Mastering Metrics: A Guide to Measuring Sales KPIs
Choosing sales KPIs that are right for your business starts with defining your sales goals and identifying criteria KPIs that align with those goals.
Monthly sales growth, customer lifetime value, customer acquisition costs, and lead conversion rate are top sales KPIs for measuring your team’s performance.
The secret of the success of high-performing sales teams is “measuring sales data.”
As the famous management saying goes, “What you cannot measure, you cannot improve.”
Thus, when management is looking to increase sales or grow profit, a good starting point is tracking sales data to determine true performance and identify areas for improvement.
However, when it comes to tracking sales data, more isn’t always better. Tracking every one of your sales team’s moves and having too many numbers and charts can slow the team down instead of empowering them to sell more.
So, the big question is, “What are the best KPIs for assessing sales performance?” This article will answer this question.
We’ll examine the right sales performance metrics to track and how to use them to drive performance.
Which KPIs can be used to assess sales performance?
When it comes to sales KPIs, no one can tell you which are “best” for your sales team and company. The best sales KPIs are those that empower your sales team to do their best work toward achieving set sales goals.
That said, some of the most critical KPIs for sales are:
1. Monthly sales growth
Monthly sales growth measures the increase (or decrease) in sales over a month. It assesses the change in your sales revenue month-over-month.
Why monthly sales growth is important
A business that does not grow its sales will eventually die. By tracking monthly sales growth, you can see whether your business is growing, stagnating, or dying.
The result can then inform your actions, such as optimizing sales processes to improve positive sales growth value or implementing new sales strategies to turn around a negative sales growth value.
How to track monthly sales growth
Monthly sales growth compares sales revenue in one month to sales revenue in the month before it. So, to calculate monthly sales growth, use the formula:
Monthly sales growth =
A positive monthly sales growth indicates an increase in sales revenue, and this suggests successful sales efforts.
On the other hand, negative monthly sales growth indicates a decline in sales revenue, which suggests unsuccessful sales efforts or a decrease in market demand.
2. Customer lifetime value (CLV)
Customer lifetime value measures the value of all purchases that a customer makes with a company over the course of their relationship. It considers the customer’s initial purchase, all repeat purchases, and the average duration of their relationship.
This metric helps a company assess how much (net profit) it can expect to generate from a customer from when they start paying to when they stop.
Why customer lifetime value (CLV) is important
The customer lifetime value is important because it shows how successful your sales team is at nurturing customers and building the kind of trust required to turn one-time customers into loyal customers.
Tracking CLV helps you predict churn rates. CLV also helps you predict future revenue because the longer your existing customers keep paying, the more you’ll make.
How to track customer lifetime value
To calculate the customer lifetime value, use the formula:
CLV = (Average purchase value per year) x (average number of purchases per year for each customer) x (average customer lifespan in years).
3. Customer acquisition cost (CAC)
Customer acquisition cost measures how much it costs to acquire one new customer. It takes into account all the costs associated with gaining a new customer.
These include marketing and sales costs (including salaries and overheads) and the cost of all online campaigns.
Why customer acquisition cost is important
Tracking customer acquisition costs helps you understand how much you are spending in your different customer acquisition segments to determine which segment is worthwhile.
You can then take steps to optimize sales efforts. Without tracking this sales KPI, you can burn a chunk of your capital on ineffective acquisition segments without realizing it.
Know that one of the best ways to increase profit is to reduce costs. Thus, tracking this sales KPI and acting on the intel can help maintain or increase profitability. How to track customer acquisition cost
To calculate customer acquisition cost, use the formula:
Customer acquisition cost =
4. New leads
“New leads” measures the number of new prospects you have attracted and nurtured for your business. A lead is any person who indicates interest in your product/ service.
Tracking new leads tells you how successful your sales teams are in getting people interested in your business.
Why “new leads” is an important metric
New leads tracking helps you determine the effectiveness of your lead generation efforts. The “new leads” gotten from your different campaigns point to which campaigns are effective and which aren’t.
You can then allocate resources accordingly, preventing you from throwing money on ineffective marketing campaigns.
Also, many customers you’ll have tomorrow will come from the leads you successfully acquire and nurture today. Therefore, tracking new leads can help you forecast sales revenue.
