Competition in sales continues to escalate. In response, more businesses are renewing their focus on sales performance initiatives. However, these directives leave little time for the most critical step: measurement. Even the best sales performance intentions will fall flat without measurement.
After decades of working with sales organizations across industries, we’ve determined a core group of eight sales metrics. These measurements are critical for getting an actionable read on how they’re performing as an organization, which is driven, in part, by sales performance initiatives. Some organizations will only need to use a few of these. Others may need them all. Here, we take a closer look at how each one works and why they matter.
- Win Rate: A team or company’s win rate serves as the primary indicator of market competitiveness. As an all-encompassing measurement, the number is easy to track and easy to baseline. This is a simple gauge of how many new pursuits close with a win status. However, win rates should not be viewed in isolation because the measurement is often a starting point, telling leaders where else to look for clues on business performance.
- Quota Attainment: When leaders want to compare performance with expectations, they turn to quota attainment as a measurement. This qualitative number answers, “What percent of the sales team is meeting their goal?” This figure serves to judge performance against expectations and is a function of how all initiatives are operating.
- Time to Productivity: Like a jet on a runway, a new seller has only so much time before they need to be “wheels up.” Time to productivity measures the length of this runway. This metric is particularly useful when looking to expand team capacity or when an organization is facing high-turnover. As Harvard Business Review reports, global companies like SAP examine time to productivity and even ongoing productivity. In doing so, they gain insight into what sellers can accomplish while helping managers more effectively staff their teams.
- Attrition: According to a body of research from the Center for American Progress, the median cost of turnover is 21 percent of an employee’s annual salary. For this reason, attrition is a valuable measurement. Attrition signals the health of the sales team and, to an extent, the demand of the product that they’re selling. The number is also a lagging indicator of other measures, such as ramp time, productivity, and engagement.
- Contract Value: Sellers today must work harder than ever before. Many competitive advantages have equalized as technology puts other players, big and small, on the same field. In response to this pressure, more sellers are seeking larger contract values so that the deals they close offer more value. In doing so, contract value serves to gauge the effectiveness of a team’s shift to multi-divisional solutions.
- Profitability: Profitability is a function of price and product mix. Moreover, diminishing profitability may stem from price-cutting, which indicates a failure to convey competitive advantages. Sustaining profitability is ultimately about effectively improving the product mix, as different products carry different margins. With this key financial measurement, sales leaders can understand their degree of efficiency when utilizing resources to win the sale.
- Pricing: Pricing is the primary driver of profitability. However, controlling pricing can be difficult as market conditions tighten. Effective sellers, however, can control pricing and therefore profitability by creating meaningful value and eventually elevating themselves to the role of a trusted advisor. Given that most sellers are compensated based on revenue generation, adjustments to price can also influence motivation.
- Sales Cycle: A company’s sales cycle reflects the effectiveness of the sales team and buyer’s engagement. Changes to the sales cycle arise from the ability to adapt to a changing marketplace. Additionally, new customer acquisition requires much more time than selling to an existing customer. Therefore, a shorter sales cycle emerges from improved customer loyalty. Research from Accenture shows that “only 12 percent of CSOs believe that their customers and prospects view their companies as trusted partners with the majority considering them as only as vendors or suppliers.”
These metrics serve not only to answer key questions regarding the health of a business, but they also lend valuable insight as to where leaders should explore further. Nearly every business will find that they have access to data that allows them to leverage at least some of these eight metrics.
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