Sales KPI: Definition, Benefits, and How to Measure It

Sales KPI is an important indicator used by companies in measuring sales performance effectively. With the KPI sales, the company will be able to optimize its performance by forming an organization that is able to run well and optimally, especially in achieving sales targets. With the sales KPI, good organizational performance and healthy competition among the sales team will be built. 

This has a positive impact on the sustainability of the company’s performance, especially in increasing sales targets so that the company’s revenue and profits will also increase.

However, do you know what a sales KPI is, its benefits for the company and why is it important? Then what are the indicators used to measure KPI sales? If you want to know, see the discussion this time.

What are Sales KPIs?

Sales KPI is a measure used by companies to assess or evaluate the performance of sales or sales teams in carrying out their duties. KPI stands for Key Performance Indicator, where in measuring sales performance, companies will use certain indicators to evaluate and assess their sales performance effectively. 

Companies need KPI sales to optimize the company’s organization in achieving its targets. This measurement will help the company to optimize its sales performance in making sales and achieving targets.

With the sales KPI, healthy competition will be established among the sales team. This has a positive impact on the continuity of sales performance. 

Because of this sales KPI, the sales or sales team will try harder and be serious in achieving the sales target within the allotted time. Therefore, the sales KPI is also one of the benchmarks commonly used in evaluating the performance of company employees. 

What is the Importance of Sales KPIs for Companies?

Sales KPIs for companies are very important. This is because the sales KPI aims to measure and evaluate sales performance so that the company can know and assess the capabilities and reciprocity that each salesperson provides to the company. This reciprocity can be in the form of revenue or sales targets being met or even exceeding the target.

Therefore, starting from measuring sales performance, sales KPIs will form a healthy and positive competition among the sales team so that it will optimize the company’s performance in managing its organization and achieving sales targets.

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Sales KPIs for companies are very important in increasing sales targets. With the measurement of sales performance, sales will be motivated and motivated to do the best for the company.

Sales will try their best to achieve sales targets and even exceed them. This can happen because there are indicators to measure the effectiveness of sales performance. 

In addition, the provision of incentives to salespeople who succeed in achieving sales targets or even exceeding them also encourages sales to achieve sales targets within the allotted time. Therefore, the existence of KPI sales also has a positive impact on increasing the company’s revenue.

What are the Benefits of Sales KPIs for Companies?

What are the Benefits of Sales KPIs for Companies?

KPI sales are needed to optimize the company’s sales performance. Meanwhile, the benefits of sales KPIs for companies can be seen as follows.

1. Measuring the Performance of Each Sale

The benefit of the first sales KPI is as a tool to measure the performance of each company’s sales. This means that with the KPI sales the company will know how to work and the results that their sales provide to the company. These results can be in the form of meeting sales targets, closing each sale win, and increasing the number of prospects. 

Through sales KPIs, companies can also find out about sales activities and see if sales are having difficulties in carrying out their duties and areas that need training assistance.

2. Creating Healthy and Positive Competition Among Sales Team

The second benefit of the sales KPI is to create a healthy and positive competitive climate among the sales team. This is because in the sales KPI the performance of each sale will be measured according to certain indicators individually. Therefore, measuring the sales KPI will build healthy and positive competition between sales. 

In order to achieve sales targets and generate more revenue for the company. The sales will try to be the best in increasing the company’s turnover and achieving the targets they need to meet.

3. Managing Sales Performance

The third benefit of the sales KPI is to help companies manage the performance of their sales team. With the KPI Sales, managers and companies will know their sales activities and then conduct an assessment and evaluation through predetermined indicators. 

Through this assessment and evaluation, the company will know their sales performance, and the difficulties faced and then take a solution or a way out to solve the problem. This solution can be in the form of giving ideas or creating innovations to make the work of the sales team easier.

4. Increase Company Revenue

The fourth benefit of the sales KPI is to increase the company’s revenue. KPI sales function to measure the company’s sales performance through certain indicators. In carrying out this measurement, sales performance will be assessed and evaluated individually.

This will certainly increase the enthusiasm and motivation for sales to do the best for the company and achieve sales targets so that their presence in the company will be maintained. 

On the other hand, if the sales target is successfully met or even exceeded, usually the sales will also be given appreciation by the company, either in the form of monetary incentives or other bonuses. This will certainly trigger the enthusiasm of the salespeople in increasing sales and profits for the company.

What are the Indicators Measured in the Sales KPI?

In measuring KPI sales, the indicators commonly used include the following.

1. Sales Growth

The first indicator used to measure the sales KPI is the sales growth in your business or company. By looking at developments in the business, you can find out the performance of your sales team. If the sales have worked well, it will be seen in the sales progress and the achievement of satisfactory targets. 

This success will be seen in the increase in the company’s income due to the fulfillment of sales targets in a certain period. If your company is able to experience increased sales and achieve targets during a certain period, then your steps in developing the business will be successful.

