It’s impossible to manage what you can’t measure.
Metrics are vital in every element of the company, but in sales, they are extremely important. There is too much at stake for sales executives to rely on their gut instincts when making judgments, and this is especially true when dealing with a mountain of data.
In spite of the fact that the sales productivity of your team is unique to each individual, it is still a process. A scalable, repeatable sales process that consistently produces results is the key to growing sales and revenue over time. Your business can expand with new team members who can be trained on the winning formula once you have that under your belt.
Unfortunately, this can’t take place until you’ve figured out what works and what doesn’t for your business. Despite the fact that you’ve seen the same person do well over and over again, you can’t pass this information on to the rest of the team unless you understand why.
It is important to know how and why to increase sales productivity. You may use this information to make proactive business decisions that will help you grow your company in the long run.
Table of contents
- What Are Sales Productivity Metrics?
- How Can Sales Metrics Increase Sales Performance?
- Sales Metrics used by sales teams
What Are Sales Productivity Metrics?
It is the efficiency of your sales personnel that determines their sales productivity. Increased sales productivity is a direct result of increased time spent meeting sales targets. When it comes to saving money, productivity also plays a role.
To assess productivity, output or revenue must be compared to every unit of input, just as productivity is calculated in economics. Finding out which inputs produce the most output is why sales productivity indicators are studied.
How Can Sales Metrics Increase Sales Performance?
It’s impossible for a salesperson in today’s data-driven world to rely on intuition or gut feelings. Without the right metrics to monitor the productivity and success of their teams, a sales manager is badly handicapped in today’s world.
It’s imperative that you know what your most effective sales approach is, how quickly your sales and marketing team can meet their goals and whether or not your sales goals are feasible in today’s competitive marketplace.
In the end, sales metrics help sales management understand the performance of individual sales agents and the overall performance of the company, and whether this fits with the goals they set at the beginning of the year, quarters or months.
Some of the Sales metrics measures include the following, mostly shown in percentages:
- Time spent selling
- Time spent on manual data entry
- Time spent creating new content
- Number of marketing collaterals utilized by sales reps
Sales Metrics used by sales teams
These are some of the most common sales metrics used to measure company-wide performance:
A. Total Revenue
Revenue is a crucial indicator for any organization. Any time period can be used to measure total revenue, such as monthly, quarterly, or yearly.
Revenue Operations metrics such as ARR (Annual Recurring Revenue) are common. It’s also worth noting that Monthly Recurring Revenue (MRR) is an analog to MRR in a much shorter time period. When salespeople close multi-year contracts and retention rates are strong, ARR is an excellent statistic for predicting revenue.
B. Average Revenue Per Account/Product/Customer
One way that leaders and managers determine where to focus their attention and resources is to look at the average revenue generated by a single product, service, account, or customer. An increased ARPA indicates that your company is more reliant on a small number of essential customers.
C. Market Penetration
Understanding your market share is critical because it tells you where your firm stands in relation to the growth you expect. According to the total addressable market (TAM), which is an evaluation of the size of a product or service’s potential customer base, firms typically measure this against their TAM.
Consider that markets can expand or decrease for a variety of causes, so it’s important to keep this in mind. The CRM applications market, for example, was estimated by Salesforce at $7.1 billion in 2002 when the company was preparing to go public. According to Salesforce’s revenue figures for the last year, CRM software sales have climbed dramatically.
D. Percentage of Revenue from New vs. Existing Customers
For a variety of reasons, it is useful to know how much revenue comes from new and returning consumers. As an example, if your Revenue Operations team is doing a great job of upselling and growing existing customers, but the team tasked with acquiring new logos is lagging behind, this could be an indication that your Revenue Operations team is doing a great job of acquiring new customers, but the team tasked with acquiring new logos is lagging behind.
If the majority of your revenue comes from new clients, this could indicate either a high churn rate or hypergrowth. Tracking metrics like LTV, NPS, and more will help you see where your team stands in relation to the rest of the industry.
E. Win Rate
It is the percentage of deals that close, or the opportunity-to-win ratio, which is the percentage of agreements that are successful, compared to the total number of opportunities that have been made. For the most part, win rate gauges the efficiency with which a sales staff closes deals.
After reading this article, you’ll understand why your sales team’s win percentage is so important. Increasing your winning percentage is as simple as using the strategies we’ve outlined.
F. Year-Over-Year Growth
In spite of the fact that growth may be measured over any period of time (month-to-month, quarter-to-quarter, or year-to-year), annual growth is the best indicator of a company’s ability to perform.
G. Sales Expense Ratio
Sales costs, direct client acquisition costs, and indirect operations expenses should all be understood in relation to revenue. Your sales organization will be less lucrative if your cost-to-sales ratio is large.
As a startup’s sales force grows and the product acceptance curve rises, the startup’s expenses tend to rise as well. In other words, as the market matures, your sales expense ratio should go down as a result.