Amber Bharti

The Ultimate Guide to Sales Metrics: What to Track, How to Track It, & Why If you ask any professional or successful person who should I compare myself to grow faster without being demotivated then you will get the answer “You”. You are the only person whom you can easily compare and grow faster than comparing anyone else without being demotivated. If you yourself is best for comparison with whom you are then the question arises how can we do that? The answer is simple, “Metrics” With the help of metrics and measures you can easily compare you with your past analyzing the results and managing the work life more perfectly than ever. Here the importance of metrics and measures is straightaway reflected, it is equally important in various professional and personal aspects of life. In sales and marketing, metrics have a special role, it is widely used to track all the growth, ups, downs, efficiency of the sales professionals, and various other important factors. You can say that it is one of the most important factors or aspects of any brand or business. Various sales professionals, no matter how experienced they are, take the help of metrics and measures to take various important decisions relevant to any of the sales and marketing campaigns. There is an obvious reason behind it and that’s the high risk of failure, literally the risk is high and can lead to huge loss for a company or business and that is why the help of metrics and measures are taken to analyze the impact before implementing any of the strategies in any of the sales and marketing campaigns. Nearly all the successful companies and brands have a look and analyze their metrics and data for various business models, sales strategies and management. For beginners who are new to the field of sales and marketing it’s often become difficult to track and keep a measure of various things. This may be difficult for a beginner but if one has mastered it and is working according to it then he or she will definitely surpass his or her past performance and grow faster than ever. If you are a beginner then don’t worry because in this guide we will help you to track your sales metrics and describe in brief that why, how, and what is to be done. What are Sales Metrics? So, the first question arises and the doubt should be crystal clear, what exactly does the sales metrics mean? Well, they are just a collection of data points that represents the progress of an individual, team, business or brand over a period of time. Sales metrics are extremely important and useful in various tasks and decision making of a company or business such as goal settings, future preparation and strategy, analyzing market competitiveness and handling various other issues. What are the different types of Sales Metrics? There are various kinds of Sales metrics that provide important and valuable information for your business or brand. Gradually we will be discussing you uncovering their potential. So let’s talk about KPIs, do you know about them? Sales KPIs stands for Sales key performance indicators and these are the types of sales metrics which are very useful for analyzing the performance of the whole company. The Sales KPI uncovers some of the most useful and valuable information of the company of brands such as revenue by market and territory, cost of sellings as a percentage of revenue, stats of sales reps achieving 100% quota, number of lost deals, net promoter score, year wise growth, revenue generated from existing customers, revenue generated from new businesses, penetration, and the overall revenue. When a sales metrics represents the schedule or the performance of the sales reps or the sales professionals on a daily basis then they can be stated as the Activity sales metrics. It’s a bit different from other metrics because it can be manipulated by the sales manager in various ways. The sales manager can influence and motivate the sales team to increase their efficiency and update their daily schedule along with performance. The things which can be manipulated by the sales manager and can be identified with the help of activity sales metrics are number of calls made, emails, conversation, social media interactions, schedules, meetings, referral requests, proposals sent, etc. They are beneficial in predicting the upcoming results and increasing the overall efficiency of the sales professionals. If a sales manager or a professional wants to measure the health of the sales pipeline then they will use the Pipeline Sales Metrics. These sales metrics will help you understand what's working and what’s not in the overall sales process. The Pipeline sales metrics includes the average length of the complete sales process, number of open opportunities, closed opportunities, total value, average contract value, win rate, loss rate and conversion rate. There is a lead generation sales metrics which is widely used for checking the performance of prospecting of salespeoples. This sales metrics is also used for various purposes such as number of new opportunities appended to the pipeline, percentage of followed up leads, average lead response time, percentage of dropped leads, qualified leads and acquisition cost. Outreach is one of the most popular topics in the world of sales and marketing as it’s the first thing a sales professional does for connecting with his prospect in various strategies and that’s the reason for the existence of the outreach sales metrics which is used to track the initial contact to meeting rate and the overall performance of outreaches. There is an Email Sales Metric with the help of which various emails information such as open rate, response rate, engagement rate, and percentage of enhanced recipients are tracked. Phone sales metrics are also there which is used to track the back calls, calculating the percentage of the prospects who agree to certain things and who don't. This was widely used a decade back when calling was only the most