Measuring key sales metrics enables you to identify and improve things like total sales activity, sales forecasts, conversion rates, and all-around process and cost-efficiency. When compared to industry standards, previous time periods, or internally between multiple reps or teams, these 12 sales metrics can help you find and fix flaws in your sales operation to boost sales performance, cut waste, and increase profits.
What It Measures
Total sales revenue broken down by a segmented unit, e.g., sales pipeline, product or service, geographic territory, target customer, lead source, sales team, or rep
Average Customer Lifetime Value (CLV)
Average revenue generated per customer over the course of the lifespan (average length of time someone remains a customer) with your company
Cost of Selling
Total cost to sell your products or services as well as segmented costs (by team, product or service, lead source, and so on)
Aka customer turnover, or the rate of customers who decide not to purchase from your business again, cancel their subscription, or not renew their contract
Total Sales Activity
Total number of sales activities, such as calls placed, emails sent, meetings scheduled, presentations delivered, proposals sent, or referrals requested
Deal Closing Rate
Percentage of open sales opportunities that become closed deals
Leads Generated by Source
Total number of qualified leads generated, broken down by lead source
Average Deal Value
Average revenue value of every contract, won opportunity, or deal finalized
Average Length of Sales Cycle
Average amount of time it takes to get a lead through the sales process and into a closed deal
Sales Qualified Rate
Total percentage of all leads that have shown interest in your products or services by seeking price estimates or expressing they are almost ready to purchase
Weighted Deal Value of Pipeline
Total value of all deals in the pipeline times the percent chance of closing each deal
Rate of Selling Activity
Percentage of time a sales rep spends on selling activities
1. Segmented Revenue
What it measures: Total sales revenue broken down into segments
While total revenue shows how your business is performing overall, segmenting revenue into categories tells a deeper story about what areas are working and which need improvement. Segmented revenue can be broken down by things like product or service line, geographic territory, sales team, target customer or persona, lead source, and individual sales rep.
Segmented revenue analysis is the first step in improving sales performance because it allows you to identify the “what,” as in what areas need improvement. Once you know what needs to be improved, brainstorm ideas about how to improve the specific category or revenue. Or, if you’re referring to revenue broken down by lead source, you may decide to discontinue using specific lead sources.
For instance, let’s say you found that over the course of the last six months, $100,000 was generated by online inbound leads, $56,000 was generated by outbound sales prospecting, and $9,000 was generated by trade show leads. Instead of investing in future trade shows, you would then decide to invest more resources in inbound marketing and outbound sales.
Customer relationship management (CRM) software like Salesforce shows sales revenue breakdown information right on the system’s dashboard. On top of that, Salesforce takes your current key performance indicators (KPIs) and other data like activity, opportunities in the pipeline, and deal values to create up-to-date sales forecasts. Real-time forecasts are helpful for estimating business growth by predicting how much revenue you plan to generate.
2. Average Customer Lifetime Value
What it measures: Average revenue generated per customer over their lifetime with a company
Although measuring CLV requires a few years of historical data, it shows the true value of attaining a new customer in terms of lifetime revenue. Average customer lifetime value shows how effective your business is at customer retention and remarketing to existing customers. This, in turn, shows where improvements can be made to extend the length of the average lifespan and increase the average amount a customer spends over that span.
This sales metric is also an excellent way to evaluate whether your sales team and customer service reps are effective at cross-selling and upselling to new as well as existing customers. Plus, you can use this stat to see how your business compares with industry standards and measure it over time to see if you are executing strategies needed to increase the average lifetime value.
3. Cost of Selling
What it measures: Total costs of selling your product or service
Sales metrics related to revenue or deals are often the most obvious ones to consider when looking for ways to improve sales performance. However, the true cost of selling reveals how cost-efficient your team is at producing sales. The cost of selling includes sales materials, salaries, commission expenses, sales technology, travel expenses, and event costs.
The cost of selling can be looked at as a whole for an organization or segmented by different sales teams, sales methods, or product lines. Looking at the total cost of making sales allows you to improve profitability performance by reducing or eliminating expenses that aren’t necessary to produce sales.
