Sales metrics: What and how to track

These metrics provide insight on how well a sales strategy is working, identify areas for improvement and help track progress toward wider business goals. Artificial intelligence (AI) and automation are being used to help develop more sophisticated sales dashboards, templates and streamlined integrations with customer relationship management (CRM) software, which for many is the central hub for analyzing sales data. Tracking sales metrics is one of the most crucial ways to boost sales productivity and make a sales team become a high-performing machine.

While there are many sales metrics to pick from, it’s important for a business to track the right metrics that suit their business needs and effectively measure the performance of the sales organization.¹ To have a complete view of a sales team’s performance, a business needs to pick metrics that measure things such as sales performance, sales activities, sales process efficiency and sales operations metrics.

Once those critical metrics have been identified, it’s a matter of aligning them to the business goals so they can become key performance indicators (KPIs). These metrics are the data points team leaders will use to signify whether a team has met the overall sales objectives and business goals.

The easiest way to understand the difference between KPIs and sales metrics is that sales KPIs focus on long-term business goals, while metrics measure specific business activities or processes.² Both are quantitative measurements, but used for different purposes.

If, for example, the business objective is to have a higher conversion rate, the business would need a number of different sales activity and performance metrics that impact conversion numbers. The KPI in this example is conversion rate because it measures progress based on a specific business goal, while the metrics are used to back up the higher conversion rate goal or show progress toward said goal.

Furthermore, KPIs can be separated into leading indicators and lagging indicators, and can be used for effective activity management and to assist sales teams in meeting sales goals. Leading indicators include things like calls made, LinkedIn invitations sent, social media interactions and follow-ups. Lagging indicators are things like customer lifetime value (CLV), customer retention rate and churn rate.

With sales metrics and KPIs in place, a salesperson, team or organization can evaluate performance against set goals and objectives. Businesses want all employees to be on the same page and that isn’t possible without predetermined goals and expectations.

By monitoring metrics like total sales, average order value and sales growth rate, businesses can assess their financial health and predict future income. This insight is vital for strategic planning, securing investment and win rate.³

KPIs such as conversion rate, customer acquisition cost (CAC), net promoter score (NPS) and CLV offer insights into consumer preferences, purchasing patterns and overall satisfaction. These objectives can be measured through sales metrics like, revenue, win rate, churn rate and lead response time. These insights help guide marketing strategies and product development, ensuring businesses meet customer needs effectively.

Sales metrics facilitate the evaluation of sales team performance. KPIs like sales quota attainment, win or loss ratio and sales cycle length give managers a clear picture of individual and team effectiveness. This information can be used to design targeted training programs and incentive structures, enhancing team productivity and morale.

Furthermore, sales metrics help in inventory management.⁴ By analyzing sell-through rates and stock turnover, businesses can optimize their inventory levels, reducing excess stock and preventing shortages.

Having sales metrics in place can contribute to better decision-making across all departments. By aligning on common metrics, departments can work collaboratively toward shared objectives. For example, understanding sales metrics can help marketing tailor campaigns with more relevant offers, or the product team design products that better meet market demand.

The typical sales metrics include sales performance metrics, sales growth metrics and sales operations metrics. Each plays a crucial role in helping a sales organization measure success in real-time. They often focus on things like new leads in the sales pipeline, closed deals and lead generation.

These metrics are quantitative and are used to evaluate the efficiency and effectiveness of a sales team or individual representatives in achieving their sales targets. The metrics provide insights into various aspects of the sales process, including sales volume, profitability, customer acquisition, retention and team productivity. Some common metrics include:

• Sales revenue: The total income generated from sales over a specific period.

• Conversion rate: The percentage of leads that are converted into customers.

• Average deal size: The average dollar value of each transaction or deal closed.

• Sales quota attainment: The percentage of sales targets achieved by a salesperson or a team.

• Customer acquisition cost (CAC): The cost incurred to acquire a new customer.

• Customer lifetime value (CLV): The estimated revenue that a business can reasonably expect from a single customer account.

• Sales cycle length: The time taken from initial contact to closing a sale.

• Win or loss ratio: The proportion of deals won versus those lost.

• Number of prospects: The total number of potential customers engaged by the sales team.

• Number of opportunities: The total number of potential sales in the pipeline.

• Average response time: The time taken to respond to leads or inquiries.

Sales growth metrics look specifically at the expansion and contraction of a company’s sales over time. These metrics are critical for understanding the performance of sales strategies and the overall health of a business. Common sales growth metrics include:

• Year-over-year (YoY) growth: The percentage change in sales revenue from the same period in the previous year. This KPI is found by measuring specific sales metrics.

• Quarter-over-quarter (QoQ) growth: Similar to YoY, this metric compares sales from the current quarter to the previous one. It's particularly useful for companies reporting sales on a quarterly basis.

• Month-over-month (MoM) growth: This measures the percentage change in sales from the previous month. It's ideal for tracking short-term trends and seasonality.

• Sales growth rate: This number indicates the rate at which sales are increasing or decreasing over a specific period. A positive growth rate suggests expansion, while a negative one indicates contraction.

