High-performing sales teams use data as the foundation for their success. Whether looking to increase sales, maximize profit, grow the sales team or beat the competition, the good news is sales leaders have more than enough data readily available in their customer relationship management (CRM), enterprise resource planning (ERP) and other systems. The key for sales teams is to identify the most impactful data points and key performance indicators (KPIs), interpret the findings and take action to reach or exceed sales goals. An effective way to accomplish this is through well-defined sales KPIs.
While sales managers use high-level, holistic sales KPIs that provide visibility across the entire sales team’s performance, sales reps typically focus on more tactical KPIs. For example, a sales manager may want to shorten the sales cycle or grow pipeline value, whereas a sales rep may focus on how many meetings to schedule or deals to close to reach quota. Regardless of position, a team’s ability to turn sales KPIs into an actionable plan can positively impact the bottom line.
What Are Sales KPIs?
Sales KPIs synthesize raw data into critical business metrics used to measure the activities of an individual, department or business against their goals and gauge the success of their efforts. KPIs can be tied to financial data, deal-related or about individual or team progress. Businesses use sales KPIs to evaluate and improve sales team performance, optimize the sales cycle and boost sales revenue.
Sales Metrics vs. Sales KPIs
Sales metrics and sales KPIs are closely related but not the same. Sales metrics measure the sales-related performance and activities of an individual, team or company over a period of time. Sales KPIs are a type of sales metric used to measure performance against strategic goals. Put another way, metrics are data generated by sales activities, and KPIs track whether a business meets its objectives.
Why Are Sales KPIs So Important?
Sales teams and leaders use sales KPIs to track their progress toward goals. Without sales KPIs, sales reps and managers may lack clarity about whether their efforts are producing the desired results or whether the team needs to change direction. They also use KPIs to track emerging trends and themes.
Based on the KPI, sales leaders can look deeper to identify underlying causes and how to address them. For example, if a new product is generating better-than-expected sales, additional resources could be reassigned to focus on selling it. On the flip side, if a product is underperforming due to competitive pricing pressure, then the sales team could cut prices or shift their sales efforts to another product.
Sales KPIs also offer visibility into an individual’s and team’s activities and performance so managers can ascertain whether team members — often spread out across various regions—are maximizing their efforts to achieve their goals. Close and consistent monitoring of sales KPIs ensures leaders have a clear view of where the business is heading.
How to Choose the Right KPIs
Choosing the right sales KPIs is critical to achieving sales and business targets. The most effective KPIs are specific, measurable, achievable, relevant and timely (SMART). Often, less is more: By selecting the most impactful sales KPIs, a sales team can concentrate its efforts on its main goals. After you select your KPIs, customer relationship management (CRM) software can help you create dashboards to monitor your chosen metrics. The dashboards show the KPIs in an easy-to-understand and visually compelling way so your whole team can track progress toward goals and have at-a-glance views of real-time sales data.
