KPIs for High-Performing Sales Teams

Sales can be a high-pressure job, and team leaders will be tasked with getting the best results possible out of their sales strategies and personnel. An essential tool for any sales team is a set of carefully chosen KPIs (Key Performance Indicators) to provide measurable and actionable insights into performance. 

KPIs help teams make better decisions, work more efficiently, and ultimately drive greater revenue for the business. By selecting the right KPIs, you can identify new opportunities to improve operations, optimise processes, and nurture a data-driven culture. 

This article will examine which KPIs can help your sales team achieve their goals and outperform competitors. 

Revenue Growth Rate 

Revenue Growth Rate measures the rate of increase in revenue over a specific period. A fundamental KPI for sales teams, it provides a clear measure of both team performance and the effectiveness of the overall sales strategy being employed.  

Revenue Growth Rate = ((Current Period Revenue - Previous Period Revenue) / Previous Period Revenue) * 100 

Customer Acquisition Cost (CAC) 

As the name suggests, the Customer Acquisition Cost is an essential metric that measures the cost incurred by the business to acquire a new customer. The lower the CAC, the more cost-effective the sales strategy appears to be. Of course, CAC is not the only KPI that should be used to measure overall success, as customer quality is also an essential consideration. 

Customer Acquisition Cost = (cost of sales and marketing) ÷ (number of new customers) 

Conversion Rate (CR) 

Generating leads or enquiries is only one part of many sales processes. Conversion Rate is the important measure of what percentage of leads/prospects are converted into paying customers. This could be the percentage of free trials that become paid subscriptions, or how many vehicle viewings/test drives result in sales.  

Conversion Rate is very useful because it not only helps you evaluate sales performance but also the quality of your lead generation efforts. 

Conversion Rate = (Number of Conversions / Number of Leads) * 100 

Average Deal Size 

Average Deal Size is simply the average amount of revenue generated by the business for each deal that is closed. This is particularly important for companies with flexible or bespoke pricing models. This not only helps teams evaluate the quality of new customer leads but can also reveal opportunities for cross-selling. 

Average Deal Size = Total Revenue Generated / Number of Deals Closed

Sales Cycle Length 

Depending on the product or service being sold, the Sales Cycle Length may be an essential KPI to track and measure. This is a measure of how long it takes on average to close or complete a deal after initial contact is made with a prospective customer/client.  

An optimal Sales Cycle Length will vary significantly depending on the business type, but shortening the Sales Cycle Length can lead to increased revenue and is often a signal of a better customer experience. 

Sales Cycle Length = (Total Days to Close Deals) / (Number of Deals Closed) 

Customer Lifetime Value (CLV) 

For businesses whose revenue is generated from more than just an initial sale, Customer Lifetime Value is an essential KPI to track. This metric attempts to measure the total revenue that a customer brings to a business throughout the entire relationship. This can include repeat purchases and long-term subscriptions. Sales teams may wish to prioritise customers whose CLV is highest and tailor their strategies to target these more often. 

Customer lifetime value = (customer value x average customer lifespan) 

Customer value = Sales price – cost of goods sold 

Churn Rate 

For companies offering subscription-based services, the Churn Rate measures the percentage of customers who terminate their subscriptions during a designated timeframe. By closely monitoring this Churn Rate, businesses can promptly identify the factors leading to customer cancellations and, in turn, enhance customer retention. Churn rate is an important KPI in the Software industry. 

Churn Rate = (lost customers ÷ total customers at the start of time period) x 100 

Implementing KPIs 

Understanding these KPIs is essential to keep a sales team performing at a high level, but so is the correct implementation. This can be done by defining clear (SMART) objectives, gathering sufficient data, establishing benchmarks, and carefully monitoring and reviewing this information at regular intervals. High quality management information is an essential component of this process. 

The Genus team at Shorts has collaborated with some of the most dynamic companies in the region, helping them improve their sales processes, determine the most suitable KPIs, and enhancing their management information for improved business decision-making. If you're interested in discovering how KPIs can lead to success for your sales teams, get in touch today.