13 Unique Sales KPIs that Boost Business Growth
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Lord Kelvin said,
“If you can’t measure it, you can’t improve it”.
In terms of your business this means that for the right results, you need the right metrics.
There are many sales Key Performance Indicators (KPIs) that can help you measure and improve your business. This article will talk about the most important ones that can define and boost your business growth.
What’s a KPI?
According to Paldesk, KPIs are a set of quantifiable measures. Companies use it to gauge performance over time. These metrics are used to determine a company’s progress in operational goals. They are also used to compare a company’s finances and performance against other businesses in the same industry.
Another thing about KPI is that it differs from sector to sector. Following that, competitors with the same needs might differ in their use of KPI. The way of using it depends on the philosophy and strategy of a brand. There are also some differences in each industry.
Before determining your KPI you need to set your goals. Decide whether you want to increase efficiency or improve marketing or something else. This may take some time, but the better the research, the more likely the KPI will harvest insightful results. Also, pay attention to choose achievable goals.
Unique Sales KPIs
1. Monthly Sales Growth
Sales growth analysis is a key part of any business strategy. It allows you to track future revenue objectives. This unique sales KPI measures the progress of your sales revenue on a monthly basis. Although annual sales revenue is important too, monthly is more precise. This is important especially for smaller companies.
A formula for monthly sales growth is:
(Current month’s total sales – Previous month’s total sales)/ Previous month’s total sales) x 100
Tracking sales growth from month-to-month helps you to predict revenue trends. Setting attainable sales revenue goals can inspire performance and keep sales efforts aligned.
2. Average Profit Margin
As you know, profit is the amount that your business revenue exceeds your costs. It is usually figured for a standard period such as a year or quarter. Further, the profit margin is profit expressed as a percent of costs. For example, a business with profits of $1,000 and costs of $2,000 has an annual profit margin of $1,000 divided by $2,000, or 50%. Average profit margin is usually calculated for the long term.
It calculates a total of all costs, all profits and finds a profit margin.
This KPI helps to assess the profit margins across the suite of products and services. Using it, small companies can easier diverse product offerings and improve sales flexibility.
3. Sales Opportunities
There is an old saying:
The opportunity is a deal that you have the possibility to close.
In other words, a sale is an opportunity for a contact or an account to be qualified. You have already contacted this person and find out their called or met needs.
Organizational and unique sales KPI helps to see opportunities as well as to determine which are worth resources in pursuing. It organizes prospects based on opportunity value and the probability of a closed deal. Each prospect has a purchase value to help you prioritize efforts.
4. Sales Target
According to Business Dictionary, a sales target is a goal set for a salesperson or sales department. You can measure it in revenue or units sold for a specific time. Setting up sales targets help keep you and your sales team focused on achieving your unique sales KPI goals. It also compares sales wins over periods of time. It can serve as a way to rally sales teams to improve their performance.
With this KPI, however, it’s important to create a sustainable framework. Sales teams that are constantly pressured to meet the unattainable are often on the perfect path to burnout. Using this KPI to look at previous performance and establish attainable future goals is the best use case.
Picture 1. Be sure you always hit your sales target
5. Sales Closing Ratio
Sales Closing Ratio shows the proportion between quotes your sales team sent out and how many deals they closed. It determines how much time a sales employee or the whole team spends on pursuing an opportunity.
The first step toward improving closing ratios is to target marketing efforts to bring in better-qualified leads. In addition, optimize lead capture and contact management processes. In other words, it makes sure you’re collecting as much information as you can about prospective clients. Also, you are engaging clients in follow-up leads so the sales team doesn’t spend much time for closing each deal.
6. Average Purchase Value
The Average Purchase Value KPI measures the average value of each purchase. It compares the value of purchases to the average number of units per transaction. This unique sales KPI may vary depending on the type of products and services you are selling.
For instance, an auto dealer will have a high average purchase value but low units per transaction. It’s also important to segment customers according to key demographics. Demographic segmentation helps better target sales and marketing efforts.