How to track new leads
The easiest way to track “new leads” generated is to use a lead tracking tool or a CRM tool that allows you to capture and monitor leads.
These tools will show you the different lead sources and how each prospect interacts with your company.
This helps you manage leads more efficiently - segmenting them based on their level of interest, personalizing communication, etc.
5. Lead conversion rate
Lead conversion rate (also called the lead-to-sales percentage) measures how many of your leads convert to sales. Having many people interested in your business will not move your bottom line if you do not manage to convert some of those prospects into actual sales.
Thus, one of the most important performance indicators of a high-performing sales team is “leads conversion rate.”
Why leads conversion rate is important
The goal of lead generation is to acquire prospects that will become paying customers. Tracking lead conversion helps you determine the effectiveness of your entire sales team in converting a prospective customer into a paying customer.
Tracking lead conversion by channel helps you determine the marketing channels that work best to generate quality leads. Then, you can allocate resources accordingly, putting more into channels that bring in more top-quality prospects.
The metric also tells you about your lead qualification process. If you score your leads highly, but they aren’t converting, you may have to rethink your qualification process or adjust your sales pitches and other communication aimed at nurturing leads.
Tracking lead conversion by specific sales reps can help you make decisions about sales reps’ training and development.
How to calculate lead conversion rate
You can calculate your lead conversion rate using the formula:
Lead conversion rate =
6. Average conversion time
The average conversion time measures how long it takes (on average) for a lead to convert to a sale.
Why is average conversion time important
You must have heard the saying, “Time is money.” The faster your prospects convert, the more your turnover within a period of time, increasing your revenue.
Thus, tracking average conversion time can help you forecast revenue and determine whether you’re on track to reach your sales goals.
Average conversion time also provides insight into the efficiency of your sales team in closing deals and the productivity of your sales funnel.
This helps you make better decisions about the effort you put into the sales process.
For example, longer than average conversion times tell you that you should put more effort into closing deals quicker. You can then adjust pitches and other follow-up communication aimed at converting prospects.
Average conversion time per sales rep can also help you identify high-performing staff, helping you make decisions about training.
How to track average conversion time
You can calculate average conversion time using the formula:
Average conversion rate =
7. Average sales cycle length
Average sales cycle length measures the time (on average) from the initial interaction with a prospective customer to when the person makes a purchase.
The quicker your sales team moves prospects along the pipeline and closes deals, the more revenue you make.
Therefore, after setting a sales cycle length benchmark, you may work to shorten it by closing deals quicker.
Why average sales cycle length is important
Tracking this sales metric helps you evaluate the efficiency of your sales process. You can also use average sales cycle length to evaluate the efficiency of your sales rep.
If you monitor the sales KPI by representatives, you’ll see who is closing deals quickly and who may need improvement.
How to track average sales cycle length
To measure the average time it takes to close a deal from initial interaction, use the formula:
Average sales cycle length =
8. Average purchase value
Average purchase value measures the average amount each customer spends on your products or services. Can you get your customers to buy more each time?
You should because the more a customer spends, the more you increase your revenue and profit.
The average purchase value sales metric measures how well you are doing in this regard.
Why average purchase value is important
Sales managers use the average purchase value metric to ascertain the value of leads. This is because the more a customer spends (on average), the more value the customer holds to the company.
Tracking average purchase value also helps you develop strategies to increase revenue with each transaction.
For example, if you record a less-than-desirable average purchase value, you can think of ways to incentivize customers to send more.
How to track average purchase value
You can calculate the average purchase value using the formula:
Average purchase value =
9. Churn and retention rate
Churn rate and customer retention rates have a yin and yang relationship. An increase in one automatically reduces the other.
The churn rate is the percentage of customers you lose. They represent customers who cancel or do not renew their contract or subscription for your company’s product service.
A rising churn rate can show that there’s a problem with your product/ service offering, pricing, or customer experience.
On the flip side, the customer retention rate is the percentage of customers who stay with you.
These are customers who renew their contracts or subscriptions for your products or services. A rising retention rate shows that customers are happy with your products/ services.
The goal is to reduce churn rates and increase customer retention rates. This is because acquiring new customers costs 5 - 10 times more than selling to existing ones, and current customers spend 67% more on average than new ones.