2. Sales Target Sales (Sales Target)

The second sales KPI indicator is the sales target (sales target) . To measure how effectively your sales team is performing, sales target indicators need to be used and included in the sales KPI measurement criteria or indicators.

As the name implies, the sales target indicator (sales target) functions to find out, view, and assess sales targets that sales have achieved. 

In order for your business to grow, the sales target must also increase continuously from the previous period. Through the sales target indicator, you will know the performance of the sales team in making sales and achieving targets to increase company revenue.

In addition, you can also use this indicator as an important reference in determining future business plans and strategies.

3. Lost/Decreased Customers (Customer Churn Rate)

The third indicator to measure KPI sales is the number of lost/reduced customers (Customer Churn Rate). With this indicator, you can find out whether the performance of your sales team is good according to the sales target or not. You can see from graphs or data on sales targets that your sales team has achieved over a certain period. 

If the sales target has increased (progress) from time to time, then your strategy to develop the business has been successful. However, if the sales target has decreased, then you need to change your strategy by looking at the existing problems and then finding solutions and innovative solutions.

4. Ratio of Opportunities or Prospects (Lead to Opportunity Ratio)

The fourth indicator to determine the performance of the sales team is to look at the ratio of opportunities or potential prospects. With the prospect or opportunity ratio indicator, you can determine the number of prospects you need to achieve your sales target.

Therefore, the opportunity ratio indicator will also help you in estimating the income you will get if you get prospects and sales targets are met. 

In order to achieve sales targets by getting prospective prospects, then you also have to implement the right strategy to determine the target prospects so that your business continues to grow.

5. Number of Prospects Who Buy (Opportunity to Win Ratio)

The fifth sales KPI indicator is the number of prospects who buy from your company. This indicator will help you to know the performance of your sales team in getting sales and achieving targets. If the number of prospects who buy from your company is increasing from time to time, then your sales team has been effective and able to carry out their duties well. 

This is evident from the success of sales to meet company targets within a certain time. In addition, this one sales KPI Indicator will also help you identify and train the performance of the sales team to be more effective so as to generate more sales transactions.

6. Conversion Ratio (Lead Conversion Ratio)

The sixth indicator to measure KPI sales is look at the conversion ratio obtained by the company. This indicator is an important part of the sales KPI to assess the performance of the company’s sales team.

This lead conversion rate is calculated from the number of prospects who successfully become customers and buy products from your company. 

If the sales team has worked well, the conversion rate will stabilize or even increase. If the conversion rate matches the target you set, it means sales are doing well.

7. Average Purchase Value

The seventh indicator to measure KPI sales is to look at the average purchase value (Average Purchase Value) obtained by the company over a certain period. To see this one sales KPI indicator, you can compare the average sales value you currently get with the average sales value you got in the previous period. 

If the average sales value continues to increase, then your strategy and the sales team’s performance in increasing revenue and growing the business has been successful. 

However, if the average value of sales has decreased then you need to think of effective ways to increase it again, one of which can be by increasing sales opportunities or prospects by offering more incentives to customers.

8. Revenue of Each Sale (Revenue Per Sales Rep)

The next sales KPI indicator is to look at the income of each sale (Revenue Per Sales Rep).

With this indicator, you can see the performance of each salesperson in providing feedback to the company in the form of successful sales and achieving targets within the allotted time.

This indicator will provide you with information about the performance of the sales team and the progress they provide. 

To get that data, you can compare your current income with your previous income. Through this indicator, you can compare your best sales force with other sales personnel to improve the performance of the sales team to be even more effective in the future.

9. Profit Margin of Each Sale (Profit Margin Per Sales Rep)

The next indicator to measure the sales KPI is to know the profit margin obtained by each sales force. Through this indicator, you will find out which sales force is most effective in generating profits for the company. To get data on the development of company profits, you can compare the current profits with the profits made in the previous period. 

After that, you can find out and identify the ability of each salesperson to generate profits and achieve targets. With this sales KPI indicator, you can also determine whether the sales force who manages to get the biggest profit for the company will be given incentives and/or promotions or not.

Through this indicator, you will know the success of your sales strategy. However, you can also add some strategies or adjustments in case of decreasing profits.

How to Easily Measure and Improve Sales KPIs?

Sales KPIs need to be improved so that the company experiences optimal development in achieving sales targets and earning revenue. For this reason, the performance of the sales team needs to be improved in order to achieve the maximum target.

In this case, the SFA (Sales Force Automation) software from SimpliDOTS is here to assist the company and the sales team in achieving sales targets.

SFA software is part of CRM which functions to assist and simplify the work of the sales team in checking stock, registering stores, making work schedules, and so on.

Not only that, the SFA software from SimpliDOTS can also be used by sales managers to monitor the work of the sales team, manage the sales process, provide offers, and make monthly reports.

This application is very suitable for use in measuring and increasing sales KPIs through monitoring carried out by sales managers. In addition, the sales team will also be facilitated through the features in this application.

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