Your team’s sales productivity is not a universal process, but it is a process nonetheless. Consistent sales growth and revenue expansion stem from an adaptable, repeatable sales process that consistently delivers results. Once established, your business can scale by onboarding new team members who can be trained in the successful formula.
Although contemporary tools like Salesforce Maps can help your team identify consistent top performers, this knowledge can’t be shared across the team without first comprehending the underlying reasons for their success.
Increasing sales productivity hinges on understanding how and why sales performance is tracked. The insights gleaned from this data empower you to make informed decisions that enhance your business’s performance.
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Exploring sales metrics
A sales metric serves as a data marker that mirrors the achievements of individual managers, sales teams, or the broader organization. Sales teams employ these metrics, often termed Key Performance Indicators (KPIs), to gauge their advancement toward set objectives, determine eligibility for bonuses or incentives, and uncover areas for improvement. These KPIs are also pivotal in aiding companies to adjust to market shifts and strategize for forthcoming expansion.
An optimal scenario involves a well-balanced distribution of performance across high, medium, and low achievers within the sales realm. Additionally, the collective performance of the team should manifest as consistent and enduring success.
Outlined here are several prevalent sales metrics that provide a holistic assessment of a company’s performance:
Arguably the most critical metric for any business is revenue. Total revenue can be measured across various timeframes, typically monthly, quarterly, or annually.
Annual Recurring Revenue (ARR) is a vital metric for sustainable RevOps performance. Correspondingly, Monthly Recurring Revenue (MRR) assesses revenue over a shorter span. ARR is especially valuable when considering projected revenue for multi-year contracts with high retention rates.
2. Average Revenue per Account/Product/Customer
Average revenue generated by an individual product, service, account, or customer guides leaders in allocating attention and resources effectively. It’s equally crucial to identify instances where the business heavily relies on a few key accounts, indicated by a higher Average Revenue per Account (ARPA).
3. Market penetration
Evaluating market share helps gauge your business’s position relative to anticipated growth laid out in your sales or business plan. Companies often measure this share concerning the Total Addressable Market (TAM), an estimate of a market’s size for a specific product or service.
4. Percentage of income from new and existing customers
Understanding the revenue contribution from new and existing customers is illuminating for multiple reasons. A rising proportion from existing customers may suggest that the RevOps team excels in boosting sales and customer numbers, whereas the team focused on acquiring new customers might lag.
If new customers dominate your revenue, it could signify high churn or rapid growth. To ascertain your position on this spectrum, track metrics like Customer Lifetime Value (LTV) and Net Promoter Score (NPS), covered later in this guide.
5. Win rate (conversion)
The win rate, measured as the ratio of successful or closed deals to the total number of deals attempted, gauges sales performance. It reflects the sales team’s competence in successfully concluding negotiations.
Numerous factors influence sales conversion, many of which are explored later in this article. Additionally, we identify key factors to double your win rate.
6. Growth for the year (YOY – Year-Over-Year Growth)
While growth can be measured over any period of time—for example, month-by-month, quarter-by-quarter, or year-by-year—year-on-year growth demonstrates high-level strategy execution and long-term growth goals.
The formula for calculating year-on-year growth (YOY) is as follows, assuming that last year’s revenue was $10 million and this year it grew to $15 million:
[($15MM – $10MM) / $10MM] * 100% = 50% growth per year.
7. Customer lifetime value (LTV)
Lifetime value is the income that can be expected over the life of an average customer relationship. After establishing a relationship and rapport with a client, your team should ideally maintain the existing relationship to keep the client satisfied and increase the customer’s lifetime value.
Comparing Average Contract Value (ACV) to LTV is pivotal: if ACV matches or surpasses LTV, it might signify shortcomings in products or services, potentially nullifying profits due to ongoing sales costs.
8. Net Promoter Score (NPS) as a measure of Customer Engagement
To what extent would customers recommend your offerings? NPS answers this question by quantifying customers’ likelihood to promote your business through word-of-mouth, typically on a scale from 1 (unlikely) to 10 (very likely).
9. Implementation of the sales plan
Plan performance tells you whether a manager (SDR/AE/CS) has achieved their target sales figures for a given period of time and what percentage of that they have achieved. This is an important metric because poor plan execution can be a symptom of more complex problems in the sales team, including inadequate training, scaling, and lead planning.
It is worth noting that the progress towards the plan should be tracked on the dashboard in Bl in order to objectively understand how the RGA scores (more on this later) directly affect and correlate with the achievement of the plan.
10. Pipeline reach
Sales people at all levels need to understand how healthy their pipeline is compared to their plan. This sales metric is a leading indicator of quota achievement – if you don’t have enough pipeline to cover your quota, it will be extremely difficult for you to reach your goal.
Poor deal qualification can skew the results of this metric because if your managers manually mark the qualification criteria, it can give a false sense of coverage. SalesAI evaluates SQL based on the lead’s actual pipe activity, offering a more accurate prediction.
11. Sales expense ratio
Comprehending the interplay between sales costs, direct customer acquisition expenses, and indirect operational costs against revenue is pivotal. A higher sales expense ratio indicates reduced business profitability.
In startups, the expense ratio typically rises with increasing management roles and product adoption. As the market stabilizes, the cost-to-sales ratio tends to decline.
If you want to gain an edge in today’s competitive market, you need to be able to determine what your most effective sales strategy is, how quickly your sales and marketing team can reach your goals, and whether your sales goals are truly achievable.
Sales metrics offer pivotal insights to sales leaders about individual representatives’ performance and overall organizational achievement, and whether they are meeting the goals they set at the start of the year, quarter, or month. And with AI tools like the Revenue Grid for tracking sales, collecting and monitoring these metrics becomes a breeze.