If I were to guess, you and I are similar in at least one way—we like to measure things. We like to create goals, establish metrics, and analyze output to determine if we’ve reached our objectives.
How else can you identify improvements?
This is a post for sales managers that want to get the most out of their teams because it outlines 5 key performance indicators that can be used to measure and improve upon your sales team’s current performance.
This is far and away the most used sales performance metric. Quotas serve to give individuals (and sometimes entire teams) tangible goals. It’s a pretty black and white metric. Did you meet your quota or didn’t you? Why or why not?
Things to consider when creating quotas:
- Company’s overall revenue goals
- Historical revenue generation
- Past sales performance of the team
2) Lead Conversion Ratio
The lead conversion ratio is the ratio of the number of leads that convert to a qualified opportunity.
This is important because, as well all know, not every lead turns into a qualified opportunity. Using this metric, we can measure our lead generation effectiveness and determine if changes need to be made in this part of the sales cycle.
3) Sales Conversion Ratio
This ratio is the ratio of the number of qualified opportunities that convert to actual sales.
Again, this is a great way to measure your effectiveness in a certain area of the sales cycle. Great, you’re getting qualified leads, but your salespeople aren’t closing the deal. What could be the problem there?
4) New Meetings Per Month
What I like about this measurement is not that it has a direct correlation to sales—obviously not every meeting leads to a sale—but that it tells me how much time is being spent on lead generation. How much effort is being put into the prospecting process? Could we find a way to make it more efficient?
Combine this measurement with the ones above and you’ll get some useful data.
5) Rate Of Follow Up
Persistence really does pay off.
About 10% of sales are closed on the 4th contact, and 80% are made on the 5th to 12th contact.
As a sales manager, your hope is that every qualified lead is being followed up on multiple times. Tracking the rate of follow-up will tell if you if that’s happening and if further action needs to be taken.
These 5 key performance indicators will help you identify areas of improvement for your sales team.
How do you measure performance?