What are sales metrics, and why are they important?

As management guru Peter Drucker says, what gets measured gets managed.

To make critical business decisions, you’ll need to rely on a whole bunch of sales metrics—the effectiveness of your sales strategies, the performance of your sales teams, etc. Here, we’ll give you the complete list of sales metrics and how to use each one of them.

sales metrics

WHAT ARE SALES METRICS?

Sales metrics are essentially data points that indicate how an individual rep, a team, or a company is performing when it comes to sales. Sales managers and business owners use these metrics to measure their teams’ day to day performance. It’s important to keep an eye on these metrics, because they help you set a benchmark for your team’s progress, and make sure they’re on the right track.

What are the Key Performance Indicators (KPIs)? How are they different from sales metrics?

In a nutshell, KPIs are measurable values that show you how effective your company is at achieving business objectives. Sales metrics, on the other hand, track how your team is doing with regard to sales processes. In other words, you use KPIs to track higher-level business goals, and you use metrics to track your workflow and processes.

Say you’re a Sales Director, and one of your KPIs is monthly sales growth. You’ve been tasked to lead your team to achieve 20% growth in sales, month-on-month. In order to achieve this goal, you’ll get your sales team to track metrics such as average win rate, conversion rate, lead to qualified opportunity conversion rate, etc.

Sales metrics to track

Sales performance metrics

Sales performance metrics are metrics that benchmark the general performance of your sales reps. These include:

  • Average win rate
  • Average deal size
  • Average sale cycle
  • Lead to qualified opportunity conversion rate
  • Sales per rep
  • Sales by region
Sales Performance Metrics
Average sale cycle

Average sales cycle length refers to the number of days taken to convert a lead into a paying customer. Here’s how you calculate this metric:

Generally speaking, your average sales cycle depends on the complexity of the sales process. This could be due to the target industry, the price of the product/service, or the size of your potential customers.

That said, there are certain things that you can do to build trust with your customers and push down the length of the average sale cycle, such as featuring credible testimonials on your website, sharing case studies of customers with similar company size and challenges, or offering money back guarantees on your product.

Average Win Rate

Your average win rate refers to the percentage of deals that your sales team closes. Here’s the formula:

Statistics show that sales reps have an average win rate of 47%. That said, your win rate depends on many factors, including your industry and the type of product/service you’re selling.

 
Average Deal Size

Average deal size refers to the average amount that a customer pays when they sign up to use your company’s products/services. Here’s how you calculate your average deal size:

This is fairly straightforward - the larger the average deal size, the better the company’s bottomline.
 

Average Sales Cycle

Average sales cycle length refers to the number of days taken to convert a lead into a paying customer. Here’s how you calculate this metric:

Generally speaking, your average sales cycle depends on the complexity of the sales process. This could be due to the target industry, the price of the product/service, or the size of your potential customers.

That said, there are certain things that you can do to build trust with your customers and push down the length of the average sale cycle, such as featuring credible testimonials on your website, sharing case studies of customers with similar company size and challenges, or offering money back guarantees on your product.
 

Lead to Opportunity Conversion Rate

This metric deals with the top of the funnel; it evaluates how adept your team is at converting a lead into an opportunity. Here’s how you calculate the metric:


Sales Per Rep

To identify your sales per rep, just add up the amount of revenue that each rep brings to your company. You’ll want to reward your best performing reps, and speak to your reps who are struggling and offer to help them.
 

Sales By Region

If you sell internationally, you should keep an eye on sales by region. It’s common for companies to have an exceptionally strong showing for the country/region they’re based in. But upon looking at your numbers, you might decide to re-allocate your resources to focus on other countries or regions with high potential.

Sales Productivity Metrics

Sales productivity metrics are metrics that you use to track the efficiency of your sales team. The goal is to improve your team's sales productivity. Doing this will allow your reps to meet thier quota within shorter periods of time. 

Sales productivity metrics include:

  • Percentage of time spent on prospecting
  • Percentage of time spent on discovery calls
  • Percentage of time spent on admin
  • Percentage of time spent creating sales proposals
  • Lead response time
  • Attempt to connect rate

The first three metrics are relatively straightforward; these can be measured using CRM software. Ideally, your reps should be spending a larger proportion of their time on selling, and less time on creating content and handling administrative tasks. So make sure your reps have access to relevant tools, such as a robust CRM platform that automates time-consuming data entry.


Time to action

Time to action refers to the amount of time that reps spend on researching accounts and contacts before reaching out. According to statistics, a whopping 78% of leads end up purchasing from the first vendor or company that responds to their enquiries, so time is of the essence.
 

Attempt to connect rate

Attempt to connect rate can be calculated using either of the following formulas:

       1. Total connects/calls attempted

       2. Email responses/emails sent

If your team has a low attempt to connect rate, this could mean that their outreach isn’t resonating with their target audience, or that their leads are of poor quality. Consider switching up your pitch, and approaching your leads from a different angle. You can also increase your work and collaboration with the marketing team, to generate higher quality leads.

