10 Important Sales KPIs in Modern Sales
One of the main goals of every business is to increase sales. But how can this be achieved in a company that already exists and does not have a clear sales process? We have compiled a list of 10 sales KPIs (key performance indicators) that, if analyzed correctly, will have a positive impact on your sales. This makes it possible to track the behavior of your sales staff and to optimize processes and procedures at any time. This isn’t about accumulating more sales metrics or data, you need the right ones.
What exactly is meant by this will become clear in the article – first, there are indicators that you define together with your team to evaluate the effectiveness and efficiency of the work done.
Why tracking sales KPIs is important
Key Performance Indicators (KPIs) are becoming more and more important, and nowadays it is impossible to imagine any sales process without them. Without these sales figures, it is impossible to lead a company into a positive future in a targeted manner. It is therefore important to formulate concrete goals and to specify them for every sales manager. Your employees can use these to orientate themselves and check their progress. It is important that the goals are achievable and not utopian, but they must not be too challenging.
If a sales employee is busy with a few hundred phone calls a day, they can easily lose track and be unsuccessful. On the other hand, they can also be under-challenged. KPIs are the measuring tape with which one’s own work can be measured.
Trust is good, control is better!
Everyone knows this saying only too well and you have probably heard it before. Many people mistakenly believe that working with sales figures is a kind of control over their employees. However, this is a misconception. It is about pure statistics, about the collection of data, and the analysis of the customers. The aim is to create transparency, both within the company and for all external stakeholders.
To be able to make optimizations, transparency in the company is essential. This ensures open and honest communication, and the company goals are tackled together. The day-to-day business determines the turnover of a company. We have worked out exactly how this can be optimized with 10 important sales KPIs.
The 10 most important Sales KPIs
- Number of leads
- Conversion rate
- Turnover per employee
- Acquisition costs
- Churn rate
- Number of customers
- Repurchase rate
- Customer Lifetime Value (CLV)
- Competitor analysis
Sales KPI 1: Revenue Targets
You have set sales targets based on a quarterly or annual period. So, you should periodically check your revenue to see if you’re making progress or not. A good indicator of this are reports that are created and analyzed weekly or even daily.
Sales KPI 2: Number of Leads
Here you should follow the credo ‘quality over quantity.’ What good are leads that don’t convert to customers in the end or don’t bring in any sales? A certain consistency is important. You can achieve this if you make specifications and determine how many leads you want to generate over a certain period. Then you must iteratively check whether the estimated number is realistic or not. Furthermore, the conversion rate of the leads is crucial. If there is a problem with this, it may be because your landing pages are not designed to be user-friendly enough and the call-to-actions are not appetizing enough. If your lead acquisition strategy is no longer up to date, get inspiration here, and consider hiring a custom web design company to ensure that your landing pages are visually appealing and easy to navigate, increasing the chances of converting leads into loyal customers.
Sales KPI 3: Conversion Rate
The lead yield is given as a percentage. It determines how many of the leads received have also become real customers. A conversion rate of approximately 3% is desirable and ideally should be exceeded, but not fall below. If your rate is below 3%, they should use lead nurturing and lead scoring. It is important to accompany the customer along the customer journey, and to enrich and optimize this “path” with relevant content for the respective target group. Interacting with the leads is important and should be considered. E-mail actions, for example, can be useful. We have already mentioned the target group. If your target group is not clearly defined and your sales team is not committed to it, it will be difficult to increase the conversion rate. The bait must taste good to the fish, not to the angler.
Sales KPI 4: Sales per Employee
Revenue per employee is one of the most important sales metrics for sales managers. In this way, it can be determined which employee is responsible for how much turnover. Sales KPIs serve the purpose of expressing personal and company-related goals in figures. These statistics provide information about the skills of the sales staff in individual cases. But long-term success depends on the intuition of a salesperson. The better he can put himself in the position of the target group, the more likely it is that a lead will become a customer. Therefore, it makes sense to look at sales KPIs with a particularly cautious eye, because true sales professionals trust instincts, experience, and interpersonal interactions.
Sales KPI 5: Acquisition Costs
To be able to determine acquisition costs, you need a few key figures. These result from marketing and sales costs, salaries, and other expenses that arise over a certain period. This sum is divided by the total number of customers acquired during this period. This sales KPI provides information about how well your sales marketing works and provides information about the quantity. Furthermore, with this sales indicator it is possible to understand the scalability of your company and to carry out process optimization.
6: Churn Rate
If a subscriber or customer has changed his mind after a certain time and wants to leave you, this is known as churn. The churn rate, also known as the customer churn rate, represents the percentage of all customers or subscribers who have changed their mind during use. If this rate is high, this is a first indication that your product or service is not satisfactory. Here, too, it is important to initiate optimizations and to rethink the sales process for existing customers. Especially in the subscription area, and especially with SaaS, the churn rate is decisive for the economic success of the company and should always be kept in mind.
Sales KPI 7: Number of Customers
There should not be a big discrepancy between regular customers and new customers. You should always understand how effectively you are selling your product or service. Both to new customers and to existing customers. If you tend to win a lot of new customers, this can be an indication of problematic customer retention. Conversely, this stands for a high number of returning customers. This is generally a good sign, but it may also be the case that you should reconsider your orientation when it comes to acquiring new customers.
Sales KPI 8: Repurchase Rate
Customers who buy a product or service from you at certain intervals are shown with the repeat purchase rate. Usually, a period is determined here and the so-called repurchase rate is then calculated based on this. If the rate is positive, keep going. You are selling the right products or services to the right target group. If the rate is negative, you should perhaps identify it with a new target group analysis or, if necessary, reconsider the area. When all else fails, you should reconsider your product or service.
Sales KPI 9: Customer Lifetime Value (CLV)
This key figure shows the contribution margin that a customer realizes during his entire “customer life”, discounted at the time of observation (see Wikipedia). This number is important insofar as it is decisive for the acquisition costs. Only if you put the two key figures in relation do both make sense. It doesn’t seem like much to spend 150 euros for a paying customer, but when the CLV is just 50 euros, the investment is not worth it at all. On the other hand, you can pay an average of 5,000 euros for a new customer and then make an average turnover of 50,000 euros afterward. Then the bill goes up.
Sales KPI 10: Competitor Analysis
Classic benchmarking provides for analyzing the competition and drawing conclusions about your own products and their pricing. Check what your competitors are asking their customers to do. What are their customers willing to pay for their product or service?. If prices of the competition are higher, you should try to undercut them. If this is not an alternative, there must be a clear USP (Unique Selling Proposition) that clearly differentiates your product or service from those of the competition.
Sales KPIs: Conclusion
Now you are well armed and can get to work. Create realistic KPIs tailored to your business and salespeople. Basically, it is important that the goals set are achievable and not too challenging. These should only serve as crash barriers and must be readjusted. The use of such sales KPIs is very important for the future of every company. The better these are used, implemented, and adapted to current circumstances, the more likely it will lead to sales success and thus to long-term corporate success. Check your current sales figures.
Which of these do you actively use? Which of these are realistic and useful? Do you have your target group in mind? And always consult with your sales team, because they are the ones who are responsible for the company’s success and sales in day-to-day business. Get the team on board and steer them into a strong future together.