7. Lead to Sale
A sales lead is a potential sales contact, individual or organization that expresses an interest in your goods or services. Leads are obtained through the referral of an existing customer or through a response to advertising. Lead to sale is the ratio between closed deals and the number of leads.
This KPI helps sales teams see if leads were quality, which methods may work best in closing future deals. Also, it shows if particular offerings or messaging made a special impact. Lead to sale should be shared and routinely discussed by the marketing team and the sales team. Quantity isn’t important here, but quality since 20 quality leads could be far better than hundreds of low-quality leads.
8. Sales Per Rep
Sales per rep allow leaders to see how many sales were made per rep by each employee. It measures the ability of each sales rep to generate revenue for your organization. This sales KPI can help in establishing a sales baseline and in determining the strengths and weaknesses of each rep.
For example, some reps may take a longer time to close deals but those they do close tend to stay customers longer. For the sake of sustainability, it’s important not to use the sales per rep KPI for checking speed.
9. Product Performance
The Product Performance KPI ranks product sales based on revenue performance. Its role is to inform your sales team which products are selling well. At the same time, you should rank the poorest performing products to determine failings and to resonate with customers.
When monitoring this uniques sales KPI, it’s important to consider the specific contexts of each product. For instance, is a certain product receiving a boost due to a viral marketing campaign? Or, are you experiencing a slump because your competition is offering a similar product at a lower price?
10. Customer Lifetime Value
It’s important for sales teams to understand not how much deals close for, but how much that closed deal brings to the company over time. This ensures they know the “true” impact of a win.
A formula for Customer Lifetime Value KPI:
Lifetime Value = Gross Margin % X ( 1 / Monthly Churn ) X Avg. Monthly Subscription Revenue per Customer
11. Expansion MRR
Expansion MRR (Expansion Monthly Recurring Revenue) is a metric used to measure the amount of extra revenue coming from existing customers. To calculate Expansion MRR for a month, add all additional revenue from current customers that occurred within that month.
A formula for Expansion MRR is:
Expansion MRR for January = Upgrades + additional feature purchases + industry report purchases
It is typical to calculate Expansion MRR as a percentage rate where you compare the current month to the previous month. You identify whether your existing customers are buying more or less of your products and offerings. Expansion MRR is also an indicator of how happy and loyal your customers are. If they’re happy with your product and customer success, they will buy more stuff from you.
Picture 2. Expansion MRR is an indicator of customer happiness
12. Average New Deal Length
How much does the average sale generate, and over what length of time?
This KPI shows which sales packages may be the most profitable for your company. Average New Deal Lenght can also be broken down on a per employee basis.
For example, one sales rep may have closed 50 deals last month, but all deals were for a month-to-month plan. Meanwhile, another rep may have only closed 2 deals, but they were for the company’s annual package.
13. Average Cost Per Lead
This KPI answers the question:
How much does it cost for us to generate a single lead?
The cost of generating a lead is highly variable. Other factors, including targeting, marketing channel, content, and creative can be a huge factor as well. Most online marketers want to test different creatives across platforms to gauge effectiveness.
Picture 3. Calculating average cost per lead
14. Average Conversion Time
Conversion time measures the efficiency of your sales funnel. It is the average amount of time it takes per a conversion. If your product sells at a certain monthly rate, but it takes half a ear to close one deal, then there is something seriously wrong with your sales funnel.
15. Churn Rates
A churn rate is a KPI which detonets how many people has a subsrciption-based company lost over a period of time due to cancellation or non-renewal of a service. This KPI is one of the crucial ones, since it has been proven that the cost of retaining a customer is far less than the cost of acquiring a new one.
Modern sales teams are displaying their sales KPIs on a dashboard. This gives the department visibility and transparency into their numbers. It increases sales productivity because the data being pulled in often updates in real-time. It is also a great way to motivate teams and to profit.
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