What Are Sales Metrics? (Definition, Types, and Importance)

By Indeed Editorial Team

Published May 14, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Companies usually advance because of its ability to track, maintain, and control progress as it helps them indicate what methods are more effective. As a result, businesses across different industries track growth through specific parameters. Understanding the metrics to track in a business ensures that you can achieve your goals faster within a given period. In this article, we discuss sales metrics, explore the different types, explain their importance, and provide what to consider when tracking these metrics.

What are sales metrics?

Sales metrics are parameters or data points that indicate the progress or performance of a set task towards a larger goal. This performance may be by an individual, a team, or the company as a whole. These metrics help a company understand how it can adjust its strategies, award pay raise or compensations, organize training programs, offer incentive programs, or improve its operations. The sales team often develops and implements them while collaborating with executive officers.

Related: How to Measure Success in 7 Actionable Steps

Types of sales metrics

The different types of metrics that exist in businesses are:

Lead generation metrics

Lead generation metrics help you track leads through the sales process to determine which lead generation methods work best. Some examples of lead generation metrics that help you properly evaluate your marketing strategies are:

  • Qualified leads

  • Dropped leads

  • Customer acquisition cost

  • Lead response time

  • Percentage of lead follow-up within a specific time frame

  • Percentage of lead follow-up

Outreach metrics

These metrics indicate the most effective methods for targeting sales prospects and converting them to leads. These outreach metrics may not always have general application, as the metrics you may track depend on a company's sales methodology, strategy, process, and goals. You also classify the outreach metrics based on your preferred medium. For example, phone metrics include a percentage of call-backs, prospects that agree to meet, and prospects that advance to the next step.

E-mail metrics may include response rate, open rate, engagement rate, and percentage of recipients that advance to the next stage. You may also track an organization's outreach sales through social media metrics. This includes the number of qualified opportunities that you generate, direct message response rate, percentage of connection requests, and prospects that engaged on social media. It can also include prospects that advanced to the next stage, the number of meeting that recipients booked, and the number of qualified opportunities that the post generated.

Sales activities metrics

Sales activities metrics help you monitor the activities of sales representatives. It allows you to evaluate their duties and roles, determine which is more effective, and propose areas of improvement. Sales activities metrics also help you analyze staff strengths and representatives and determine performance. Some examples of sales activities metrics are:

  • Social media management

  • Sales representations

  • Scheduled meetings

  • Proposals

  • E-mails

  • Conversations

  • Referred requests

  • Demonstrations

  • Calls

Read more: How to Write a Resume for a Sales Representative Position

Sales key performance indicators

Sales key performance indicators are similar to sales activities, only that it measures the entire organization's performance instead of individual staff. These are key performance indicators essential to an organization as they help you evaluate the collective efforts of staff and principal stakeholders in the company. It also helps you develop areas of improvement for improved productivity. Some examples of sales key performance indicators are:

  • Cost of selling

  • Net promoter score

  • Revenue by product or service

  • Year-over-year growth

  • Percentage of revenue from existing customers

  • Revenue by market

  • Market penetration

  • Number of deals that the company lost to competition

  • Revenue by territory

  • Percentage of revenue from new business

  • Total revenue

  • Average customer lifetime value

Activity metrics

Activity metrics are leading indicators that help you predict ultimate results in a team. They indicate what people in a team do daily. It's easy for managers to track, measure, and influence these indicators. Examples of activity metrics are:

  • Number of conversations per day

  • Referral requests

  • Demos or sales presentations

  • Social media interactions

  • Number of calls or e-mails that a representative puts through in a day

Sales pipeline metrics

Sales pipeline metrics measure the overall health of a company's sales pipeline. These metrics help you make adjustments to promote the pipeline's growth by highlighting its hindrances and factors that limit effectiveness. It also helps you indicate and improve the factors or activities that help the pipeline function optimally. Some examples of sales pipeline metrics are:

