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Sales: Key Performance Indicators (KPIs)
Sales is the lifeblood of every business. It doesn’t matter if you are selling a software solution or landscaping services, your company relies heavily on its ability to connect with prospects and close deals.
From inside sales to outside sales, success doesn’t always come easy. There are people who are born to sell, those who work extremely hard to reach their goals, and those who continually fall short of expectations.
Tracking Progress and Results
As a company owner, sales manager, or salesperson, it is essential to implement a process that generates the best results.
You want to know everything you can about your website visitors. This allows you to tweak your marketing plan accordingly.
Even though no two companies are identical, not even those in the same industry, there are sales key performance indicators that can help every organization track progress and achieve the desired results.
Below are seven that deserve your attention:
Number of Incoming Leads
It doesn’t matter how these leads are generated. It doesn’t matter where they come from or how they show up. What matters is that a steady flow of leads is always in the pipeline.
If the number of incoming leads falls off, it is only natural for sales and revenue to follow. Conversely, if the number of leads increases, there is a greater chance of increased sales and revenue.
Tracking the number of overall leads coming in the door is important for your business. Knowing what stage they’re at is critical.
Lead to Sale Ratio KPI
Generating leads is only the first step in the sales process. What matters most is that a high percentage of these leads are converted into sales.
With the right system in place, tracking this performance indicator is simple. For example, you can divide the number of sales by the number of leads at the end of every month. If your salespeople received 200 income leads and converted 20 into paying customers, their conversion percentage was 10 percent.
By tracking this number on a weekly, monthly, and yearly basis, you can ensure that the “close ratio” is moving in the right direction.
Knowing the lead to sale ratio is important for you to know how to maximize your Sales funnel.
Lead Response Time KPI
Let’s make this one simple: the sooner you follow-up with a lead the better chance you have of making a sale. There are many reasons for this:
- It shows you are interested in doing business with the prospect.
- It lessens the chance that the prospect will contact another party, thus choosing their product or service instead.
Here is an eye opener from Harvard Business Review:
“The average response time, among companies that responded within 30 days, was 42 hours.”
If you make it a habit to wait almost two days to respond to leads, don’t expect the best results. Rather than respond in 42 hours, strive for 42 minutes (or less).
Image: InsideSales.com
It’s important to try to connect quickly and often to get that sale!
Contracts Out, Contracts Closed KPI
For a salesperson, sending a contract to a prospect is a good feeling. You know you are one step away from closing a deal. Unfortunately, sending a contract and closing a contract are two entirely different things.
Keep track of how many contracts are proposed and how many of these turn into closed deals. If you find that an extremely low number of contracts are being closed, it may be time to reconsider how these contracts are presented to the prospect. By tweaking the information, by tweaking the delivery method, you may experience an increase in closed contracts.
Image: ContractExpress
Number of Phone Calls, Emails KPI
In a perfect world, salespeople would never have to prospect for new business. Instead, fresh leads would flow through the company like water. There will be times when a prospect reaches out to a company, but a successful salesperson must remain active.
For many, this means making a high volume of phone calls or sending a high volume of emails on a daily basis.
You know what works best for you, your company, and/or your sales force. It makes sense to track the number of phone calls and emails. Taking this one step further, calculate the ratio of meetings, contracts, and sales. If it takes 100 calls, on average, to make one sale, at least you know what you are up against.
Sales Meetings
For some companies, the number of sales meetings scheduled is a top performance indicator. There are sales managers who want nothing more than salespeople meeting with prospects all day, every day.
Other companies, such as those that rely heavily on inside sales, may not be as invested in this performance indicator. Even so, it is not one that should be overlooked.
In today’s world, a face-to-face sales meeting is not the only option. Many companies are using software, such as Zoom.us or GoToMeeting, to eliminate the need for travel.
Every salesperson, inside and outside sales included, should track how many face-to-face or online meetings they conduct. This leads to the tracking of other performance indicators, such as:
- Lead to sale ratio.
- Contracts out, contracts closed.
In this example out of 457 leads, 25 product demonstrations were done for a conversion rate of 5.4%. That’s the benchmark KPI for demonstrations.
Sales Funnel
Your sales funnel is full of three types of people:
- Leads
- Prospects
- Customers
Every relationship starts with a salesperson turning someone into a lead. Once the person is a prospect, it is time to show them what your company, product, and/or service has to offer. This typically means holding a meeting and sending out a contract (more on this above). Finally, you hope to turn the lead into a customer.
You can track many details in relation to your sales funnel:
- Number of leads.
- Number of prospects.
- Number of customers.
- How you generated the leads.
- Number of contracts sent.
- Ratio of leads to prospects to customers.
It doesn’t matter if you manually track the performance indicators of your sales funnel or use software, you need to know where things stand at all times. Neglecting to do so could lead to an empty funnel.
In this traditional Sales funnel this company is tracking from every lead who hasn’t been contacted all the way to those that have been closed.
Final Thoughts
Most companies make sales a top priority. In basic terms, they realize that more sales mean more money. If you truly want to excel in this area, pay more attention to the key performance indicators detailed above. These will help you better understand your sales cycle, overall performance, and much more.
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