A KPI (key performance indicator) is a metric used to provide insight into success and failure by measuring important components of your business. The key is to select KPIs that are the most relevant to your business case and will provide insightful data so you can make informed, intelligent decisions. KPIs should be tracked across the entire organization, and sales does not get a pass on this. Since an organization's strength should begin with its sales team, it is imperative that the right metrics are being measured. Now is the time to determine the KPIs that are relevant and meaningful to both your business and your sales strategies. At a minimum, I suggest you start with the following:
Do you know the sales activities that create success within your organization? Flying by the seat of your pants is not a strategy. It's a precursor to failure. If you do not know the activities that create success, find out. Ask other successful sales reps both inside your organization as well as outside of your company. These following three are a must have when it comes to activity metrics: Number of discovery meetings, number of proposals or quotes and number of contacts to meeting.
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This measures the average value of each sale, and therefore will help you place a quantifiable value on each potential opportunity. This sales KPI, in conjunction with other metrics associated with pricing models, is how you can estimate the true dollar value of each lead. This average can be applied to help a sales team and an individual sales rep determine how many sales need to close in order to reach revenue goals.
MQL (Marketing Qualified Lead) to SQL (Sales Qualified Lead)
This is the percentage of leads from marketing that become sales qualified. Sales qualified leads are those marketing leads who are rated most likely to convert to customers. This is an important metric because it will provide you with insights into how well your marketing and sales team are aligned. If the conversion rate is low, that’s an opportunity to communicate with marketing to better define your ideal customers and map a strategy to move them through the funnel. Another metric that you can embed with MQLs is the average response time. Very often you can easily connect the dots between a lost deal and a prolonged response to that lead.
Monitor metrics that provide insightful data so you can make informed, intelligent decisions.
Average Sales Cycle
The sales cycle length is the average amount of time between the first touch with a prospect to closing the deal. This is an important metric to track because it can tell you how efficient your sales process is and help you forecast sales more accurately. For instance, if you know your average sales cycle length, you can estimate the number of won deals you’ll have in a given time period based on how many leads are currently in your pipeline. This metric also allows you to define different cycle lengths for outbound, inbound and partner leads.
Lead to Sale
What's the ratio between closed deals and the number of leads received? This KPI will help you see if leads were quality, which methods may work best in closing future deals, and if particular offerings or messaging made an impact. This KPI should also be shared and routinely discussed by your marketing team and the sales team.
Net Promoter Score
If you do not have a consistent, unified customer satisfaction metric you use to guage your relationships with clients, we recommend periodically measuring NPS. This KPI provides valuable insight into the relationship and loyalty you have with your clients. This simple, one question survey is made up of the following question, "How likely are you to refer ______ to a friend or colleague?" Survey Monkey is a great tool to use for managing your NPS and has a canned survey already in place. Want to know more about NPS? Check this out.