Sales Activity Metrics

Sales activity metrics are used to track what your reps are doing on a day-to-day basis. These include: 

  • Number of calls made
  • Number of emails sent
  • Number of conversations
  • Number of interactions on social media
  • Number of meetings scheduled
  • Number of meetings conducted
  • Number of proposals sent

Don’t make the mistake of assuming that these aren’t as important as “high-level” metrics. These metrics are leading indicators, which means they predict and impact your ultimate results.

Sales Pipeline Metrics

Sales activity metrics are used to track what your reps are doing on a day-to-day basis. These include: 

  • Total open opportunities
  • Total closed opportunities
  • Total opportunity value
  • Ratio of leads to marketing qualified leads
  • Sales funnel leakage
Total Open Opportunities and Total Closed Opportunities

First up, be sure to track your total open opportunities and total closed opportunities. We recommend looking at this from several perspectives - by quarter, by month, by team, and by individual. It’s important to strike a balance here. If you have too many open opportunities, this could indicate that your sales team is struggling to cope with volume, or that they’re not being as productive as they could be. If you have too few open opportunities, this might mean that your marketing team isn’t funneling enough leads to your sales team.
 

Total Opportunity Value

Apart from looking at the number of open and closed opportunities, also keep an eye on your total opportunity value. If you notice that the number of open opportunities is high, but the total opportunity value is low, work with your marketing team to generate leads from larger business sectors.
 

Ratio of Leads to Marketing Qualified Leads (MQL)

If your sales and marketing teams are aligned, then you shouldn’t have a problem with this ratio. A low ratio indicates that the company is wasting money on marketing or advertising (since most of the leads generated can’t be converted), so make sure you keep this ratio high.  

Calculating this ratio is pretty straightforward. Here’s a simple formula you can use:


Sales Pipeline Leakage

Sales pipeline leakage allows you to identify where prospects or leads drop out of your pipeline. To identify your largest leakage point, look at your win rates at each stage of the pipeline, and hone in on the win rate that’s the lowest.

If many prospects leak out from call to demo, this means that your reps aren’t doing a good job of selling through the phone, and that their pitch isn’t convincing enough. If you’re having trouble at the final stage (from demo to close), this might mean that your reps need to learn how to overcome sales objections better.

Sales funnel metrics 

Sales funnel metrics help you keep an eye on the big picture, and ensure that you’re not encountering any bottlenecks at any stage of the sales funnel. These metrics include:

  • Lead velocity rate
  • Opportunity count across stages
  • Time spent on each stage
  • Win rate
  • Sales velocity
Sales Funnel Metrics
Lead velocity rate

This metric refers to the monthly growth in your qualified leads,  and it measures how many leads you’re currently working on converting to customers.

This metric is a real-time indicator of growth and sales revenue, so if you have a high lead velocity rate, you can expect high sales revenue for the upcoming months.
 

Opportunity count across stages

This is exactly what it sounds like—the total number of opportunities across each stage of your sales funnel.

Here, you’ll want to ensure that you have a good balance of leads in each stage of your funnel. If you notice excessive leads at any one stage, this might mean that your reps are struggling to move them down the funnel, which is cause for concern.
 

Time spent on each stage

Intuitively speaking, it makes sense to try and minimize the time spent on each stage, so that you push down the length of your average sales cycle.

That said, remind your reps to exercise discretion when doing this. They shouldn’t rush their leads into the next stage of the process if their lead isn’t ready to move on. Remember, nobody likes a sales rep who’s too pushy or aggressive, and moving your lead along too quickly might backfire.

 
Sales velocity

Sales velocity is a measurement of how much revenue you can expect to earn from your customers over a given period of time. Here’s how you calculate this metric:

If your sales velocity is $5,000, this means the company is bringing in an average revenue of $5,000 per day. To improve your sales velocity, you can work on each of the components that are used to calculate the formula. Either increase your number of opportunities, deal size, or win rate, or decrease your average sales cycle.

Inside Sales Metrics

Inside sales refers to sales that are handled remotely (over the phone, or via email). If your company is in the B2B, tech, or software-as-a-service (SaaS) industry, your reps probably engage in inside sales. It is to your advantage to track inside sales metrics:

  • Percentage of opportunities won

  • Percentage of opportunities lost

  • Percentage of opportunities lost to a competitor

  • Percentage of opportunities won, categorized by lead source

In particular, take note of the percentage of opportunities you lost, and the percentage of opportunities you lost to a competitor.

Inside Sales Metrics

If most of your lost opportunities involve your leads simply not making a decision, this indicates that your pitch isn’t compelling enough. It is also possible that your leads aren’t ready to make a purchase. However, if most of your lost opportunities involve your leads choosing another vendor over you, then you’ll need to work on identifying competition earlier on in the sales process, handle objections, and prepare your sales reps with battlecards.

