.

The churn rate of every company should be analyzed and reviewed at least once a month. Retaining customers is much cheaper than acquiring new ones, the cost of which can cut into profits and capital. There are different churn rates for every industry, so the average can vary wildly. If your churn rate is low or at an average level, then that's great for you. However, if it's drastically higher than it previously was or it's a lot higher than average, you may need to review your company's processes. 

While attrition is attrition, and it may impact your revenue, either way, customers who stop buying can be divided into two categories. There is voluntary attrition and involuntary attrition. Voluntary attrition means that your customers left because they didn't like your product or they found a better product or service. Involuntary attrition means that your customers didn't stop patronizing your product because they wanted to, but because circumstances beyond their control forced them to. If your churn rate is high, it's important to research whether your customers' attrition is voluntary or involuntary. It's important to define the difference between the two, so the company can decide on its next action.

7. Product Performance

The product performance KPI is vital to every company, but most especially those that have various goods on the market. It allows the sales department to see what products are selling the most and which are selling poorly. Though there are products that are market leaders, if a company's product is selling well, then there must be a good reason for it. The sales team need to ask questions such as: did the competitor's prices go up. Is the boost in sales due to a marketing campaign? Was it due to a change in sales strategy? 

The same process will happen if a popular product that was selling well before suddenly dropped in performance. The sales team should also consider the context of the situation, ask questions, and do research before drawing a conclusion. 

This research has to be done to identify the factors boosting or bringing down your products. If they're not identified and either applied to other products or nullified, the business will suffer a loss. However, there are some instances when the cause of an increase or decrease in a product's performance cannot be found. Still, this KPI should be monitored intensely so that important information on product performance within periods will not be missed. Some opportunities for a boost in product performance have time limits — for instance, tourist season.

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8. Revenue per Sales Representative

The sales team of every company usually have goals and objectives for the year. They're focused on bringing in more revenue than the year before. There may even be a bit of competition between team members who can bring in the most revenue. However, the purpose of the revenue per sales representative KPI isn't to create a rivalry between employees. This KPI is meant to find out who is bringing in the most revenue out of all the sales representatives. But the information this KPI displays can actually be used to improve sales and the sales team.

This KPI asks, who is the person who brings in the most revenue on the sales team? The answer to that question can be used to answer questions like:

  • How does this person bring in the most revenue?
  • Is this a skill anyone can learn?
  • Can I teach it to all of my sales reps?
  • If not all of them can learn it, which of them can? 
  • What about the rest of the team? 
  • What are their strengths? 
  • Can they be harnessed to earn more revenue?
  • What are their weaknesses? 
  • Can they be polished away or harnessed?

The answers to these questions will be of immense value to the sales team manager. 

Calculating revenue per sales representative doesn't have to be done monthly. It can be done bimonthly, quarterly, every half year or year. What's important is that no rivalry between members of the sales team is sparked during the data analysis.

In conclusion

We've only just scraped the surface of sales KPI. There are many more sales KPI that can be used to improve your business. However, these eight are the most essential. When choosing a KPI for any department in your company or organization, it's important that you have a goal or objective and timeframe for that department. If you have those two things in place, you can then choose a KPI that aligns with them because you already have the requirements clearly defined. If you don't know what you want your sales KPI to measure, there's a substantial chance you'll pick the wrong KPI and therefore measure the wrong thing. It might not be fatal to your company, but it will probably cause damage that could've been avoided.

Frequently Asked Questions (FAQs)

Q1: What is KPI in Sales?

KPIs in sales can be defined as business metrics used to measure the progress in the sales of any organization, company, or individual. These KPIs are useful for making decisions and strategies in both the long and short run. 

Q2: What KPIs do you use to rate sales representatives?

There are several KPIs used to rate sales representatives, and one of them is one we've discussed above, revenue per sale representative. There are others, including:

  • Lead per sales representative: This KPI shows the sales representative that found the highest amount of leads within a specified period. 
  • Sales by Representative: This business metric shows which representative sold the highest number of goods or services within a specific period. 
  • Monthly Calls or Emails per Sales Representative: This KPI measures which sales rep had the highest number of calls or emails within a month. 
  • Profit Margin by Sales Representative: This KPI is used to determine the commission earned by sales representatives, or to determine the strengths of each representative and see what can be done to either improve their profitability or use them to enhance other's profitability.

Q3: What do MQL and SQL mean?

MQL is an acronym for Marketing Qualified Lead. A marketing-qualified lead is a person or company that has been identified as a lead based on their behavioral patterns, website visits, and other researched information. 

SQL means Sales Qualified Lead. This means that the sales team has identified the MQL to be an actual, viable lead that could turn into a sale. The SQL has now entered the buying cycle, and the sales team may create a strategy to acquire that customer. 

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