Improve Sales Team Performance By Monitoring Essential KPIs

Discover essential Key Performance Indicators managers should monitor to improve sales and efficiency from their sales team.

Businesses that are striving to grow revenue and scale their sales team must understand and analyze sales data. If a business chooses to collect sales data, they are starting out on the right track, however, that’s just the beginning. Managers commonly start tracking too much data and become hesitant on what to do next because they don’t know what data points to focus on and improve. This hesitation is known as analysis paralysis.

In sales data analysis, more isn’t always better. Sales managers only need to track the Key Performance Indicators (KPIs) that are the right fit for their goals. To determine which KPIs are the right fit for the company, sales managers must understand why each KPI is important and how the data will be used.

This article discusses five important KPIs in sales, how to use them in analysis and improve the efficiency of the sales team to scale. 

What are the key sales KPIs to monitor?

Every business is unique and KPIs that are most effective for one company may not be effective for another. It is best for all companies to identify the specific KPIs that will allow their organization to be successful. 

Below are essential core KPIs all businesses should monitor and optimize towards improvement.

1.     Lead to Conversion Rate – This is the number of leads who have expressed interest in the company’s product that become paying customers vs total leads. When a company determines how many leads are needed to generate a sale from a single agent, they can then determine how many leads are needed to accomplish sales goals for a sales team and the business. For example, if the business produces one sale for every ten leads and the company needs ten sales next week, then the marketing department needs to produce 100 leads next week to accomplish this goal.

2.     Customer Acquisition Cost – tracks the total of all associated costs to generate a sale. Multiple sources of cost may be associated with this KPI. Many companies make the mistake of focusing solely on marketing costs. 

-        For example, if a sales agent generates a $100 sale and marketing generates leads at $10 per lead, the thought is that the sales agent needs to generate at least one sale for every 10 leads. When you consider customer acquisition costs such as salaries for both sales and marketing, tools to run the business and overheads, it is clear that the company is generating a loss for this sale.

3.     Customer Lifetime Value – this KPI determines the total revenue a company generates from an existing customer. This KPI considers the entire lifespan between the customer and the business. 

-        Using the previous example in Customer Acquisition Cost, if the sale includes a $10 monthly subscription renewal and the average life span of a customer is 10 years, then the business will need to reconsider and recalculate the expected revenue generated from the original sale. This KPI also allows the sales team to refocus and prioritize sales efforts that drive the highest Customer Lifetime Value.

4.     Customer Churn Rate – identifies the number of customers within a specified period of time that stops using the company’s product or service. The rate is calculated by taking the total number of customers at the beginning of a set timeframe and dividing this number into the number of customers lost within that set. This KPI affects Customer Lifetime Value because a higher Customer Churn Rate will lower Customer Lifetime Value and the revenue generated for the company. To lower the Customer Churn Rate, several strategies may be implemented such as a customer retention plan or examining the Sales Cycle Length KPI.

5.     Sales Cycle Length – measures the length of time for a sales lead opportunity to become a sale. Most businesses focus on minimizing this KPI. By shortening the Sales Cycle Length, the sales agent can move on to another lead and generate more sales. It is also important to compare both Sales Cycle Length and Customer Churn Rate together. Analysts often find a direct correlation between these two KPIs. Often, sales agents that focus on reducing the Sales Cycle Length of their deal have a higher Customer Churn Rate because the customer was unhappy with the product that was purchased and/or the solution was not described effectively by the sales agent. A longer Sales Cycle Length may yield a happier customer, reduce Customer Churn Rate and improve Customer Lifetime Value. It is in the best interest of all businesses to analyze their data and determine their most effective Sales Cycle Length.

Monitoring these top five KPIs will provide business managers visibility on the status of their sales team. But how does a business improve these KPIs? One solution is sales coaching and training based on recording the interactions between customers and sales. Employee monitoring tools are necessary to effectively coach and train sales agents which in turn improve sales KPIs.

Sales Coaching and Training

To monitor and improve the performance of these KPIs, business managers may implement call recording software to observe the activities of their sales team. Employee monitoring programs are designed to be installed into a sales agent’s computer and run silently in the background.

The call monitoring software enables sales managers to listen and review the calls between sales agents and their clients. This provides the sales manager the opportunity to review the call with the sales agent, provide coaching and guidance to the agent on how to improve their sales KPIs.

Conclusion

Implementing call recording will equip sales managers with the proper call monitoring tools to provide training and coaching to their team. With this training, managers can guide their sales team to focus on improving their KPIs, improve sales and increase the revenue generated for the company.