Why churn and retention rates are important
Business survival depends on continually closing deals. Interestingly, the stats show that it’s cheaper to sell to an existing customer than to a new one and that existing customers spend considerably more than new ones.
Therefore, keeping churn rates down and increasing retention rates is crucial to reducing the cost of sales and generating recurring revenue.
Tracking churn or customer retention rates can help you get an accurate view of your customers' sentiments about your products or company.
It also gives you a realistic view of your customer retention strategies. You can then take actionable steps to increase customer satisfaction and loyalty.
How to track churn and retention rate:
You can calculate retention rate using the formula:
Retention rate =
You can calculate the churn rate using the formula:
Churn rate =
10. Sales by region
Sales by region measures where your sales are coming from. It assesses the volume of sales per city, state, country, etc.
Knowing where your sales are coming from can help you determine what influences your sales figure and take steps to improve good sales performance or turn around poor performance.
Why the “sales by region” metric is important
The sales by region metric helps you see where demand for your product/ service is highest and lowest. You can then try to figure out what is influencing your sales figures toward focusing efforts properly and improving revenue.
For example, when you track sales by region and see how you perform in the different markets, you may focus efforts on regions bringing in more sales revenue.
You can also adjust marketing plans in poor-performing regions to see if you can get more revenue from these areas.
Also, when you notice an unexpected drop in sales revenue from a top-performing region, you can investigate the developments in the region to see what the issue is and how you can respond.
How to track sales by region
The best way to track the “sales by region” metric is by using analytic or customer relationship management (CRM) tools that tag customer location with each deal.
11. Sales by contact method
Sales by contact method measures the effectiveness of the different methods your salespeople used in initiating contact with prospects. Thus, the “sales by contact method” traces every deal you close to the way it began originally.
Was the initial contact by email or in-person visit? Tracking this can help you determine the most successful contact methods for generating sales.
Why the sales by contact method metric is important
When you understand the contact methods that are more likely to generate sales, you can arm your salespeople with the tools most effective for bringing in sales revenue.
This can help you reduce sales/ marketing expenses by avoiding low-yield, high-cost contact methods.
However, do not be quick to abandon outreach methods because of this sales metric.
This is because other factors (like your sales reps’ strengths) can be responsible for converting a prospect into a paying customer.
How to track sales by contact method
To calculate the sales by contact method metric, use the formula:
Sale by contact method =
12. Upsell and Cross-sell rates
Upsell and cross-sell rates measure how much money you can get from a customer over what they intended to spend.
The upsell rate is the percentage of your revenue that comes from upselling.
Upselling is a sales technique for generating more revenue where sellers encourage customers to purchase a more expensive item instead of the one they intended.
For example, your sales rep convinces a customer to buy an upgrade (and more expensive version) of their intended product.
The cross-sell rate is the percentage of your revenue that comes from cross-selling.
Cross-selling is a sales technique for generating more revenue where sellers encourage customers to buy extra items in addition to the primary item.
For example, a customer comes to buy a phone, and your sales rep convinces them to also buy a phone cover.
Know that upselling and cross-selling are big contributors to revenue. For example, Forbes reported that Amazon attributes 35% of its revenue to cross-selling.
Why upsell and cross-sell rates are important
Tracking upsell and cross-sell rates shows your sales teams’ effectiveness in generating more revenue from existing customers. Tracking these sales metrics gives you insight into improving revenue.
For example, upsell rates can help you gauge the effectiveness of sales pitches, while cross-sell rates can help you gauge how customers respond to product combinations offered.
You can then adjust pitches or product combinations to improve upsell and cross-sell rates, respectively.
How to track upsell and cross-sell rates
To calculate upsell rate and cross-sell rate, use the formulas:
Upsell rate =
Cross-sell rate =
13. Calls or Emails per rep
Calls or emails per rep measures the sales activities of each of your sales representatives.
You need to know what your sales reps are doing to connect with new leads, and tracking the volume of sales communication (calls and emails) helps you do this.
Why is the “calls or emails per rep” metric important
High volume of sales communication indicates that your reps are connecting with customers properly. Thus, it is one indication of a sales rep's productivity.
However, quantity often does not tell the true story.
