Sales KPIs are actionable metrics that give you insight into your sales team’s performance. They help you optimize your sales process by allowing you to track progress and measure results against your goals.
Properly tracking your team’s sales KPIs can also help grow your business. You can use KPIs to gauge your business’s health and track your sales team’s performance.
But which KPIs should you track? Here’s an overview of the essential metrics for measuring your company’s sales performance.
Why are Sales KPIs Important?
An understanding of why sales KPIs are important can help you select the right metrics before implementing a set of KPIs in your organization
Keep team members aligned
Keeping your team aligned is one of the most important things you can do as a leader. A misaligned team is less inclined to stay motivated, makes more mistakes, and doesn’t perform well.
Setting clear goals everyone understands and agrees upon is the best way to keep your team aligned.
Measure growth and progress
Sales KPIs are important because they help you measure your growth and progress over time. They can show you how well you’re moving towards your goals, help identify trends, and indicate which adjustments are necessary.
They also help you set up a framework for discussing what is and isn’t working with your team and customers.
Serve as benchmarks
Sales KPIs are important because they serve as internal and external benchmarks. They allow you to measure your progress over time to see how much you’ve improved or let you compare your performance against other companies in the same industry.
These comparisons help you identify where to improve your sales strategy.
7 Essential Sales KPIs to Track
Of all the available sales KPIs, there are seven that are essential for startups to track.
1. Customer Lifetime Value
Customer Lifetime Value is the amount of money a company makes from a customer throughout their relationship with the company. It’s also known as customer equity and CLTV.
It’s essential to sales because it helps you understand how much sales and profit you create from each customer, which indicates where to focus your marketing efforts and how much to spend on those efforts.
2. Conversion Rate
Conversion rate is the percentage of visitors who complete a specific action on your site, such as purchasing a product or signing up for a free trial.
This metric tells you how many visitors convert into customers. It also gives you an idea of where your process is breaking down. For example, are too many people abandoning their shopping carts? Coupled with A-B testing, the conversion rate can also help you improve your website’s design and user experience to ensure more people convert into customers.
3. Customer Retention
Customer retention is the percentage of your customers that you keep over time. It’s important because it measures how well you keep your customers happy. A high customer retention rate means that your customers are satisfied with the experience they have with your company.
Conversely, a low customer retention rate indicates you’re not doing enough to keep customers happy and coming back for more. It can be due to various reasons, and discovering those reasons is crucial for improving customer retention.
4. Lead Response
The lead response is the percentage of contacted leads that reply to your outreach. It’s important because it shows how well you communicate with potential customers and get them to engage them with your brand.
Good lead response indicates a clear message and that resonates with your target audience.
5. Monthly Sales Growth
Monthly Sales Growth is a KPI that tracks your sales growth over time. Many businesses and teams set specific targets for how quickly they need to grow to achieve profitabilityBy following monthly sales growth, you can ensure that your team is doing its job and helping your company grow profitably.
6. Customer Acquisition Cost
CAC is the amount of money it takes to get a customer, it complements Customer Lifetime Value (CLTV) well.
This metric is essential for sales because it shows how much it costs to bring a new customer on board, allowing your team to assess whether that cost is worth it. A high CAC requires a higher LTV.
7. New and Expansion Monthly Recurring Revenue
New and Expansion Monthly Recurring Revenue is a crucial metric that salespeople should track. This metric is important because it shows how much new recurring revenue you bring in from customers you’ve added in the past month.
Tracking Expansion Monthly Recurring Revenue (MRR) will help you see if your sales team is doing a good job selling new products. In some ways, it’s another growth metric, letting you know how much money is coming into your company on an ongoing basis. Information from this metric can improve your cost planning.
Need Help Tracking Sales KPIs?
As a founder or CEO, you’re a valuable ally for the sales team, even if you’re no longer directly running company sales. Tracking sales KPIs is vital to your company’s success and will allow you to build an effective sales team.
Investing in the right tools and services for your business is key to managing your numbers and making intelligent decisions. The experts at Founders CPA can help you set up systems and methods to track your sales KPIs and drive company growth. Contact us today!