Are you looking for an effective way to evaluate how your sales team is doing? Would you like to check if your business goals are met? This is when key performance indicators come into play. Aligning your strategy with the right metrics boosts performance and productivity, while helping you monitor the condition of your business and sales team. What are KPIs in sales and how to choose them?
What is KPI?
What are KPIs in business? Key performance indicators are measurable values that demonstrate how effectively a company is achieving key business objectives.
Organizations use KPIs at multiple levels to evaluate their success at reaching targets.
Key performance indicators in sales
There are many different ways to measure sales performance, so it’s important to choose KPIs that are aligned with your company’s goals.
Here are some examples of what KPIs in sales are:
- Revenue – perhaps the most obvious KPI for sales. It measures the total amount of money that your company has generated through sales.
- Sales volume – this indicator is used to monitor the total number of sales that your company has made.
- Average sale price – do you know how much money your company makes per sale? If not, monitoring this KPI will help you answer the question.
- Sales growth – it’ll help you check the year-over-year growth of your company’s sales and evaluate its development.
- New customers – how many new buyers have you attracted in a specific period of time? Tracking this KPI will allow you to estimate if your marketing efforts bring the expected results and help you acquire new customers.
- Customer retention – with this indicator, you can keep an eye on the percentage of customers that your company has retained over a given period of time.
- Sales cycle – this is an important KPI that measures the average length of time it takes for your company to close a deal.
- Win rate – how many sales opportunities has your company won? Monitoring the win rate will help you assess how effective and persuasive your team is.
What are KPIs used for?
So, what are KPIs used for? Sales KPIs can be used to measure progress towards targets set for revenue, number of new customers, or number of sales. They can also be used to track the performance of individual salespeople, monitor their performance, and effectiveness. Thanks to tracking the right metrics, companies can make more accurate executive decisions and find areas for improvement.
Apart from the sales sector, KPIs can also be used in other areas of business. For example, they’re ideal for monitoring customer satisfaction, employee productivity, or operational efficiency.
How to choose the right ones?
Since you know the KPI meaning, it’s time to discuss how to choose the right indicators that will help you monitor your progress and achieve business goals.
Unfortunately, there is no one-size-fits-all answer to this question, as the right KPIs for sales will vary depending on the specific objectives of your sales team.
However, some commonly tracked metrics used to measure sales performance include monthly sales growth, improved compliance, more sales opportunities, lead conversion rate, ROI, revenues, or sales by contact method.