Data-driven sales teams are like drivers using a navigation app to reach their destination.
When using a navigation app, you know the direction to go and the estimated time to reach your destination. Likewise, data-driven sales teams are equipped with metrics and insights that lead them to their sales goals.
To ensure you’re going in the right direction to reach your sales goals, you must track your sales key performance indicators (KPIs). Sales KPIs measure how your team’s activities contribute to your success.
Need help identifying sales team KPIs to track? Let this blog post guide you as we go through these topics:
- What are sales KPIs?
- Sales metrics vs. sales KPIs
- Why are KPIs in sales important?
- 10 most important sales KPIs you must track
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What are sales KPIs?
Sales KPIs are a set of quantifiable measurements of a sales team’s success in meeting its targets, objectives, and desired impact on the business. Selecting and tracking the right sales KPIs for your business is crucial to growing your company.
You can then gather, organize and analyze your sales data using a tool like a sales intelligence platform.
Sales metrics vs. sales KPIs
The difference between sales metrics and sales KPIs
Sales metrics are data points that measure the performance of a specific task. Meanwhile, sales KPIs measure overall performance.
Sales metrics and sales KPIs are often used interchangeably as they’re related. However, they are different.
Sales metrics are data points that measure the performance of a specific task. For example, cost per lead (CPL) is a metric that refers to the average amount you spend to earn a lead. CPL measures the performance of your lead generation efforts (a specific task).
Think of a sales metric as a piece of a puzzle. Then, imagine the puzzle as the big picture that tells you how far along your business is doing to reach your goals.
On the other hand, sales KPIs measure overall performance. For example, customer acquisition cost (CAC) is a sales KPI that tells you how much you spend to acquire a new customer. It considers several factors to inform you on how efficient and effective your sales acquisition process is.
Here are some metrics and factors that influence CAC:
- Cost per click
- Cost per lead
- Cost per acquisition
- Sales cycle length
That said, think of a sales KPI as a puzzle that comprises of several pieces — or metrics. It paints the big picture of how your sales acquisition process is impacting your business growth.
Why are KPIs in sales important?
Sales KPIs’ importance
KPIs in sales inform your team whether your efforts are steering you — and driving you — toward your desired results. That said, sales KPIs can tell you if you need to change directions to reach your goals.
Sales KPIs can also track emerging trends, so you can make informed decisions to ensure you’re on track to meet your goals. Sales leaders can also use KPIs to identify roadblocks toward success and understand them better so they can hurdle them.
For example, let’s say one of your sales team KPIs is customer lifetime value (CLV). CLV gives you insights into the value of your different customer segments. It enables you to effectively manage your customer relationships to increase your profitability.
If you notice increasing CLV, you’re increasing revenue from each customer over a certain period. Notice a decrease in CLV? You can further investigate what’s causing the decline.
10 most important sales KPIs you must track
Now that you know what sales KPIs are and why they’re important, here’s a list of the most important sales KPIs to track:
- Customer retention rate
- Customer churn rate
- Annual contract value
- Customer lifetime value
- Customer acquisition cost
- Average sales cycle length
- Upsell and cross-sell rates
- Average customer satisfaction score
- Net promoter score
- Average sales rep retention rate
This table summarizes the different sales KPIs and what they measure:
Let’s dive into each one:
1. Customer retention rate
Customer retention rate formula
(Total number of customers at the end of the year – net of new customers acquired during the year) / (number of customers at the start of the year) * 100
Customer retention rate tells you the percentage of customers who continue to buy from you. Tracking this sales KPI enables you to identify upsell and cross-sell opportunities, and maximize your return on investment (ROI). After all, a 5% increase in customer retention can increase your business’s profit by 95%.
2. Customer churn rate
Customer churn rate formula
Number of people who stopped being customers during a period / number of customers at the beginning of the period * 100
Also called customer attrition rate, customer churn rate is the percentage of customers who stop purchasing from you. Think of it as the opposite of customer retention rate.
Tracking this important sales KPI informs your team if you need to prioritize nurturing your existing customer relationships to upsell, cross-sell, and renew contracts. Use our Churn Rate Calculator to calculate your churn rate and estimate lost revenue due to churn.
3. Annual contract value (ACV)
Annual contract value formula
Total annual sales value of contracts / number of contracts
ACV tells you the average total yearly income from a customer’s contract. This sales KPI enables you to identify opportunities for upselling and cross-selling among your customers to increase the value of customer contracts.
If upselling or cross-selling is not appropriate among your existing customers to increase your ACV, you may need to focus on acquiring new customers to grow your revenue.
4. Customer lifetime value (CLV)
Customer lifetime value formula
(Average annual revenue from a single customer * number of years) – customer acquisition cost for the particular customer
CLV is a sales KPI that informs you how much revenue you can expect from a single customer throughout your relationship. It also determines which among your customer segments generates the most revenue.
Is your sales team fostering trust among your customers? CLV answers this question. Thus, you can strategize your upselling, cross-selling, and renewal efforts. Use our CLV calculator to get started!
5. Customer acquisition cost (CAC)
Customer acquisition cost formula
Total cost spent to obtain customers / number of customers acquired
CAC informs you how much to spend to acquire a new customer. It includes the following expenses:
- Marketing fees
- Sales costs incurred
- Teams’ wages
Monitoring your CAC and CLV can help you maintain or improve your business’s profitability.
