The phrase “you can manage something only when you measure it” stands true, especially for critical business functions like sales. However, there is also the question of are you measuring the right sales effectiveness metrics? — Key sales performance indicators like Lead-to-win rate, consistent Quota attainment, etc., can help revenue leaders gauge team performance and sales strategy effectiveness, and It is critical to accurately and periodically track them.
This article gives you a list of saas sales metrics that revenue leaders should be tracking for go-to-market success.
What Are Sales Metrics?
Sales metrics/analytics indicate how an organization, team, or individual rep is performing. Sales leaders and CEOs use these data points to measure and improve team performance, productivity, and sales effectiveness, enabling them to drive accurate sales forecasts, identify gaps in their selling process, and course-correct wherever needed.
Also Read: Sales Forecasting Tips & Techniques
15 Important Sales Metrics To Track:
To set an ideal strategic direction for your team and provide the most effective answers to your CRO’s questions, here are some of the metrics you need to track:
- Annual Recurring Revenue (ARR)/Monthly Recurring Revenue (MRR)
- Average Revenue Per Account or Average Revenue Per Customer
- Quota Attainment or Sales Per Rep
- Pipeline Coverage
- Year-over-Year Growth
- Win Rate
- Customer Lifetime Value (CLTV)
- Average Selling Price
- Opportunity age/ Average Sales Cycle time
MRR is an excellent measure of whether your teams are winning deals and hitting quarterly targets. At the same time, ARR gauges the market readiness of your GTM strategy and your team’s capability to execute and grow long-term. ARR is also a great indicator of predictable revenue flow
The Average Revenue Per User or Account (ARPU or ARPA) is the amount of money that a company brings in per subscriber, user, or account in a particular period. ARPA/ARPU helps sales leaders understand their attainment status and what they should be focusing on going forward.
Also Read: Best Revenue Forecasting Techniques
Quota attainment is the percentage of deals a sales rep has won in relation to their set quota for a given period. Quota attainment is significant because any indication of a decline in hitting the target quota points to gaps in areas like coaching and capacity planning within the organization.
Pipeline coverage refers to the total amount of deals in your sales pipeline to ensure you reach your sales target. As a standard, an organizations’ pipeline is 3x their revenue target so that factors like deal slippage and lost deals don’t prevent them from hitting targets. For example: If your sales target for the quarter is $1 million, an indication of adequate coverage would be having $3 million in the pipe.
YOY growth measures your organizations’ revenue for the current against the revenue you made last year. Although you can measure Y-O-Y growth over any time frame, such as monthly, quarterly, or yearly, annual growth indicates consistent execution across your salesforce.
Win rate, also known as the opportunity-to-win ratio, refers to the percentage of deals that your sales team closes compared to the total deals present in the pipeline. Win rate is a direct indicator of sales effectiveness and the ability of your team to close deals.
Lifetime customer value, also called LTV/CLTV, shows the cumulative revenue you will generate from a customer as long as they remain a paying customer.
LTV can highlight deficiencies in your product or customer service. For example, an ACV of $100k multiplied over six months will result in a loss of $50k in potential revenue. This loss in revenue indicates a high churn rate and signals you to focus on retaining customers to realize recurring revenue for the long term.
Average selling price refers to the average amount that a customer pays when they sign up to use your company’s products/services. This metric indicates your sales teams’ ability to go up-market and win large deals. Here is the calculation for ASP:
Average sales cycle length refers to the time your sales team takes to convert a prospect into a paying customer, across your sales team/organization. Here’s how you calculate this metric:
The length of the sales cycle varies from business to business. There are several factors like pricing, target industry, size of the deal, and so on, that influence the time taken to close. However, some universally accepted best practices that help build prospect trust and shorten sales cycles are:
- Featuring credible testimonials on your website
- Sharing case studies of customers with similar company size who your product/service has influenced etc
Conversion Rate: Qualified lead to Closed-won
This sales metric is used to evaluate the effectiveness of your sales team’s to convert qualified opportunities into closed-won deals.
Net Promoter Score (NPS)
NPS surveys might seem like a job for the customer success or product success teams to run, but the survey results can also influence your sales pipeline. If your existing customers are satisfied with your service, they are more likely to speak to their network about it. Thereby leading to organic pipeline growth and consequently increase in revenue.