For example, an agent with high sales communication may have fewer conversions than another agent with fewer sales communication.
Thus, it’s best to review this sales metric with success rates.
How to track calls or emails per rep metric
The best way to track the calls or emails per rep metric is by using a CRM tool with good reporting capabilities.
Find tools that will give you a breakdown of sales rep’s activities, including sales calls or emails attended.
14. Sales per rep
Sales per rep measures the sales volume generated by each sales representative. It assesses the effectiveness of each sales agent in closing deals toward increasing the company’s sales revenue.
Thus, it’s one of the most important sales KPIs for many companies.
Why sales per rep is important
The sales per rep metric helps determine each rep’s productivity in terms of sales generation. The result can help you identify top-performing and underperforming sales reps, and this can direct your training and development efforts.
You can draw insight from the sales per rep metric to set sales targets for your team.
Displaying these metrics on leaderboards can create transparency and inspire your salespeople toward better performance.
However, you should be careful when doing this, as it can demoralize underperforming reps. One way to avoid this is to show only the stats of top performers.
How to track sales per rep
You calculate “sales per rep” using your total sales and the number of sales made by the rep as follows:
Sales per rep =
15. Employee satisfaction
Employee satisfaction measures your sales reps’ contentment with their job.
Working in sales can be grueling. And sometimes, sales reps run out of steam.
Why employee satisfaction is important
When your sales representatives are happy, they will be more motivated to do their work and make the contributions you need. Thus, increasing employee satisfaction is crucial to improving your team’s productivity.
Tracking employee satisfaction can help you know their motivation levels. You can then take appropriate steps to inspire them.
Employee satisfaction rate also helps you predict employee turnover rate. If you don't keep your staff happy, you’ll lose them. However, it can cost you 6 - 9 months of an employee’s salary to replace him/ her.
Since replacing an employee is expensive, it’s crucial to prevent turnover. Tracking employee satisfaction is key to this as it helps spot burnout or disgruntlement and devise a plan to address it.
How to track employee satisfaction
One of the best ways to measure employee satisfaction is using surveys. Send out structured surveys to employees in the sales department.
You can also consider making surveys anonymous, as this removes the fear of reprisals and makes employees more forthcoming.
The eNPS (employee Net Promoter Score) is also excellent for tracking employee satisfaction. It’s a short survey that requests three responses from employees:
First question: On a scale of 0 to 10, how likely are you to recommend our company as a place to work?
Second question: What do you like about our company?
Third question: What do you dislike about our company?
You can replace “company” with “sales department.”
The eNPS survey is easier to create and analyze as it is significantly shorter than traditional satisfaction surveys.
How to choose the right sales KPIs for my business
Choosing the right sales KPIs for your business starts with defining your goals and understanding your sales process. Then, identify critical metrics and ensure they are SMART.
Let’s discuss them in detail.
Define your goals
Key performance indicators are metrics for measuring performance toward achieving a particular goal. Therefore, choosing the right sales KPIs starts with clearly outlining your sales goals.
Start by asking yourself what you want to achieve.
Are you aiming to increase revenue, reduce customer churn rate, improve customer satisfaction, or something else?
Clearly define what you want to achieve, and this will point you to the right KPIs.
Understand your sales process
Analyze your entire sales process (from lead generation to closing deals) to identify touchpoints where you can measure performance.
Common touchpoints where you can measure performance include lead generation, qualification, presentation, negotiation, and closing.
Identify critical metrics
After identifying the areas where you want to measure performance, the next step is to identify the metrics for measuring performance. There are different performance metrics, but they are not all equally important.
Therefore, select the metrics that are most relevant to your goals and business model.
Selecting the right KPI for your goals can be a daunting task. First, it’ll require having several meetings with relevant stakeholders (sales managers and heads of sales and marketing teams, etc.).
This can take hundreds of hours of management time, which would have been directed at revenue-bringing activities. So, the lost hours are equal to lost revenue.
Then, there’s the problem of selecting the wrong KPIs. Manually selecting KPIs comes with the risk of choosing the wrong or less impactful KPIs.
This leads to focusing too much on wrong or irrelevant data while failing to track important ones. Needless to say, the situation can be damaging to your business.
Thankfully, AI-based strategy management software like Kippy helps in this regard.