For example, let’s say you break down the total cost of selling by the three sales teams that make up your department. You discover your top-selling team spent $0 on travel expenses because they used video conferencing software to meet with distant prospects. At the same time, you find that although the two other teams each spent $5,000 on travel, they produced significantly less revenue.
As a result, you conclude that travel expenses are unnecessary to close deals and you decrease budget spending for those kinds of expenses accordingly. In addition to eliminating waste and identifying the most effective selling tools and methods, this directly impacts your business’ bottom line and profitability.
Pro tip: Use a customer relationship management (CRM) system such as Freshsales that integrates with popular business accounting software like QuickBooks to easily track your expenses. In addition, you can perform invoicing and billing tasks using QuickBooks from the Freshsales CRM, and account values will be automatically updated because the integration syncs the data from the Freshsales and QuickBooks systems.
4. Churn Rate
What it measures: Percentage of customers who decide not to purchase from your business again, cancel their subscription, or don’t renew their contract
Knowing your churn rate (also known as your customer turnover rate) enables you to evaluate your company’s customer service and ability to retain or resell to existing customers. Due to how expensive it is to bring on a new customer or client, it’s essential to keep the churn rate as low as possible to ensure maximum sales value.
Your churn rate tells the story of how your revenue is being generated so you can make adjustments that improve sales performance. For example, if you find your business is great at acquiring new business but has an 85% churn rate, your organization’s CLV is not being maximized, and the cost of selling may be far more than average or is desirable.
Improvements in your sales operation to decrease churn and increase customer retention also decrease the costs of marketing and advertising needed to acquire new business. Examples of sales process improvements to reduce churn are adding resources to customer service, training sales and customer service agents, adding new products that appeal to existing customers, creating loyalty programs, and developing more effective cross-selling and upselling strategies.
CRM platforms like HubSpot allow you to catch customer churn before it happens by creating and emailing customer surveys. HubSpot CRM users can quickly find out exactly how their customers feel and discover things they can do to improve customer satisfaction, decrease selling costs, and increase average customer lifetime value.
5. Total Sales Activity
What it measures: Total daily, weekly, or monthly sales activity completed by sales reps such as calls placed, emails sent, proposals sent, appointments created, referrals requested, and sales presentations or product demos conducted
Sales activity metrics show what each sales rep or team is doing with their time. Your business’ activity will vary depending on how leads are generated as well as how your sales pipeline is set up. The idea behind measuring sales activity is that if you know the conversion rates of your sales pipeline and funnel, you can use total activity to predict (and improve) sales performance.
For example, imagine you want to generate $50,000 of revenue this quarter and you know it takes four product demos for every one deal closed, with an average deal size of $10,000. You also know it takes an average of 70 cold calls to schedule one product demo. Based on this information, the activity required to schedule enough appointments to close five deals at $10,000 each is 1,400 cold calls during the quarter.
Activity metrics needed to hit your company’s sales goals can be easily tracked using CRM systems like HubSpot. HubSpot takes the total sales activity completed and breaks it down by sales rep and activity type. Managers can then generate sales reports to see which reps are performing well vs those who may need more coaching or sales training.
6. Deal Closing Rate
What it measures: Percentage of deals closed compared to current open opportunities
The deal closing rate is used as a predictor for sales forecasts and as a performance indicator for how efficient your sales pipeline is. When used for forecasting, for example, if you know that 3% of all opportunities in the pipeline are closed deals, and you set your deal goal at 50 per year, then you need about 1,667 total leads generated to hit your sales goal.
When using deal closing rate to evaluate your pipeline, you can improve performance by finding where the bottlenecks are in the pipeline that are negatively impacting closing rates. Closing rate is an accumulation of the entire sales process, so you also want to look at the conversion rates of each stage in the pipeline to get a better picture.
For example, let’s say your deal closing rate is 3%, but you found there is a significant drop-off where opportunities are being lost at the sales presentation stage of the pipeline. Knowing that, you can then invest in sales training programs to improve your team’s ability to deliver successful sales presentations.