popular and useful sales prospecting technique. Social media has a different impact in the world of sales and marketing. It has developed its own technique or strategy of marketing known as social media marketing and that’s the reason why it is important to track certain things when using it in your sales and marketing campaigns. Social media metrics are used for it. It provides various information such as percentage of connection requests accepted or pending, InMail or outreach response rate, conferences, meetups, number of qualified leads, etc. Conversion metrics are there to represent various conversions related to the campaign such as percentage of opportunities won, lost, open, closed, etc. To optimize your channel sales strategy every sales professional takes the help of channel sales metrics because with the help of channel sales metrics one can extract out various information such as revenue, margin, average deal size, total revenue by partners, number of partners, retention rate, cross-sell and upsell-sell rate, number of new partner added to the campaign, average time taken to find, onboard and provide training to new partners. Productivity is an important factor of any one's overall development and that is the reason why various sales professionals take the help of Sales productivity metrics for increasing their sales productivity. The sales productivity is defined as the rate at which the sales professionals hit their goals or targets. Hiring and onboarding always don’t turn out to be successful and beneficial for the overall brands or companies wealth and that’s the reason why the hiring and onboarding metrics is created to keep and manage the record of various hiring and onboarding stats. One can easily increase the efficiency of the overall onboarding process with the help of hiring and onboarding metrics. Sales hiring metrics are there to provide you useful sales hiring insights such as percentage of sales management, Average time spent in recruiting and hiring, percentage of various sources of hiring, accepted offer letters, rejected offer letters, average tenure, average turnover and cost of replacing the sales professionals from their roles. There is a term known as Sales ramp-up or simply sales ramp which simply represents the average time taken to transform a sales professional into a fully productive sales professional. Sales ramp is widely used to take the hiring and firing decisions, settle the expectation with upcoming reps and develop more precise sales forecasts. There are multiple ways to calculate the sales ramp but first it should be understanded clearly. For example, if a sales professional of your sales team takes four month to achieve 100% quota then the ramp time will be 4 months. This was just an example, don’t use it as a formula as it is not 100% accurate and efficient, maybe your sales professional gets a head start with the help of existing prospects, who knows! Still, if you want to calculate the accurate sales ramp or sales ramp up then you can use the formula given in this way, Sales ramp-up is equal to the amount of time spent in training and mentoring plus the overall average sales cycle length plus X is variable which is inversely proportional to the experience of the sales professional or the sales person. Sales tools, training and process adaptation method metrics are used to measure spenditure in these three sales stages. These stages are important for the overall sales and marketing team of any firm or organization. The sales tools, training and process adaptation metrics provide various useful information such as percentage of reps following the sales process, reps using backed collaterals, reps using email templates, messaging or any other technique, cost of training, time spent in training, satisfaction with the overall training, reps using the CRM, reps using specific trending online tool. Leading indicator and lagging indicator are also one of the most popular terms or buzzwords that are used for tracking, analyzing the growth using metrics. Leading indicator represents and predicts your results, it also represents the direction in which you’re trending with the time required and remaining to change your final outcomes. Coming to the lagging indicators, it represents the final and the ultimate results. It may be your team quota achievement at the end of quarter or month. What is Saas Metrics? Saas also known as Software as a service is one of the most popular software models which provides access to the software or application over the internet or the world wide web instead of installing it on any of your local system. There are different metrics for Saas which are calculated and measured for overall development. Now, we will discuss some of them and try to gain complete knowledge about them step by step. So, first is the Customer Acquisition Cost or CAC, CAC is the average of the total amount of sales and marketing expenditure that is required to capture a new customer. There are various potential components of CAC such as Inbound marketing, paid advertising, events or trades, business and sales development. So, that was a brief introduction about CAC, but how to calculate it? Well, it’s easy to just divide the total amount of money spent on sales and marketing over a given period of time by the total number of consumers you acquired. A simple example for calculating CAC or the Customer Acquisition Cost is like you spent $500 over a span of two months and acquired 10 new customers then according to the formula as we stated above, the CAC or the Customer Acquisition Cost will be 50. CAC seems to be useful and accurate but there are some cases in which it does not provide the accurate results, rather it can also provide you misleading results. Let’s say that your customer takes two months to analyze and buy the very first product or services from you and you have included him or her into calculation of CAC for one month only, then it can