The question “How likely are you to recommend our product to your friend or colleague?” forms the basis of the NPS survey, with answers numbered from 1 to 10. The survey also acts as a measure for customer satisfaction since your customers would only promote a service or product that they find useful.
Sales linearity is when reps close their deals on a consistent week-to-week and month-to-month basis throughout the quarter, as planned. This is a much healthier alternative than closing deals in bulk at the end of the quarter to fulfill the quota.
For example: If the sales target for the particular quarter is $1 Million, reps should aim to attain $200k of their quota by the end of the first month, $500k for the second month, and $300K in the third month, thereby fulfilling the $1 Million quotas.
These consistent wins make reps more accountable, drive predictable revenue, allowing more strategic investments. This also helps post-sales teams like customer success to plan ahead and manage newly-onboarded customers.
A close study of this data will show your company whether it needs to invest more time, training, and resources in creating a better sales strategy for the entire quarter.
Sales Expense Ratio
The higher your sales expense ratio, the less profitable your sales organization will be. It is critical to compare your cost of sales, customer acquisition costs, and indirect operating expenses to the revenue your sales reps are generating.
Expense ratios differ across organizations, and business unit sizes play a role as well. For example, startups will have higher expense ratios, since they’d want to onboard as many customers as possible to increase adoption. But as your market matures, your sales expense ratio should decrease.
Deals that don’t close within the expected time in the forecast with their target dates getting pushed out to a later date (typically from one quarter to another) constitute slipped deals. For example, A deal in the commit for Q1, getting pushed to Q2 due to budget constraints, or other such circumstances.
Tracking deal slippages in a spreadsheet or a CRM field may prove to be unintuitive today. Platforms like Aviso can pinpoint how, when, and where a pipeline changed so teams can prevent and remedy deal slippage.
Also Read: Benefits Of Sales CRM Automation
Sales Activity Metrics
Sales activity metrics represent the activity of your sales representatives on a day-to-day basis. It’s important for sales leaders to grasp how these daily actions can impact overall selling and optimize them as needed.
Activity metrics can reveal strengths and weaknesses that may influence a sales representative’s performance. By analyzing the outcomes of these activities on top performers, you can share results with the broader team and get them to adopt best practices.
Activity sales metrics sales leaders should track:
- Contacts touched
- Contacts touched per Account
- Days between each Opportunity touched
- Emails Sent
- Meetings Created
- Meetings on Calendar
- New Accounts Touched
- New Contacts Touched
- New Opportunities Owned
- Prospecting – Calls, Emails sent, Meeting on Calendar
- Untouched – Accounts, Opportunities
Also Read: How To Handle Sales Objections
Challenges In Tracking Sales Metrics
It is pertinent for sales leadership to regularly be on top of their team/hierarchy’s sales metrics. Reviewing these metrics as an afterthought will result in a gut-based decision-making process instead of one that is fact-based. There has to be a well-structured approach to monitor these metrics and obtain a holistic view across the entire sales organization to break out of silos and act on the insights provided by the data.
Creating and updating sales metrics dashboards on a daily basis would take X+ hours of a dedicated analyst’s time every week. As a best practice, automating the generation of these reports helps balance real-time data with person-hours spent on menial work – A Revenue Intelligence software is a quick way to do this.
Accurate And Real-Time Sales Metric Data With Aviso’s RevOps Platform:
World-class revenue teams like Honeywell, Ringcentral, and Ivanti use Aviso to forecast revenue and close deals effectively with real-time sales data. With Aviso, revenue teams:
- Use AI to plan and build pipeline for future quarters
- Measure pipeline performance and pipeline health by comparing the start of the quarter pipeline & new pipeline added to ending pipeline predictions.
- Track Deal activity (emails, calendar meetings, engagement metrics) across the sales org enabling sales leadership to bridge the gap between deal actions and revenue outcomes.
- Spot risk in the pipeline and execute against it
- Combine critical sales metrics and AI adaptive metrics real-time in a single pane of glass
Interested in learning how Aviso can give you more sales team visibility and help achieve your forecasting goals with 98% accuracy every quarter? Sign up for a free consultation with our experts, and we’ll reach out to you!