Hi Community members,
If you are a sales leader or in a sales operations or enablement role, you know that there are numerous metrics and KPIs to evaluate the effectiveness of an individual seller and the whole team’s activities and efforts. According to these three blogs (Harvard Business Review, HubSpot, people.ai), here are the top 12 sales metrics that overlap and are ranked as most important in measuring the ROI of your sales organization and sellers.
1. Total Revenue — Perhaps the most important metric of any business, the total revenue can be measured on any time scale. The most common ones are annual recurring revenue (ARR) and monthly recurring revenue (MRR).
2. Average Revenue per Account/Product/Customer (ARPA) —This average revenue helps sales leaders understand which product/service or account/customer should be focused on. It also helps to know if your business is heavily dependent on a few key accounts.
3. Market Penetration — Understanding your marketing share is important as it measures how many customers you have compared to the total number of potential customers in the market, or total addressable market (TAM).
4a. Percentage of Revenue from New Business — This is the part of revenue from net new or green customers in the market. If this percentage is high, it could be an indicator of high churn or hypergrowth.
4b. Percentage of Revenue from Existing Customers — This is the portion of income generated from cross-selling and upselling current customers. If this percentage is high, it can mean that the teams responsible for account growth and management are doing a great job and business acquisition may have catch-up to do.
5. Win Rate — Another important metric, the win rate is a ratio of closed-won deals to all the opportunities (including open, lost, or in any other pipeline) and measures the effectiveness of your sales teams to close deals.
6. Average length of sales cycle — A measurement of pipeline health (and perhaps also seller efficiency), this refers to the amount of time it takes for a lead to go through the sales pipeline until it becomes a closed-won deal.
7. Annual contract value (ACV) — Usually used by SaaS companies that have yearly or multi-year contracts, ACV refers to the amount of revenue of a contract generates per year.
8. Lifetime Value (LTV) of a Customer — The lifetime value of a customer is the revenue that can be expected throughout the duration of the relationship with a customer. Retention and churn rates are two factors affecting LTV and help determine the sustainability of your sales teams as well as the longevity of the value of your product/service.
9. Year-over-Year Growth — Annual growth shows high-level execution of strategy and whether long-term growth goals have been achieved.
10. Net Promoter Score (NPS) — How likely are your customers to recommend your product/service to others? While we generally won’t know for certain if customers actually do recommend, the NPS helps indicate customer satisfaction. You can calculate the average NPS from a survey.
11. Quota Attainment — This is an important individual sales metric as it measures how your sales reps are performing against their forecast. A low quota attainment rate can be a signal for inadequate sales training and limited resources and sales tools. It might be a good idea to compare the quota attainment between field sales and inside sales as well – the number might just surprise you.
12. Cost of Selling — Last but not least is measuring your sales expenses, which can include direct customer acquisition costs and indirect operating expenses, against your revenue. The higher the ratio is, the less profitable your sales organization will be, so the goal is to lower this ratio as much as possible.
What do you think? I’m curious to know if you agree and which of these metrics is most important to you. It’d also be interesting to learn if there are other metrics you use to measure the performance and effectiveness of your sellers and sales org that’s not included in this list.
Thank you and looking forward to hearing your thoughts,
Eva C.