CRMs like Zoho CRM help you analyze closing rates and conversion rates for all of the sales pipeline stages. From the pipeline analysis dashboard, you can see how effective your sales team is at getting a lead to the next spot through a funnel style, horizontal pipeline, and a listed breakdown by geographic territory or lead source.
7. Lead Generated by Source
What it measures: Total qualified leads generated broken down by lead source
This sales metric enables you to identify the most effective and efficient lead sources for your business. Tracking how many and where each lead came from during a set time period shows how good your business is at getting opportunities in the pipeline and which lead sources offer the most promise.
To improve sales performance, using the leads generated sales metric broken down by source is a solid way to see which methods are working and where you should be putting resources. It can also show you the best source of qualified leads, or leads that have expressed interest in your business to some degree and are therefore more likely to convert.
For example, let’s assume that of your qualified leads, 30% are generated through online ads, 25% are from outbound prospecting, 20% are from networking events, 15% are from referrals, and 10% are inbound from content marketing. Since content takes a long time to develop, you may want to redirect effort and resources to the other lead generation tactics that are more effective and take less time to execute, such as seeking referrals or online advertisements.
Pro tip: In the business-to-business (B2B) space, generating highly qualified leads comes in many forms and tactics depending on the skills you possess and resources at your disposal. Find new ways to generate leads for your business in our article with the best 14 B2B lead generation tactics to try in 2022.
CRMs like Pipedrive can track the source of a deal, lead, or opportunity within its profile. This allows you (or any sales rep) to view a contact’s record and discover where they became aware of or interested in your business so that you are better informed before starting a conversation.
8. Average Deal Value
What it measures: Average revenue from a closed deal or won opportunity
By knowing how much, on average, you bring in per every deal closed, you can forecast the total revenue you will acquire over a specific period of time. If your average deal value is $10,000 per deal, per year, and you know, based on your pipeline conversion rates and total activity quotas, that 12 deals will be made, then your total projected revenue is $120,000.
Knowing your average deal value also improves sales performance by dictating your target markets. Let’s say you are a software company that was initially targeting small businesses, but after two years, you found your average deal value was much higher than expected because of some large deals closed. This tells you that your software is well-suited for larger businesses, so you can shift your sales strategy to produce higher-value, more profitable deals.
CRMs like Pipedrive offer an array of deal analyses via dashboards. Using data about your current opportunities and closed deals, Pipedrive can display information on average deal value, the average time it takes to close a deal, deals lost, deals started, and activity metrics to see what’s being done to close the deal.
9. Average Length of Sales Cycle
What it measures: Average number of days to turn a new lead into a purchasing customer
For the purpose of estimating when a deal will close, the average length of your sales cycle is an important sales metric. This stat can be taken a step further to improve individual performance if you evaluate the average length of a sales cycle per sales rep to see which ones are quickly responding to opportunities and putting in plenty of activity.
For example, while looking at the average length of a sales cycle for John and Richard, you find John’s average is 140 days while Richard’s is 230. You also look into the activity of each rep and find John responds to all inquiries within one day and sends 20 follow-up emails per day. Richard takes three days to respond and only sends five follow-up emails per day. With this data, you can work with Richard to set clearer expectations on sales and follow-up activity.
Use a CRM like Freshsales to create corresponding revenue-to-activity reports. One of the most unique capabilities of Freshsales in this respect is its sales cycle and sales velocity reporting. It provides information on the average time each sales rep spends with a lead in a specific stage of the pipeline.
10. Sales Qualified Rate
What it measures: The percentage of leads that are sales-qualified, either by expressing interest in your products or services by seeking cost estimates, or by telling a sales rep they are almost ready to purchase
This stat shows how effective your sales and marketing teams are at gauging interest among leads ready to make a purchasing decision. Being sales-qualified is the highest level of lead qualification someone can be at before making a purchase decision. The higher your sales-qualified rate, the more deals you are likely to close.