The software automatically generates accurate KPIs matching your objectives.
It does this in seconds, saving you the time and stress of choosing the right KPIs that align with your objectives and the troubles of choosing the wrong KPIs.
Make your KPIs SMART
After choosing the most relevant KPIs for your objectives, make them SMART. That is, ensure your sales targets are Specific, Measurable, Achievable, Relevant, and Timebound.
Specific: The sales targets should be clear and narrow for easy planning.
Measurable: Ensure you can measure progress towards achieving the target.
Achievable: Ensure the target is realistic.
Relevant: Ensure it aligns with your goals and objectives
Timebound: Define a period of time for achieving it.
For example, rather than a vague target like “increase sales revenue,” you can define a SMART target like “increase monthly revenue by 10% by the next quarter.”
How to track essential sales KPIs
Now you know some of the top sales KPIs and how to choose the right ones for your business.
To tracking the KPIs in a way that gives you actionable data, you should do the following:
Choose the right tool
You should choose customer relationship management (CRM) software that can help you collect and track KPI data efficiently. These come with beautiful dashboards for monitoring and visualizing KPIs.
Set up data collection and integration
Measuring performance entails evaluating specific data sets. So, one of the first steps in tracking sales KPIs is defining your data sources. Integrate your CRM tool with other systems (like financial software, etc.) to automatically capture relevant sales data.
Set sales benchmark
Establish clear and realistic benchmarks for each performance metric. You can set benchmarks using historical data or external sources (competitors or industry standards).
A benchmark gives your teams something to aim for, motivating them to higher performance.
Regularly monitor KPIs and adjust as needed
The business environment constantly evolves, which may cause your goals to change. Therefore, be prepared to adapt your KPIs accordingly.
Regularly evaluate the effectiveness of your performance metrics and make adjustments when needed. Be open to incorporating new metrics as your business evolves.
This ensures you are measuring what matters and driving continuous improvements in your sales efforts.
Provide feedback and recognition
Regularly communicate KPI results and progress to your sales team. Carrying everyone along creates a sense of ownership that drives higher performance.
You may also consider rewarding top performers and offering guidance to those who may be performing below par.
What makes sales KPI important?
Sales KPIs are very important for the following reasons:
The primary function of sales KPIs is to track sales team performance. These metrics provide a quantifiable way to measure your team’s performance as well as the performance of each sales representative.
Without sales KPIs, your salespeople will lack clarity about whether sales activities are producing the desired results or whether the team needs a change in direction.
Sales KPIs also help align your sales teams’ efforts with your company’s overall goals and objectives.
When you align your sales KPIs with your goals, you can be sure that your sales team’s activities are in sync with your company’s strategic direction.
Identify strengths and weaknesses
Tracking any sales KPI will reveal either good or poor performance. Good performance shows areas of strength within your sales process, while poor performance shows areas that need improvement.
You can then use this information to optimize your sales strategies.
Early warning signs
Sales KPIs can act as early warning signals of impending problems. For example, if certain metrics start to decline, you can investigate the problem and take proactive actions.
KPIs help you allocate resources effectively. For example, when you track KPIs and identify the sales strategy or channel that generates the most leads, you may choose to allocate more of your budget to them to optimize lead generation.
Takeaway: Measure sales KPIs and drive your sales team to higher performance
Sales KPIs are metrics used to track your salespeople’s performance toward achieving sales goals.
The 15 sales KPIs above are some of the top ones you can track to empower your salespeople to do their best work toward achieving sales goals and moving your business forward.
Choosing sales KPIs that are right for your business starts with defining your sales goals and identifying criteria KPIs that align with those goals.
Manually choosing KPIs is a stressful and time-consuming process. Worse still, it comes with the risk of choosing inaccurate and unhelpful KPIs.
Interestingly, there’s a holistic KPI management tool you can use to make the process seamless. Kippy enables instant access to an infinite set of AI-generated KPIs based on your objectives.
Kippy provides a single source of truth for KPI management, as it helps you generate accurate KPIs, align every team member with strategic goals, track performance metrics, and appraise employee performance.
Ready to measure sales KPIs and drive your sales teams to higher performance? Book a demo with us today, and see how Kippy can help you.