• Compound annual growth rate (CAGR): The annual growth rate of sales over a specified period, assuming the growth has been consistent.

• New vs. returning customers: Tracking the proportion of new versus returning customers can provide insights into customer loyalty and retention.

• Sales by product or service: Monitoring growth in sales by individual products or services can help identify which areas are performing well and where improvements might be needed.

• Sales by region or channel: Tracking sales performance across different geographical regions or sales channels (for example, online, retail, wholesale) can highlight successful strategies and opportunities for expansion.

The purpose of sales operation metrics is to monitor and assess the efficiency and effectiveness of a company’s sales operation. These metrics focus on the internal processes, tools and systems that support the sales team, with the goal to streamline operations and improve overall productivity. Some key sales operations metrics include:

• Sales cycle length: This metric measures the average time taken to close a deal, from initial contact to final sale. Shorter cycles often indicate a more efficient sales process.

• Lead response time: Tracks how quickly sales teams respond to incoming leads, indicating their responsiveness and efficiency.

• Sales productivity: Measures the output of sales representatives, typically expressed as revenue generated per salesperson or the number of deals closed per representative.

• Sales forecast accuracy: Shows how closely predicted sales match actual results, helping to refine forecasting models and improve strategic planning.

• Sales process efficiency: Metrics here might include the percentage of leads qualified, conversion rates at each stage of the sales funnel or the number of touches required to close a deal.

• Sales tool utilization: Highlights how often and effectively sales teams are using provided technology and tools, such as CRM systems or sales enablement platforms.

• Training effectiveness: This KPI relies on metrics such as completion rates for sales training programs, improvements in sales performance posttraining and feedback scores from participants.

• Sales territory analysis: Measures the performance of sales territories or regions, helping to balance workload and resource allocation.

• Customer satisfaction: Surveys or feedback can be used to measure customer satisfaction with the sales process, providing insights for continuous improvement.

In some cases, a sales metric can also be a KPI depending on how it’s used. The following list contains ten metrics that are key to a business' success:

The sales revenue sales metric is crucial to a business because it directly reflects a company’s ability to generate income and sustain its business operation. It gives sales leaders the top line on a company’s income statement, representing the total revenue earned before any deductions or expenses, thus a clear financial health indicator. Sales teams can also look at monthly recurring revenue (MRR) to understand its income in a more frequent way.

The conversion rate is another vital sales metric due to its ability to encapsulate the efficiency of a business’ sales and marketing strategies. This kind of sales analytics represents the percentage of individuals including website visitors, qualified leads or prospects that complete an expected action, giving sales managers and team members a better understanding of how well their website or marketing campaign is performing.

The sales cycle length metric reflects how effective the sales process and sales strategies are for the business. A shorter sales cycle generally implies a more efficient process, potentially allowing for higher sales volume in a specific period. This important metric also provides insight into customer behavior and market conditions. With this metric, a sales team can find its average sales cycle time. If, for example, a longer sales cycle is recorded, it might suggest complex sales, requiring more customer education to mitigate any bottlenecks.

Customer acquisition cost is a key metric because it quantifies the investment required to gain a new customer. Understanding CAC is crucial for budgeting and profitability as it helps businesses determine how sustainable their sales and marketing efforts are in the long term. In addition, a CAC facilitates comparisons across marketing channels that can help allocate resources and inform pricing strategies.

A customer lifetime value metric is another key sales metric because it predicts the total revenue a business can reasonably expect from a single customer account throughout their relationship. A CLV measures the number of sales per customer and the kind of transaction being done such as a repeat purchase or as a result of upselling or cross-selling. With this metric a business can make smarter investments in customer retention and loyalty programs, setting sales teams up for success when it comes to future outreach.

A churn rate is a key metric because it tells a business the number of customers who stop doing business with them over a specific period of time. This metric is crucial as it reflects customer satisfaction and product or service performance. It is especially important for subscription-based and software as a service (SaaS) businesses that rely on a loyal customer base. However, that being said churn is important to any business looking to track customer relationships over time.

This sales metric helps calculate the percentage of leads that translate into customers, giving businesses a sense of how well a sales or marketing strategy did in turning potential customers into actual buyers. It can give sales teams more insight into how to maintain existing customers and data points as a benchmark for future periods of time when the lead conversion rates are being calculated.

Calculating this number indicates, on average, how much revenue a closed deal generated within a specific time period. This metric is another key sales measurement because knowing the typical value of a sales transaction can inform sales teams for future sales activities and pricing strategies.

This KPI is specific to each sales representative and how they each contribute to the overall revenue of the business by looking at average revenue per deal. It helps businesses assess sales teams at the individual level, revealing won deals and close rates made. It can help a sales leader set realistic sales targets for individuals and allocate resources for further training when necessary.

A win rate is a sales metric indicating the percentage of qualified sales opportunities that a sales team successfully won. This measurement is one of the key sales metrics because it shows sales teams how well they are converting potential buyers into customers. It can impact how future sales reps are trained during onboarding and help foster stronger sales reps for the future.