6. Average sales cycle length
Average sales cycle length formula
Number of days to close all sales / number of new deals
How long does it take for a prospect to convert into a customer? Average sales cycle length answers this question by looking at the average length of time it takes a prospect to turn into a customer from their initial interaction with your business.
Average sales cycle length evaluates how efficient your sales process is. It’s a good idea to set a benchmark and analyze these deals over time so you can answer these questions:
- Are these customers satisfied?
- Do you retain them after their contract expires?
7. Upsell and cross-sell rates
Upsell and cross-sell rates formula
Number of customers who purchased the upsell or cross-sell / number of times the upsell or cross-sell was offered
Upsell and cross-sell rates enable you to understand your customers’ needs better. How? This sales KPI tells you which customer segments respond well to an upsell or cross-sell — meaning they are the ones who need upgraded services or extra product features.
As a result, you can identify upsell and cross-sell opportunities. You can then optimize your sales process to upsell and cross-sell among a specific segment and improve profitability.
8. Average customer satisfaction score
Average customer satisfaction score formula
Sum of customer satisfaction scores / number of customers surveyed
Average customer satisfaction score is a sales KPI that tells you how satisfied your customers are with your product or service on a scale of one to five. It lets you analyze your customer’s sentiment and helps you improve your sales process — and even your products or services.
9. Net promoter score (NPS)
Net promoter score formula
(Number of promoter scores / total number of respondents) – (Number of detractor scores / total number of respondents)
NPS is a sales KPI that tells you how likely your customers will recommend your business to a friend or colleague. You can use an NPS survey tool to ask your customers to rate how likely they’ll recommend your company to someone else on a scale from 0 to 10.
The scale is divided into different sections:
- Promoters (9 to 10): The customers who give you these scores are happy doing business with you and will likely recommend your product or service.
- Passives (7 to 8): These customers are neutral.
- Detractors (0-6): Detractors are dissatisfied customers who will likely not recommend your business.
By informing you of how likely your customers will recommend your business, NPS measures your customers’ views of the different aspects of your business. Further analysis of your NPS also tells you the next steps to take to increase your customers’ overall satisfaction and understand the pain points of your detractors.
10. Average sales rep retention rate
Average sales rep retention rate formula
(Number of sales reps at the end of the year – new sales reps hired within the year) / (total number of reps at the start of the year) x 100
This sales KPI measures the percentage of sales reps who stay within your organization within a year. Monitoring the average sales rep retention rate is essential because the more you retain sales reps, the more likely they can nurture relationships with existing customers.
As a result, you have more chances to increase your upsell and cross-sell rates, too!
Time to Level Up Your Sales
Our long list of services helps you grow every aspect of your business with marketing strategies that are proven to increase bottom-line metrics like revenue and conversions.
In the past 5 years, we’ve managed more than 14.9 MILLION transactions across our client base.
Track sales KPIs with WebFX to drive bottom-line growth for your business
Sales KPIs inform you when your team’s selling efforts move you toward your goals. If you need a co-pilot to guide your team to success, consider teaming up with WebFX.
A full-service digital marketing agency with over 28 years of experience, WebFX creates results-driven strategies backed by data. Our team of 500+ digital marketing experts will track your sales KPIs and craft strategies that drive bottom-line growth for your business.
In addition, our user-friendly customer relationship management (CRM) platform, Nutshell, enables you to track customer data and understand your audience better. As a result, you can nurture your relationships with your prospects and effectively convert them.
You can integrate Nutshell into our IBM Watson-powered proprietary platform MarketingCloudFX, which monitors key metrics that contribute to your bottom-line growth. For one, AdTechFX is one of MarketingCloudFX’s tools that keeps your business top-of-mind during critical points in the sales cycle. Our customers have experienced an 8% increase in closed deals with this tool!
We’re pumped to hear from you to get started. Contact us online or call us at 888-601-5359 to speak to our strategist to learn more about our digital marketing services!
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Maria is an experienced marketing professional in both B2C and B2B spaces. She’s earned certifications in inbound marketing, content marketing, Google Analytics, and PR. Her favorite topics include digital marketing, social media, and AI. When she’s not immersed in digital marketing and writing, she’s running, swimming, biking, or playing with her dogs. -
WebFX is a full-service marketing agency with 1,100+ client reviews and a 4.9-star rating on Clutch! Find out how our expert team and revenue-accelerating tech can drive results for you! Learn more
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Table of Contents
- What Are Sales KPIs?
- Sales Metrics vs. Sales KPIS
- Why Are KPIS in Sales Important?
- 10 Most Important Sales KPIS You Must Track
- 1. Customer Retention Rate
- 2. Customer Churn Rate
- 3. Annual Contract Value
- 4. Customer Lifetime Value
- 5. Customer Acquisition Cost
- 6. Average Sales Cycle Length
- 7. Upsell and Cross-sell Rates
- 8. Average Customer Satisfaction Score
- 9. Net Promoter Score
- 10. Average Sales Rep Retention Rate
- Track Sales KPIS with WebFX to Drive Bottom-line Growth for Your Business
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