Launched a new marketing campaign? Trialling a customer success strategy?
Overhauled your sales team? Whatever changes you've implemented in your company, what determines their success? How do you separate what works from what doesn't?
Unless you're a sales savant, sales metrics and KPIs are the mainstay of your monitoring. However, there are endless SaaS sales metrics and KPIs you could analyse, from conversion rates to return on investment (ROI). But no company has the capacity to analyse it all.
In fact, as McKinsey highlights, data-driven growth strategies can fuel lead generation and sustainable long-term growth, but few companies have found the right balance yet. The problem is they're looking at the wrong metrics.
Below, we cover the key sales metrics and KPIs you need to track to adjust sales strategies, prepare for future growth, and build a feedback cycle that keeps you growing.
In this article:
- What are Sales Metrics?
- What are KPIs?
- Key Sales Metrics to Track
What are Sales Metrics?
Sales metrics are trackable markers that provide insights into a company or team's performance and effectiveness.
Each metric measures and quantifies a specific aspect of a business, be it money earned, conversion made, or acquisition cost.
Common sales metrics include total revenue, average deal size, conversion rate, customer acquisition cost, and sales cycle length.
By monitoring these metrics, companies can evaluate if a particular strategy or tool is working, either adjusting their approach or trying something new.
According to a HubSpot analysis of 1,000 sales professionals, the top performance sales metrics include:
- Average Profit Margin
- YoY Growth
- Conversion Rate
- Productivity Metrics
- Quota Attainment
- Win Rate
- Customer Acquisition Cost (CAC)
What are KPIs?
Key performance indicators (KPIs) are much the same as sales metrics. Broadly, they're measurable values that demonstrate how effective a company is in achieving key objectives.
High-level KPIs focus on the overall performance of the business, while low-level KPIs centre on processes in departments such as sales, marketing, HR, support, and others.
KPIs should always be well-defined, quantifiable, and relevant to a company's goals. Some obvious KPIs include individual quotes, lead generation rates, and the number of closed deals per quarter.
Key Sales Metrics to Track
1. Total Revenue
Total revenue, also known as gross sales or turnover, is the fundamental metric of your business's financial health and success.
Unless you're generating revenue, you haven't got a business. In a nutshell, total revenue is the entire income generated from all your sales activities.
Remember, revenue isn't net profit – you still need to subtract your outgoings. However, as an all-around metric, total revenue is as good as it gets.
2. Average Profit Margin
Revenue is only one factor. Your profit margin is a key sales metric that indicates your company's net margin over a specific period (usually several years). Some argue it's the purest metric measuring your sales team's efficiency.
The greater profit you make for every penny you spend on sales, the more impressive your revenue.
Of course, if your profit margin is declining, it's a major warning sign that something is going wrong with sales.
3. Customer Lifetime Value
Customer Lifetime Value, or CLV, is the total revenue on a customer basis. It's the total sales you can expect to generate from a single customer account, on average, over their time with your company.
Companies often neglect this metric, favouring a comprehensive view of a business's financial health. That misses substantial opportunities.
It costs businesses far more to acquire new customers than to keep old ones. Therefore, ensuring you get as much value from each individual customer (aka a higher CLV) maximises your business efficiency.
Plus, CLV represents numerous other factors, including customer churn (the more customers you lose, the lower your CLV) and average deal size.
4. Conversion Rate
Generating leads is one thing; turning them into customers is another. If your average conversion rate climbs over time, then your sales strategy is working.
Of course, you still need to generate more leads – converting 100% of a trickle isn't a recipe for success. But, as a rule, your conversion rate is a good barometer of your brand's performance.
And if your conversion rate begins to drop, it's a clear indicator that something is going wrong with your sales team.
5. Customer Churn or Customer Retention Rate
Think of your business like a bathtub. If the water rises, your business is growing; if the water level falls, your business is shrinking.
The flow of water into your bath is the output from your conversion rate – the leads you convert. Conversely, the water leaving via the plughole is your customer churn, and the water remaining is the customer retention rate.
As SaaS sales metrics go, customer churn is among the most important. Because customers can jump between platforms easily, SaaS companies developed the 'customer success' concept to ensure users see tangible benefits from the platform.
Customer success teams use the customer churn rate to measure how many users they lose in a given period.
On the other hand, the customer retention rate is the mirror image. The more customers you retain, the more revenue you generate over time. In addition, retention directly feeds into a customer's lifetime value.
6. Sales Cycle Length
Did you know the B2B sales cycle length is getting longer? This lengthening KPI reflects the reduced buyer-seller interactions and sheer quantity of content available.
B2B buyers must sift through reams of data – including whitepapers, blog posts, product information, and more – to determine which seller to go with. It's a long game!
That being said, you can work to shorten your sales cycle, streamline your sales strategy, and close deals with greater rapidity.
The sales metric you need to monitor is the sales cycle length. It measures the time a lead or prospect takes to become a customer, from first contact to final sale. It's the key metric for your sales team's efficiency.
Take all the sales cycle lengths in a given period and average them to get the average sales cycle length. Plot over time to see any significant trends and how you can optimise the process.
7. Cost Per Lead (CPL)
Cost per lead quantifies your marketing team's success. Generating new leads is the lifeblood of any company. However, every penny you spend detracts from the customer's lifetime value. The lower the cost per lead, the further your campaign budget generates more potential revenue.
Alongside CPL, Cost Per Acquisition is another measure of the expenditure required to bring a customer on board. CPA takes a broader view – looking at the costs from marketing campaigns to onboarding.
In general, companies want to find the sweet spot between spending enough to have a steady flow of new customers but not spending so much that it diminishes overall profitability.
8. Win Rate
Who doesn't like winning? It's the best! Your win rate isn't a sales metric about costs or lost customers; it's pure, unadulterated success.
Win rate refers to the percentage of final-stage leads who become customers divided by the total number of leads in your pipeline. Despite its golden status, a win rate is really a measure of your ability to close deals, and it's not too dissimilar to your conversion rate.
Closing Thoughts
Think of your sales strategy as a pipeline. New leads are being generated thanks to marketing campaigns. These leads are then evaluated and converted into customers.
After they sign up, you try to keep the customer onboard as long as possible to keep them spending with your company. And for every stage in this process, you're spending money that detracts from your final profit.
Use your sales metrics and KPIs to identify leaks and problems in this pipeline. They're not abstract numbers. They relate to real success or errors in your business. By identifying a plummeting sales metric early, you can quickly apply a fix.
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