Tracking this sales metric shows you the proportion of leads your sales reps should be prioritizing—the ones closest to making a purchase. You can also improve performance if you find marketing qualified leads (MQL) rates are high, but sales qualified rates are low. For instance, your team can prioritize follow-up activity and sales promotions that entice leads to become sales-qualified.
Pro tip: Qualifying leads can be challenging without the right tools and knowledge. Read our lead qualification guide to learn about the types of qualified leads, why qualification is important, the benefits of lead qualification, and how to qualify your leads.
11. Weighted Deal Value of Pipeline
What it measures: Total value of all deals in the pipeline multiplied by the percent chance of closing each deal
The weighted deal value of your sales pipeline is a way to forecast your business’ total sales. It takes into account the total potential value of a deal along with the percentage chance that you will close the deal, then aggregates all the current deals in your pipeline.
For example, imagine you have 12 current opportunities. Six are for $4,000 and each has a 20% chance of closing, and the other 6 are for $7,000 with a 10% chance of closing. Your total weighted deal value and project revenue for that pipeline is then $9,000. This information can be used to determine which route to take to produce more revenue or hit revenue goals.
If the weighted deal value of your pipeline is lower than you’d like, you then have three options. The first is to create more opportunities by generating more leads. The second is to focus on leads and opportunities that have a larger potential deal value. The last option is to increase your likelihood of closing the deal through lead nurturing activities.
One way to determine the likelihood of closing a deal is through lead scoring. Lead scoring assigns a quantitative value to each lead in terms of how robust of an opportunity it is to pursue based on interactions with them and behavior indicators like links clicked, files downloaded, or emails opened. Lead scoring can be calculated and tracked for you in CRM systems like Zoho CRM.
12. Rate of Selling Activity
What it measures: Percentage of a sales rep’s time spent on selling activities like making calls, sending introduction or follow-up emails, creating and sending proposals, conducting presentations, or requesting referrals
Knowing how much time a sales rep is spending on selling-related activities allows sales managers to hold reps accountable for performance goals and activity quotas. It can also answer the questions as to “why” they are unable to hit their activity quotas or revenue goals, such as if you find they are spending too much time on non-selling activities like surfing the web or doing data entry.
Tracking the rate of selling performance enables you to improve operational performance by finding the root cause of selling deficiencies. For example, if a sales team did not hit their performance quota of $500,000 revenue because 50% of their time was spent manually entering lead data in a CRM system, you may need to hire clerical staff or automate data entry.
Data entry automation tools like Zapier give your sales team their time back doing sales activities. Through Zapier integrations and workflow configuration, when a new lead emails you or someone submits an online web form, their contact information is automatically added to a data system such as a CRM or spreadsheet.
Using Sales Metrics to Improve Sales Performance
The ultimate goal of using sales metrics is to make adjustments that improve sales performance. Many metrics are KPIs that tell sales management which areas need the most improvement vs which strategies are working well and should be expanded. For example, if total revenue for a business is $600,000 but only $50,000 is from recurring customers, a sales manager needs to find ways to decrease churn, improve CLV, and increase customer loyalty.
Some metrics, such as total sales activity and closing rates, can also be used to show comparisons between teams and individual reps. These comparisons allow you to hold people accountable for not hitting quotas and reveal methods or patterns of activity that work well, but may have not been thought of before.
For example, let’s say you looked at the sales activity of three sales reps and found that one of them generates more sales-qualified leads than the other two combined. The high-performing sales rep attends 12 networking events and one trade show per month, creating tons of personal connections. This prompts you to require your other two sales reps to start attending networking events and trade shows.
Upon finding patterns that lead to higher sales performance, sales metrics tell a deeper story to what’s happening, allowing you to hone in on the root causes of poor sales performance. All of these sales metrics can then be used as you create or update your company’s sales plan.
Sales metrics tell the true story about what is going on in your sales operation, enabling you to make critical decisions to improve sales performance. Once sales metrics paint the picture of where improvements need to be made and which parts of your sales process are falling behind, leverage that information to adjust your strategy, increase resources, and provide coaching to your sales teams.