At the same time, make sure you analyze the percentage of opportunities you’ve won, according to lead source. You might find that leads generated through a search campaign are easier to convert than leads generated through a display campaign.

Whatever the case may be, convey the information to your marketing team, so they can optimize their campaigns and allocate their resources to maximize the number of high quality leads generated.

Outbound Sales Metrics

What’s the difference between outbound sales metrics and inside sales metrics? While outbound sales metrics also deal with remote transactions, they focus specifically on calls, emails, appointments, and opportunities. These metrics include:

  • Number of emails sent
  • Email open rate and click through rate
  • Email response rate
  • Percentage of email leads who move to the next step
  • Number of calls made
  • Number of calls connected
  • Calls to conversations
  • Conversations to appointments
  • Call outcome mix
  • Percentage of phone leads who move to the next step
  • Lead to opportunity ratio
  • Opportunity to win ratio
Outbound Sales Metrics: Email Metrics

Firstly, track all email-related metrics including open rate, response rate, and the percentage of email leads who move to the next step. You will find plenty of online resources to help your sales team nail each step of the process. Get your team to read up on the best converting email subject lines, as well as best practices when it comes to writing cold emails and follow-up emails.
 

Outbound sales metrics: phone metrics

Besides email, you’ll also want to track metrics related to your reps’ on-phone activity. While most companies only record their total number of calls and connected / successful calls, you can go one step further and track your call outcome mix.

To do this, simply get your reps to indicate the outcome of each call they attempted. Here are some possible options:

With this information, you’ll be able to identify the outcome of your teams calls at a single glance. For instance, if you see that 45% of calls that are made are going to the wrong number, this means that you have a problem with data accuracy. If you see that most calls are going to voicemail, then get your team to experiment with calling at different days and times to increase their chances of getting through to the leads.

Field sales metrics

Field sales is also known as outside sales, and this involves sales reps visiting their leads, and selling to them in person. Assuming your company engages in field sales, it’s important to keep track of the following field sales metrics:

  • Number of opportunities created

  • Number of meetings scheduled

  • Demos given

  • Number of opportunities won

  • Number of opportunities lost

These are basically the same metrics that we’ve discussed before, but in the context of field sales. You’ll want to track these metrics individually instead of grouping them together with your outbound sales or inside sales metrics. By doing so, you can assess your team’s performance better, and determine the area(s) they need to work on further.

SaaS Sales Metrics

SaaS businesses and subscription businesses operate using a distinctly different business model.  Instead of generating a larger amount of revenue in a single sitting, they generate smaller sums of revenue on a recurring basis.

While SaaS companies will definitely benefit from tracking their basic metrics (such as the percentage of conversions and number of accounts closed), there are also SaaS-specific metrics that they’ll need to pay attention to, such as:

  • Annual Recurring Revenue (ARR)

  • Monthly Recurring Revenue (MRR)

  • Average Revenue Per Account (ARPA)

  • Customer Acquisition Cost

  • Customer Lifetime Value (LTV)

​​​​​​Annual Recurring Revenue (ARR)

Annual recurring revenue is pretty self-explanatory. This measures the value of a customer’s contract over a 12-month period.
 

Monthly Recurring Revenue (MRR)

Monthly recurring revenue refers to the recurring revenue that you generate within a single month. To calculate this figure, just add up the recurring revenue from all your paying customers in that particular month. Make sure you include all recurring revenue, including additional costs that you charge for extra users, etc.

 

Average Revenue Per User (ARPU)

This metric allows SaaS businesses to identify how much revenue they collect from an average customer, on a monthly basis. If you want to do a detailed analysis here, consider tracking ARPU separately for customers from different referral sources or different regions. You can also segregate new customers versus existing customers, and look at each group’s ARPU separately. Here’s the formula to calculate the metric:

 
Customer acquisition cost (CAC)

Your customer acquisition cost tells you how much your company spends on acquiring a single customer. If your CAC exceeds your ARPU, this isn’t ideal. This basically means that if a customer signs up for your product, but cancels after one month, you’re making a loss on that customer. Here’s how you calculate it:


Customer Lifetime Value (LTV)

This metric identifies the total amount of revenue generated by a single customer over their entire lifetime. The longer they stay with your company, the higher their lifetime value will be. To keep your LTV high, make sure you keep your existing customers happy and engaged, so your churn rate will remain low.

Track sales metrics using Freshsales CRM

Freshsales CRM is designed to help companies scale their sales process and scale greater heights by providing powerful reporting functionalities. The CRM system gives you a whole bunch of report templates you can use right out of the box, plus the ability to create your own reports. Sign up for a 21-day free trial that comes with a 24/5 email and phone support.