With so many moving parts, it’s not always clear whether or not our sales efforts are genuinely successful. That’s where key performance indicators (KPIs) come in. KPIs allow us to measure and track essential metrics related to our sales strategy. In other words, they give us insight into which areas we may need to improve upon.
There are literally hundreds of KPIs out there, so how do we know which ones are the most important for measuring sales success? This blog post will focus on the top KPIs commonly used in B2B and SaaS industries.
13 Best Sales KPIs to Measure Success (for Sales Teams and Managers):
1. Customer Acquisition Cost
Total sales and marketing cost / number of new customers
First and foremost, it’s crucial to track how much it costs to acquire each new customer. The CAC (customer acquisition cost) KPI tells us the total sales and marketing expenses divided by the number of new customers acquired in a given period.
Why is this KPI important? It helps us understand the efficiency of our sales and marketing strategies and how much we can afford to spend on acquiring new customers. A high CAC may signify the need for strategy or budget allocation change.
2. Monthly Sales Growth
((Sales for the current month – sales for the prior month)/sales for the prior month) x 100
Ideally, our sales should consistently increase month over month. The monthly sales growth KPI allows us to track this trend, showing the percentage change in sales from one month to the next.
This KPI is important because it gives us a sense of how well our overall sales strategy is performing and whether or not we are meeting our growth goals.
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3. Customer Lifetime Value
Gross margin % x retention rate x average revenue per customer
This KPI is especially relevant in SaaS industries, where customers often make recurring payments over a long period of time. The CLV (customer lifetime value) KPI measures the total revenue that can be expected from a customer during their relationship with your company.
For example, if a customer pays $100 per month for a software subscription and stays with the company for three years, their CLV would be $3,600.
4. Customer Churn Rate
(Number of customers lost / starting number of customers) x 100
On the flip side, the customer churn rate KPI measures the percentage of customers that cancel or do not renew their subscriptions in a given timeframe. A high churn rate suggests a need for improvement in retention strategies, product satisfaction, and overall customer experience.
It is calculated by dividing the number of customers lost during a period by the total number of customers at the beginning.
5. Average Sales Cycle Length
Total number of days to close all sales / total number of new deals
Next, the average sales cycle length KPI tracks the time it takes for a sale to be completed. This KPI helps identify any potential bottlenecks or areas for improvement within the sales cycle. Every stage of the sales cycle, from pre-sales to closing the deal, is considered.
Considering you have a limited budget and resources, making sure your sales process is as efficient as possible is important.
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6. Monthly Calls or Emails
Many B2B industries rely heavily on communication with potential customers via phone calls or emails. From cold calls to follow-ups, the monthly calls or emails KPI tracks the number of times your sales team communicates with prospects each month.
It indicates the level of effort and activity by the sales team and potential opportunities for lead generation.
7. Lead-to-Sale Ratio
(Total number of sales / total number of leads) x 100
Once potential customers have been identified, tracking the success rate of converting them into actual sales is vital. The lead-to-sale ratio KPI measures the number of leads that actually result in a sale, helping us understand the effectiveness of our lead generation and qualification strategies.
For example, if we generated 100 leads and closed 10 sales, our lead-to-sale ratio would be 10%. Depending on your industry and sales strategy, a higher or lower lead-to-sale ratio may be expected.
8. Cost Per Lead
Total cost of campaign / number of leads generated
In a similar vein to the customer acquisition cost KPI, the cost per lead KPI shows us how much it costs to generate each potential customer (or lead). This includes expenses for lead generation activities such as advertising and marketing campaigns.
In the case of a SaaS company, the cost per lead may also include the expenses for providing a free trial or demo of the product.
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9. Upsell/Cross-sell Rate
(Number of customers who upsell/cross-sell / Total number of customers) X 100
If your company offers multiple products or services, the upsell/cross-sell rate KPI measures the success of selling additional offerings to existing customers.
This can be a valuable source of revenue for your business and indicates satisfaction with current products and services. You want most of your customers to take advantage of all the solutions you offer.
10. Competitor Pricing
You might also want to track your competitors’ pricing in the market. This KPI can give you insights into industry trends and allows for the proper positioning of your own products and services. If your pricing is too high or low compared to your competitors, you may need to adjust accordingly to remain competitive.
In order to monitor your competitor’s pricing, you can regularly check their websites and take note of any changes or special offers. Keep a spreadsheet or document to track your competitor’s pricing over time. Additionally, consider conducting a competitive analysis and gathering feedback from customers on their perception of your pricing compared to the competition.
11. Sales by Channel
(Sales per channel / total revenue) x 100
A healthy business usually has multiple channels for making sales, such as direct sales, online sales, and through partners or resellers.
The sales by channel KPI tracks the revenue generated from each channel, helping you understand where your efforts are most successful and where there may be room for improvement.
Focus on the channels bringing in the most revenue while keeping an eye on potential opportunities to expand into new channels.
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12. Organic vs Paid Sales
(Organic sales / total sales) x 100
For B2B and SaaS companies, the organic versus paid sales KPI is vital. While paid strategies may bring immediate results, developing a strong organic presence can have long-term benefits for your business.
Calculating organic sales can sometimes be challenging since it may not always be clear whether a lead was generated organically or through paid efforts. One way to track this KPI is by asking customers how they heard about your company or product. Then, categorize their responses as organic or paid.
13. Average Conversion Time
Time to convert a lead to sale / total number of new sales
Finally, the average conversion time KPI measures how long it takes for a customer to go from initial contact to purchase.
Remember that you likely won’t see any revenue until after this process is complete. As such, it’s important to monitor and work towards improving the speed and efficiency of your sales process.
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These are just a few of the many key performance indicators to consider when measuring sales success. And while they may be particularly relevant for B2B and SaaS industries, they can also apply to many businesses. Keep track of these KPIs and use them to make data-driven decisions and improve your overall performance in sales.