21 Sales KPIs for Sales Teams to Track in 2022
While sales KPIs should be chosen based on individual needs, certain KPIs can be effective for many businesses. Here are 21 commonly applicable sales KPIs:
- Monthly Sales Growth
- Average Profit Margin
- Monthly Sales Bookings
- Sales Opportunities
- Sales Target
- Quote-To-Close Ratio
- Average Purchase Value
- Monthly Calls (or emails) Per Sales Rep
- Sales Per Rep
- Product Performance
- Sales by Contact Method
- Average New Deal Size/Length
- Average Sales Cycle Length
- Lead-to-Sale %
- Average Cost Per Lead
- Retention and Churn Rates
- Customer Lifetime Value
- Average Conversion Time
- New and Expansion MRR
- Number of Monthly Onboarding and Demo Calls
- Customer Acquisition Cost
1. Monthly Sales Growth
A business can survive for only so long without growing its sales. By tracking this metric in your monthly sales dashboard, leaders can quickly spot problems and act on trends. Establishing realistic monthly sales growth targets can motivate a sales team and ensure consistent alignment of their efforts with an organization’s expectations. The formula for monthly sales growth is:
Monthly sales growth =
((Sales for the current month - sales for the prior month) / sales for the prior month) x 100
2. Average Profit Margin
Average profit margin is how much of overall sales revenue results in profits and is an important financial KPI. It’s calculated by subtracting the costs associated with producing the company’s goods and services from sales revenue. Companies can also analyze profit margins generated by specific products, sales territories and salespeople. Businesses with a wide range of products or services should monitor profit margins closely, as should companies that allow their sales reps flexibility in setting prices. This can be monitored for overall average profit margin or for specific areas. The formula for average profit margin is:
Average profit margin = (Net income / net sales ) X 100
3. Monthly Sales Bookings
Sales bookings calculates the value — factoring in associated costs — of a committed, signed or won sale over a specific period. Software-as-a-service (SaaS) sales teams often use monthly sales bookings to track the value of their wins. Leaders also use this metric to develop sales strategy and prepare forecasts. The formula for monthly sales bookings is:
Monthly sales bookings = Total new bookings sales dollars for the month - (average cost per transaction x total number of bookings)
4. Sales Opportunities
The sales opportunity metric calculates the estimated sales value of a lead based on the probability of closing the sale. Prospects are categorized into stages in your sales opportunity dashboard, such as proposal, qualified or negotiation, with each stage assigned a weighted value. The formula for sales opportunity is:
Sales Opportunity = Value of sale x opportunity status
For example, the negotiation stage of a sale may be assigned a weighted value of 0.5. If a prospect is estimated to make a $10,000 purchase, then the sales opportunity would be $5,000 ($10,000 x 0.5).
Tracking sales opportunities helps teams forecast sales and identify which leads are most worth pursuing. Increasing sales opportunities indicate the potential for generating higher sales, while decreasing opportunities may signal a need to increase sales efforts.
5. Sales Target Attainment
Will the sales team reach their sales targets, also known as quotas? Is actual revenue better or worse than forecasted? Which sales rep is trailing behind and can use some guidance? The sales target attainment KPI can help answer all these questions. In your dashboard, it compares sales performance against established targets or previous periods. Sales leaderboards are an effective way to visualize sales performance against targets. The formula for sales target attainment is:
Sales target attainment = (Sales for the current period / sales target) x 100
6. Quote-to-Close Ratio
The quote-to close ratio is the number of deals closed and won compared to the total number of quotes sent to prospects. This conversion ratio analyzes salesperson effectiveness and is typically compared to historical trends and current targets to assess performance. The formula for quote-to-close ratio is:
Quote-to-close ratio = (Number of closed and won deals / number of quotes) X 100
For example, if a sales rep sends 100 quotes to prospects in a month and wins 30 deals, the quote-to-close ratio is 30%.
7. Average Purchase Value
Average purchase value is the average amount each customer spends on a business’s products or services. One of the most cost-effective ways to boost revenue is to sell more to each customer. Teams use the average purchase value to develop sales strategies that incent customers to spend more and to forecast the value of leads. The formula for average purchase value is:
Average purchase value = Total sales / number of customers or transactions
8. Monthly Calls (or Emails) Per Sales Rep
Measuring sales activities per rep, such as the number of monthly calls or emails, is an indication of a rep’s productivity level. Keep in mind that quality over quantity matters. By reviewing activity rates alongside success rates, sales teams can focus on activities that generate more sales, faster. For example, of all the emails sent or calls placed in one month, how many resulted in a qualified lead, a meeting or ultimately in a sale?
9. Sales Per Rep
A key sales KPI for most businesses is sales generated per rep. Comparing this measurement to previous periods can help teams assess sales growth and trends. Sales managers use sales per rep to set sales targets, identify top-performing and underperforming reps, and improve individual and team performance. Since sales reps tend to be competitive, businesses use sales leaderboards to create transparency across the team and inspire reps to reach their peak performance. The formula for sales per rep is:
Sales per rep = Total sales / number of sales made by rep
10. Product Performance
Which products are top-selling, and which are behind the pack? This product performance and inventory KPI answers these questions by ranking products based on sales.
