The 5 Most Important Sales Performance Metrics Every Manager Should Track
As a sales manager, evaluating sales performance is almost always a numbers game. However, most managers face a similar problem - having too much data to evaluate while finding it difficult to identify the right metrics to track.
To make things easier for busy sales managers, here are the 5 most important sales performance metrics every manager should track.
1. Percentage of Sales Team Hitting Quota
The percentage of salespeople meeting or exceeding quota (quota attainment) helps you measure team performance and gives you a clear picture of whether your quotas are too high or low. As a thumb rule, if your quota attainment is below 60%, it is a concern for the sales managers. Either the quotas are unrealistic or you need a better team to hit the numbers.
On the other hand, if your sales reps are hitting 90% to 100% (or exceeding) their quotas, your team is doing great! If you want to drill down to a micro-level, you can measure individual performance. if your salespeople are hitting quota, they’re probably coasting.
2. Average Deal Size
Measuring this metric monthly or quarterly will help you to discover your average deal size, whether your contracts are getting larger, smaller, or staying the same. Calculating average deal size can also help you spot potentially risky deals.
For example, let’s say one of your sales reps adds an opportunity that’s 4x larger than the average deal size. You can predict that the probability of closing the deal is less and the sales process will take a longer duration than normal. This can be a good way to guide reps on which opportunities are most likely to close quickly.
3. Conversion Rate
Calculating the conversion rate of individual sales reps and your team is an important metric in performance evaluation. It is one of the core competencies that define high-performing sales reps.
While this might seem easy, most startups fail to analyze the performance of sales reps. They only see the number of deals closed against the number of leads provided. This metric also helps you calculate how many leads you need to make your revenue targets.
For example, if your monthly team quota is $500,000, and your average deal size is $1,000, your salespeople need to close 500 deals. And if your conversion ratio is 10%, you need 5,000 leads per month.
Calculating the sales productivity of your sales reps based on revenue metrics is a commonly-followed practice. At the end of the day, revenue is your most important KPI. However, the revenue model differs from industry to industry. In the case of a subscription business, you may track monthly or annual recurring revenue (MRR or ARR).
Apart from the individual performance evaluation, you can break down your revenue to see:
- Percentage of a new business or new customers
- Percentage of upselling and cross-sell
- Percentage of renewal
5. Sales Funnel Leakage
People might find this difficult to relate to performance evaluation. However, identifying funnel leakage defines how well your sales reps are able to engage and nurture the lead to convert them into customers. To determine your leaky points, track stage-by-stage conversion rates.
For example, you can identify how many sales reps had a fruitful initial call, how many reps were able to schedule demos, etc. Based on your findings, your salespeople are likely doing one of the following:
- A) Not qualifying the leads enough
- B) Giving bad demos
- C) Negotiating poorly
Take the Easiest Way
Calculating and studying all the parameters for performance evaluation is a tough ask and time-consuming for sales managers. This is where Prodoscore makes it easy for you. Using the click of a button, you can evaluate different touch points, discover time spent by your rep working in all of your cloud business tools, and build simple visualization of your productivity with a simple score. This makes it easy to take the necessary action in a quick time.
Let’s team up to make the things easy for you, Get a FREE demo!