  • Value of sales by month or quarter

  • Win rate

  • Average contract value

  • Open opportunities by team or individuals

  • Value of sales by team or individuals

  • Value of the pipeline by teams or individuals

  • Length of the sales cycle

  • Conversion rate

  • Closed opportunities by team or individual

  • Closed opportunities by month or quarter

  • Value of pipeline by month or quarter

  • Open opportunities by month or quarter

Sales productivity metrics

These metrics indicate the rate at which company sales representatives achieve their periodic targets. It includes a comparison of output with input. For instance, you may compare revenue with a representative's efforts to measure sales productivity. In addition, you may infer productivity if the representatives require less time to achieve set goals. Examples of sales productivity metrics are:

  • Percentage of time it takes to create content

  • Percentage of time selling

  • Number of sales tools the representatives use

  • Percentage of marketing collateral sales representatives use

  • Percentage of time it takes to enter data

  • Percentage of high-quality lead follow-ups

Why is it important to track metrics?

It's important to track metrics first because it reveals how a company's outcome matches set goals. They also help you evaluate realistic and unrealistic goals by providing useful data. In evaluating these goals, companies clarify expectations, improving employee engagement and overall performance. They also help companies make informed decisions on how a company may improve its strategies. These decisions help optimize the sales process and improve growth, ability, and efficiency.

Read more: Important KPI Sales Metrics (With Definitions and Examples)

What to consider when tracking metrics

When tracking metrics, here are some factors to consider:

Amount and availability of data

When analyzing data in a company, it's important to limit the number of metrics you want to monitor. While it may seem useful, tracking many metrics may be counteractive. It may result in too much data and make it difficult to interpret, analyze, and incorporate in the decision-making process. A better alternative is to select a few metrics most important to the company goals, current growth model, and the industry as a whole. Consider areas where the company wants to improve long-term and short-term and select the metrics best suited for them.

Current data

It's important to select data most aligned with the company's current goals. The information you derive from these metrics helps determine if the set goals are realistic and achievable. With the information you get, you may either change unrealistic goals or modify them to fit the company's current realities. The data you analyze can be instrumental in indicating a company's progress towards its goals.

Lagging and leading indicators

Leading indicators are metrics that help you project future results that you may find hard to measure accurately. Although you can easily measure the indicators, lagging indicators demonstrate difficult or nearly impossible outcomes to influence. Assessing lagging and leading indicators when evaluating metrics is important as it helps you better understand and analyze historical performance. Again, it allows you to project the trajectory of future projects and their likely performance.

Representative perspective

Tracking metrics sometimes is a form of micromanaging sales representatives as it often helps to improve their mindset. Beyond this, tracking these metrics helps you understand staff activities, improve overall performance, and achieve the company's goals. This mentality stems from the perspective that the company's success in achieving its goals depends on helping each individual improve and grow.

Different levels

When analyzing select metrics, consider it an avenue to provide insight into the different levels in an organization. For instance, at the individual representative level, you may improve the accountability of each sales representative to improve performance. These metrics may expose the cause of trends within your sales cycle at the process level. These metrics help managers drive improvement by providing data-backed suggestions for improvement that they can discuss during coaching sessions rather than generalizing. It also helps them provide more objective, tailor-made feedback.

Friendly competition

You may use select metrics such as the sales representative metrics to drive healthy competition between sales representatives. First, track their progress using a leaderboard or dashboard. Next, grant them access to these dashboards to understand their performance and track it with others. These metrics and comparison help them understand their strengths and weaknesses, how it contributes to their performance, and how they can improve.

Tools

When tracking metrics in your organization, it's important that everyone understands those metrics and has access to tools to measure them. These tools that they may use to distribute, organize, and gather data are:

  • Data dashboard: A sales dashboard or data dashboard helps you gather information from multiple sources and provide current updates on these important metrics.

  • Automation tools: An automation tool, for example, a marketing tool, helps you track leads as they progress through the sales pipeline and helps you understand activity and performance.

  • Reports: A sales report includes a summary of an individual's, team's, or department's activity through a period while demonstrating achievements and indicating areas of improvement.

  • CRM dashboard: A customer relationship management (CRM) tool is a centralized location for a team's information and ongoing activities that helps them stay organized and communicate properly with clients.


Explore more articles