Product sales volume doesn’t always directly correlate to revenue performance. Low-price but high-volume products may account for a significant portion of total sales but may not rank in the top 10 revenue-generating products. As with most metrics, it’s important to consider other factors surrounding the product. For example, is a product experiencing a boost due to a concentrated marketing campaign? Or did a product slip because the competition rolled out an updated version at a lower price? Sales leaders can use the rankings to evaluate product market trends, while sales managers can use product performance to adjust their sales plans based on these trends.
11. Sales by Contact Method
Tracing a closed deal back to the way it originally began offers some of the best sales data and insight. By calculating the percentage of sales generated by each contact method, such as via email or in-person visit, sales leaders can arm their sales teams with the tools most effective in generating sales — and know which methods to avoid or use less frequently.
Pair this KPI with other metrics, such as contact method cost or individual rep performance metrics, to add further context. For example, a specific rep may be more successful at generating sales in person rather than sending emails, even though emails may be the company’s top tool overall. The formula for sales by contact method is:
Sales by contact method = (Sales per contact method / total revenue) x 100
12. Average New Deal Size/Length
By tracking sales dollars generated by new deals and the related duration of the sales stream, teams can gauge which offerings are most profitable for the business. Managers use this metric to compare rep performance, as well. For example, one rep may have sold 100 month-to-month subscriptions last month, while another has landed 20 bigger contracts for annual subscriptions. The formula for average new deal/length size is:
Average new deal size = Total revenue from new deals / total number of new deals
Average new deal length = Total number of days to close new deals / total number of deals
13. Average Sales Cycle Length
Average sales cycle length is the average length of time from an initial interaction with a prospective customer to closing a sale. Track this metric in your sales cycle length dashboard to evaluate the efficiency of your sales process. Once a business sets a sales cycle length benchmark, it can look for ways to shorten the sales cycle. Sales managers can analyze the average sales cycle by rep to see who closes sales quickly and who needs improvement. Like many metrics, it is important to understand context. If a rep is closing a complex deal, it may take longer than closing a few smaller deals. The formula for average sales cycle length is:
Average sales cycle length =
Total number of days to close all sales / total number of new deals
14. Lead-to-Sale %
The lead-to-sale percentage, or the lead conversion rate, is the percentage of leads that convert to actual sales. This KPI measures the sales teams’ effectiveness in converting a prospective customer into a paying customer. It also identifies which marketing channels work best to generate quality leads. With a lead-to-sales benchmark in place, sales managers can use this percentage along with the length of the sales cycle to evaluate the efficiency of the lead-to-sales process and the strength of the team’s pipeline. By aligning together, sales and marketing teams can bolster sales by focusing on top-quality prospects. The formula for lead-to-sale % is:
Lead to sale % = (Total number of sales / total number of leads) x 100
15. Average Cost Per Lead
Average cost per lead measures the cost efficiency of marketing campaigns and provides the marketing team with an amount that is reasonable to spend on generating new leads. Average cost per lead can be tracked in aggregate for all marketing efforts or by individual campaigns. When combined with average new deal size, marketing teams can evaluate which lead channels generate customers with higher buying power. The goal is to keep average cost per lead low while generating a high volume of quality leads. The formula for average cost per lead is:
Average cost per lead = Total cost of campaign / number of leads generated
16. Retention and Churn Rates
Retention and churn rates have a yin and yang relationship. Retention rate is the percentage of customers who stay or renew their contracts or subscriptions for a company’s products or services. This critical sales metric reflects a sales team’s ability to retain customers and generate recurring revenue. Rising retention rates indicate a business’s products or services are well-received in the marketplace and customers are loyal.
