Sales KPI’s are the foundation of a successful team. Measuring team performance helps to convert more leads and find out where your sales are really coming from. We’ve listed 5 of our top KPI’s that you should be using to get the most out of your team.
Sales teams come in all shapes and sizes. Some of your salespeople will be dynamic go-getters just chomping at the bit for the next opportunity and some will be quiet professionals building up their network to maximise on their chances.
It’s this diversity of characters that makes being a Sales Manager so exciting (and challenging!), but there should be one constant throughout; the targets. This is where Sales KPI’s come in. These Key Performance Indicators are a leveler through which you can monitor exactly who is achieving what, whilst giving your team something to aim for and keep them motivated.
#1- Sales growth.
The first in our list is somewhat of a no-brainer. To keep your Directors, CEOs and the rest of the board happy, you need to be showing consistent growth within your industry. If you aren’t growing, you can be sure that one of your competitors is.
Depending upon your industry, the average rates of growth will vary, and of course you must take in other details such as political, environmental and economic factors. Having said this, it is generally a priority for businesses to grow consistently and sustainably, and this can be measured against your individual sales staff.
For example, if Rachel achieved £30k of sales 12 months ago, and only achieved £25k this month, you have the opportunity to get to the root of the issue. It may be that the member of staff needs more training, or the industry is showing early indications of a downturn; either way, you are best placed to get ahead of the problem before it becomes too difficult to manage.
Finally, by having a simple KPI such as sales growth in place, you give your sales team a joined cause around which to unite; they all have a joint concern - the continued growth of the organisation.
#2- Sales Closing Ratio.
A gauge of any successful salesperson is how well and often they close deals. This Sales KPI measures the amount of sales opportunities versus how many of those were closed. This is an extremely important KPI to track as it demonstrates the closing ability of your team, and leads to higher conversion rates.
To work out the sales closing ratio, follow the below formula:
(Closed Deals X 100) / Opportunities
For example, Ross gave 15 presentations to potential customers last month, and made four sales as a result. Following the formula above, we can see that Ross has a closing ratio of 27%. Depending upon your industry, this may be very good, or it may not be.
The beauty of the Sales Closing Ratio KPI is that it gives you the opportunity to train those employees who aren’t closing enough deals, which will in turn improve your conversion rates.
#3- Average Conversion Time
This Sales KPI isn’t specifically for monitoring the success of your staff, but more to keep up to date with industry trends. Conversion times can vary drastically depending upon many factors. Deals can be closed in minutes, or months, and sales cycles can even change within a single industry.
This is where the true value of the Average Conversion Time KPI shows. By knowing the length of time that it takes for sales to surface, you can begin to efficiently schedule your pipeline, and keep your Directors more up to date with accurate information.
More than this, an increasing or decreasing trend in average conversion times can show a change in the industry - perhaps there is an urgent requirement you haven’t been made aware of yet that you can capitalise upon? Or perhaps there is a looming budget cut that you can safeguard the organisation from?
#4- System Touches
Now this is where KPI’s get really interesting. A system touch can be regarded as any point at which a prospect has been contacted by one of your salespeople; few system touches suggests that your sales process is running smoothly and efficiently, whereas many system touches could mean that there is either an element of confusion, or perhaps your salespeople aren’t providing efficiency of service.
It is in these small details that a sales team becomes a truly great one. By having few system touches, not only are you ensuring that your team are effectively conveying the relevant information, and promptly closing deals, but it also means that your team members have more time with which to source more revenue for the organisation.
#5 Customer Lifetime Value
Let’s say that Barry has just secured a one-off order from a new customer worth £250k. Impressive right? Now compare that to Scott who receives one £25k order per year from another customer, but he’s received it for 12 years running.
This example highlights the importance of measuring Customer Lifetime Value - of course both examples are important to the organisation (and who is going to sniff at £250k?!), but although the one-off orders are of lower value, Scott’s job of nurturing and retaining the smaller company has been highly beneficial in the long term.
By measuring Customer Lifetime Value, you can keep up to date exactly how much a customer is worth to you, and which salesperson has done the job of nurturing them and making sure they always return.
Monitoring your Sales KPI’s
Once you’ve established your KPI’s, it is best to keep on top of monitoring them to get the most out of your sales team. There are many pieces of software available which can help you create dashboards with which to track your KPI’s, our personal favourite is Hubspot.
Aside from KPI’s, there are also many tactics available for improving your conversion rates, such as keeping your sales team’s closing techniques fresh, and updating your sales process.
We have put together a complete guide for you, outlining every step of your sales management process to help maximise on your conversion rates, keep up to date with your opportunities and get the most of our your team. Click here to read our completely free mega-blog!