provide you misleading results. However to minimize these mistakes or misleading results you can use the formula: CAC = (Marketing expenditure (n - 60) + ½ sales (n-30) + ½ sales (n)) / Newly Acquired Customers (n) Where, n is equal to the Current Month. Now, let’s discuss the Cost per Acquisition or CPA, CPA simply means the total amount or money invested by you in a certain duration of time for acquiring the non customer assets such as leads, registered users, or a free trial. CPA and CAC are a bit relevant to each other, CPA can be the leading indicator of your CAC. For example, if you are providing the free version of your products or services then you can use CPA for measuring the cost of acquiring the free users or non customer assets and CAC for measuring the cost of acquiring a paid user. CAC is one of the most important and useful metrics for various startups and growing companies because they must know how much time it would take to recover the CAC or the Customer Acquisition Cost. This helps them a lot in managing the money flow and managing the other things according to it. CLTV or LTV also abbreviated as Customer Lifetime Value is the average of the total amount of value or money gained from the buyer as long as they stay as your customers. It is very useful in determining whether you are spending high or low for acquiring new customers. The best and the most optimal ratio for measuring the CLTV with CAC is 3:1. You can remember it as if you spend a dollar in acquiring a new customer then the customer will spend $3 for your products and services as long as they stay your customer. Analyzing the CLTV and CAC closely you will get to know where to focus your energy and which update is needed in your sales or marketing strategies. There is also a term named Annual or Average Revenue per account also known as ARPA. It represents the amount of revenue generated from a user or consumer or customer. It provides a stat with the help of which one can diminish the loss and manage his expenses. To calculate the Annual Revenue per account simply take the total revenue generated from all the customers and divide it by total number of customers. Monthly recurring revenue or MRR is used to track the total revenue generated by your company or brand which is expected to be made in a month. MRR is one of the most important metrics used by various Saas businesses and brands to see the growth and analyze the revenue generated in future. Now the question arises how you can use the MRR for your business or brand, how to calculate it? So, to answer this question, there are two ways with the help of which one can calculate the MRR. In the first method, you will have to add the monthly revenue you are bringing from each and every customer for total MRR or the Monthly recurring revenue. And then in the second method you will have to multiply ARPA by your number of paying customers. Here, the first method might take a bit longer but is more accurate than the other one. For maintaining the accuracy you will have to exclude the one time payments in your MRR. Now, let’s know about various forms of MRR which are widely used in the field of sales and marketing for growth. New MRR refers to the overall revenue from the new customers. Expansion MRR is the revenue generated from an existing consumer or customer including the cross-sells, upsells and volumes. Churn MRR is the amount of revenue you have lost from customers who are not your customers anymore. Annual recurring revenue is simply your MRR multiplied by 12 or the amount of revenue you may generate in a complete year. For the overall development with the help of sales metrics we recommend you to focus on both MRR and ARR. Churn Rate This term is often used in measuring the sales metrics of any Saas platform or business. It represents the percentage of the customers who have cancelled their subscription. Depending upon the contract you can calculate it on the basis of month, quarter or year. There are also some terms that are relevant to it such as Revenue Churn and Negative Churn. Revenue Churn is the lost amount of revenue and the term Negative Churn means that your expansion MRR has exceeded your churn MRR. KPIs based on Team: With the help of the type of the team you can also analyze your sales KPIs such as Inside sales KPIs, Field Sales KPIs, Sales Development Metrics. Inside sales team is based on the Inside sales KPIs, they use it frequently to check out and analyze the numbers of closed deals, opportunities, meetings and calls, events and interactions, demos, proposals, meeting schedules and emails. Various sales teams use field sales KPIs to focus more on meetings than anything else. Number of outside sales teams uses the sales metrics to analyze the meetings, number of opportunities created by stage, calls, demos, emails, etc. Sales development metrics are having their own importance and use as these metrics are widely used by companies to enhance their sales development reps team and their efficiency. They are widely used for managing and analyzing meetings and calls, opportunities, handling events, number of closed deals, emails and demos and managing meeting schedules. Sales metric dashboards are an extremely useful part or function of any Customer relationship management tool or software and are widely used by the sales professionals all over the world. It provides various useful metrics such as sales performance by Rep, sales activities, sales management, etc. You can also use the KPI templates if you do not want to use the CRM or the Customer relationship management softwares to track and analyze your sales metrics, all in one place. So these were all about the ultimate guide to sales metrics, what, how, and why to track. Hope you understand how important the sales metrics are in the field of sales and marketing to analyze and improve one's overall growth either it’s a personal, professional, or the growth of the individual brand or company.