Accurately measuring and evaluating KPIs is crucial to the success of your company. Let’s review how you and your organization can take advantage of KPIs to grow your business.

Today’s management and sales teams must rely on Key Performance Indicators, or KPIs, to make decisions and run their teams effectively. Sales teams are specifically crunched for time and demand quick and easy ways to evaluate large volumes of data.

Interpreting data is vital for scaling your sales team, increasing revenue, and crushing the competition. The key here is to track the right types of data and weed out the wrong ones.

Sales managers and business owners need to understand how to maximize the use of sales KPIs, as smart companies have used them to dramatically increase their sales performance.

Understanding sales KPI

KPIs are yardsticks in which companies track the performance of an employee, department, or business against goals. It helps sales leaders and their agents measure progress to their objectives, manage individuals and teams, and recognize trends.  You can’t and shouldn’t monitor everything, so the K is important.  Determining which measurables are key to your business success is half the battle. 

Importance of KPIs

Without KPIs, it would be almost impossible to create an effective strategy because you would not have historical data to measure how your team is doing. 

KPIs tell you what you are doing right and what you are doing wrong. Without it, you would not have a clear overview of your business. 

Top sales KPIs for your team

There are two types of KPIs: subjective and objective KPIs. Both are based on statistics, but subjective KPIs bank on the sales leader’s judgment. Thus, these might not reflect the real status of the business.

Objective KPIs are irrefutably measured and are often applied to compare performance over time.

Here are some of the KPIs you can use to get the most out of your sales team.

1. Monthly sales growth

Sales leaders utilize this KPI to measure their revenue growth each month. Measuring monthly sales allows you to see the trends as they happen.

2. Average profit margin

Tracking and measuring the average profit margin lets you evaluate the profit margins across your set products and services. Companies with multiple product offerings will benefit most from this KPI. Companies that give sales representatives the flexibility to price their products also stand to benefit.

3. New leads and opportunities

This KPI indicates how members of the team help the business expand. It shows who is reaching their quota and who needs more coaching. It also shows you if the quota is indeed achievable. 

4. Client Acquisition rates

Client acquisition rates show how many prospective clients convert to customers. Sales leaders can determine who among the team members are performing, and what they are doing to be successful.  This also allows the marketing team to scale based on ramping up prospecting efforts in correlation with acquisition rates to meet targets. 

5. Competitor pricing

Knowing how competitors price their goods or services can help you develop a competitive strategy. It can also help you determine the effects of reducing your prices or running a promotion.

6. Monthly sales bookings

This shows you the sales booking volume that a closed deal or a signed sale has achieved. You can further divide it into more categories, like sales booking volume per employee. Or sales booking volume per region.

7. Sales opportunities

Sales opportunities show the pending opportunities for sales teams. Using this KPI, you can decide which of them should be prioritized. Sales teams can figure this out because prospects have specific estimated purchase value linked to them.

8. Customer lifetime value

CLV helps teams recognize how much profit a customer will bring in the long run.

9. Average cost per lead

The average cost per lead tells you how much a lead costs. 

10. Upsell/ cross-sell rates

This KPI tracks upsell and cross-sell volumes of current customers to find out if certain verticals respond well to specific sales pitches. Monitoring this allows you to adjust promotional efforts appropriately.

11. Opportunity to win ratio

The opportunity to win ratio tells you how efficient a sales team closes a sale. It measures how discussions convert into money in your company. Sales agents refer to this as a win. Some agents are adept at sparking conversations but lack the skills to close sales. With this KPI, you can identify and train such agents.

12. Other specific transactional KPIs, such as ADT and UPT 

Most sales organizations have transactional KPIs that measure the quality of each sale. Average dollar per transaction and units per transaction help to evaluate the quality of sales. 

KPIs and the web

The web has turned into a brutally competitive marketplace. In such a cutthroat environment, you have to learn what works and what does not. Without measuring website KPIs, you are not going to fully understand your business.

KPIs allow you to quantify activities on your website. and measure your overall website performance.  As you make changes or do A/B testing you can measure how each change impacts results. 

Simply put, you should measure your web KPIs just as you measure your sales and revenue.

Creating better KPIs

We cannot stress enough the value of using the right KPIs. Understand your customer types and the sales activities that are appropriate for them. 

To create a great KPI, you need to do the following:

• Map the activities to customer types;
• Arrange activity targets on a quarterly, monthly, or weekly basis;
• Create a support system for sales agents; and
• Track the performance of sales activities.

Conclusion

The key to helping businesses make the best decisions is providing them with valuable and accurate information. Key Performance Indicators can help you make informed decisions to ensure that your company is moving in the right direction. KPIs help drive action.