On the flip side, churn rate represents the percentage of customers who cancel or don’t renew their contracts or subscriptions for a company’s services or products. Rising churn rates could indicate a problem with a company’s offerings, customer experience or sales approach, as well as competitive reasons. Since it is more cost-effective to retain existing customers than it is to find new ones, businesses closely monitor this KPI. The formulas for retention and churn rates are:
Retention rate = ((Number of customers at the end of period – number of customers acquired during period) / starting number of customers) x 100
OR
Retention rate = 1 / churn rate
Churn rate = (Number of customers lost / starting number of customers) x 100
17. Customer Lifetime Value
Customer lifetime value (CLV) refers to how much a company expects to earn over the entire time it conducts business with a customer. Businesses use this important metric to determine which customer segments generate the most revenue and how much to spend to acquire new customers. The calculation for customer lifetime value involves several components. The formula is:
Customer lifetime value = Gross margin % x retention rate x average revenue per customer
For example, if a business has a gross margin of 80% and monthly customer churn of 5%, and each customer spends an average of $100 per month, the calculation would be: 80% x ( 1 / 5% ) x $100 = $1,600 of lifetime value. The goal is to see rising customer lifetime values, which signal increasing revenue from each customer over a longer period.
18. Average Conversion Time
Average conversion time is the average length of time it takes to convert a lead to a sale. Sales managers use sales conversion dashboards to monitor this metric and evaluate the productivity of the sales funnel, which cycle lengths result in the most won deals and the effectiveness of an individual rep at closing a deal. The formula to calculate average conversion time is:
Average conversion time = Total length of time to convert lead to sale / total number of new deals
19. New and Expansion Monthly Recurring Revenue (MRR)
Monthly recurring revenue (MRR) is the amount of predictable revenue a company expects to receive on a monthly basis. New MRR is the additional revenue added for the month from new customers. Expansion MRR is the additional recurring revenue generated from the existing customer base, usually due to upgrades or expanded services. These KPIs are critical for SaaS or subscription-based businesses in forecasting, understanding new revenue sources and gauging sales growth trends. The formula to calculate new and expansion monthly recurring revenue is:
Monthly recurring revenue (MRR) = (Average monthly revenue from total new and expanded accounts / total number of accounts) x total number of accounts that month
20. Number of Monthly Onboarding and Demo Calls
For some companies, such as SaaS businesses, a trial or demonstration is a critical part of the sales cycle and can help close the sale. Since leads in the demo phase have a higher likelihood of converting to sales, this is a powerful KPI to gauge both the sales funnel and the success of a rep in winning the deal.
21. Customer Acquisition Cost
Customer acquisition cost (CAC) refers to how much it costs a business to acquire one new customer. The costs to acquire depend on the business model, but factoring in all sales and marketing expenses, including salaries and overhead, can ensure a comprehensive calculation. Growing customer lifetime value and average revenue per customer, while cutting customer acquisition costs, can help maintain or increase profitability. The formula to calculate customer acquisition cost is:
Customer acquisition cost = Total sales and marketing cost / number of new customers
Visualizing KPIs With Sales Dashboards
Once business leaders choose the right sales KPIs for their businesses, they’ll need a tool to track their progress. A sales dashboard is an excellent analytics tool used by high-performing teams to centralize sales KPIs, provide transparency about numbers and increase sales productivity to motivate the sales team. Dashboards should be concise and designed in a visually appealing way that shows trends or tells a compelling story. They should enable the team to see at a glance where they stand and where they need to go.
Tracking Sales KPIs With Software
A robust CRM platform automates the entire lead-to-cash cycle, capturing data points along the way. Sales KPIs tracked in real time and displayed via customizable dashboards are quick and easy to understand. Empowered by these tools, sales teams can monitor performance, spot trends and adjust their sales process to achieve or exceed their sales goals.
Sales teams are the driving force behind sales and profit, and the pressure to perform is high. Successful sales teams use carefully selected KPIs to track and measure the performance of the entire sales organization to gain insight on how they are progressing toward their goals. Armed with key performance indicators, teams are well poised to do what they do best: sell.
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Sales KPIs FAQs
What are KPIs for sales?
Sales KPIs are sales-related performance measurements used to track the activities of an individual, a department or a business against predetermined goals.
How do you calculate KPI for sales?
Calculations for sales KPIs vary according to the specific KPI. Sales dashboards can help you tap into analytics tools and show KPIs in a simple-to-understand and visually compelling way.
What are the 5 key performance indicators?
While key performance indicators vary widely by industry, roles and sales organization, monthly sales growth and average profit margin top many lists.
How can sales KPI be improved?
To improve sales KPIs, set KPI targets, monitor activity and make improvements in the sales process to reach established goals.
