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What Sales Metrics Should I Measure?

To make the correct decisions that will increase sales and maximize profits, a sales leader must prioritize measuring sales metrics. The results of sales metrics can decide what move to take next and whether it will benefit your company. Continue reading to learn more about sales metrics, key performance indicators, and which metrics you should keep an eye on to maintain company progress.

 

What Are Sales Metrics?

Sales metrics are data representing the performance of individuals, teams, or entire companies. Sales leaders use sales metrics to keep track of numerous information pieces about the company, some of which include:

  • Tracking progress towards goals
  • Adjusting sales compensation
  • Awarding bonuses and incentives
  • Spot areas of concern before they grow worse
  • Preparing for the future

This list barely covers all the purposes that sales metrics have for the company.

 

What Are KPIs?

KPIs (key performance indicators) are often associated with sales metrics. However, not all metrics qualify as KPIs. A KPI usually reflects a major priority or goal, such as the sales percentage of a major product a company is trying to push out. KPIs measure performance, and tie into the core strategy of a company.

In terms of sales, KPIs vary between companies and between departments. No single set of KPIs exists that a leader must supervise. Factors such as structures, targets, products, and obstacles vary between teams.

 

Sales KPIs

KPIs are the sales metrics that are important for measuring the performance of the entire company. Some of these metrics include:

  • Customer Lifetime Value. The customer lifetime value (CLV), also known as the average lifetime value (LTV), shows you how much value a specific customer brings to the company over their lifetime. LTV is usually measured at regular intervals to track changes over time. This metric the multiplication of the annual revenue provided by the customer and the years of relationship, divided by CAC.
  • Sales Growth. The most potent of the sales metrics, sales growth determines the ability of the sales team to increase revenue over a fixed amount of time. Due to its direct tie to time and revenue, it is very important, and the fate of the company depends on its growth. A large enough drop can result in the company becoming absorbed by another one.

There are several other types of KPIs, such as:

  • Total revenue
  • Market penetration
  • New business revenue
  • Existing customers’ revenue
  • Business lost to competition
  • Net Promoter Score (NPS)
  • Territory revenue
  • Market revenue
  • Sales reps reaching 100% quota
  • Year-over-year growth

 

Sales Productivity Metrics

Sales productivity accounts for the rate at which a sales team hits revenue targets. The less time it takes to meet a quote, the higher the productivity is.

  • Time Spent Selling. This metric allows you to determine some of the largest time consumptions during your sale process. Lead generation is one of the biggest factors that results in lost rep time, since many reps struggle with finding leads that are interested in buying anything. Tracking the time spent will make it easier for you to determine the specific issues that are slowing down the process and resolve them.

Measuring productivity for sales reps also includes other factors (numbers), such as:

  • Calls made
  • Conversations
  • Emails sent
  • Scheduled meetings
  • Social media interactions
  • Demos and sales presentations
  • Sent proposals

 

Lead Generation Sales Metrics

These metrics measure how your sales team is prospecting.

  • Monthly New Leads. The number of leads each month measures the number of possible customers that are available in the pipeline. The leads depend on the chosen business model or the industry. Leads can either claim a free trial of your product, contact your sales team, or download a specific piece of content.
  • Average Lead Response Time. The longer it takes for your sales reps to respond to leads that show interest, the greater the chance of that sales opportunity slipping away. If a prospect is seeking a solution, and one of your reps takes 24 hours to respond, that prospect will reach out to another business. According to the Harvard Business Review, lead response time is important, as this study proves that a response time within one hour increases the rep’s chance to make a sale by seven, while it decreases by 60 if it takes 24 hours.
  • Customer Acquisition Cost. By tracking customer acquisition cost (CAC), you can understand the costs associated with business growth and expanding the customer base. This metric is particularly useful for startups attempting to demonstrate their values to their investors and to understand where to allocate your budget. To calculate CAC, you must add the money and time spent, then divide it by the customers acquired.

Other metrics (percentages) for lead generation include:

  • Dropped leads
  • Qualified leads
  • Followed-up leads
  • Followed-up leads in a time range

 

Sales Per Rep

Sometimes, to foster friendly competition, a leader will look at the sales per sales rep to see how each individual representative is performing. This metric also serves other purposes, such as making sure a rep did not chase unqualified leads to fill their pipelines, or how veteran reps may outperform newer team members.

 

Pipeline Sales Metrics

These metrics allow you to gauge the health of your sales pipeline. This information can help you understand what is working and what is not regarding the holistic sales process.

  • Sales Pipeline Coverage (SPC). This metric allows you to analyze the opportunities for your sales team on making a quota for a specific amount of time. The SPC ratio compares the capacity of the pipeline to the quota for an amount of time. Not every opportunity ends up as a sale, so it shows how many opportunities need to occur at any point.
  • Opportunity Win Rate. This metric measures the percentage of total sales opportunities that end up becoming customers. For example, 100 sale opportunities have 25 sales, which creates the rate of 25%. Calculating this metric allows you to set more attainable quotas for your team and create a more effective budget. This rate applies to both teams and individuals.

 

Other pipeline sales metrics include:
  • Average sales cycle
  • Average contract value (ACV)
  • Conversion rate by sales funnel stage (team and individual)
  • Total open opportunities by month and quarter (team and individual)
  • Total closed opportunities by month and quarter (team and individual)

 

Cannibalization Rate

Cannibalization rate refers to the impact the release of your new product has on the sales of the older products. While a company usually has a goal of releasing new, more advanced products into the market, competition between the company’s own offerings is not always beneficial. Cannibalization can make your older products obsolete and alienate part of your customer base.

 

Learn More About Sales

Learning how to measure sales metrics and how they affect your company is overwhelming for a novice, but with the right training, you can ease yourself into learning more about sales. SNI’s sales training program does not just teach “what to do” when it comes to sales, but also the “how-to.” The program takes a systematic approach to increase the effectiveness of salespeople. We even measure your progress through several metrics systems, such as key performance indicators. Sign up today.

What Is Change Leadership?

Companies sometimes need a drastic change in order to fix a long standing problem or merely to adapt with the rest of the world. That shift only occurs when a single vision motivates the employees as a team and becomes strong enough to enact that change. Change leadership is important in renovating overarching aspects of a company by using an empowered vision of the potential of such radical change. To become a change leader, you must understand what it means before taking the first steps.

 

Definition of Change Leadership

Change leadership is a type of leadership that focuses on large-scale changes within an organization. Real change leaders (RCLs) are more concerned about a large, transformative vision for the business and how the employees become empowered enough to contribute to the creation of that vision. One risk of change leadership, however, is it has the potential to get out of control and not account for the smaller details in that line of work. In addition, a company may not act upon every proposed change to the established structure.

 

Distinction From Change Management

Change management is often associated with change leadership. Many consider the two synonyms. However, these two concepts approach the upcoming change at a company with different methods. Change management refers to “a basic set of tools or structures intended to keep any change effort under control.” Change management essentially introduces a company shift to a work environment that is usually resistant to the concept of change. Management keeps the distractions and effects of change under control at a small, gradual pace, rather than the disruptive approach change leadership takes.

 

The Role of People Management in Change Leadership

For RCLs to continue their ambitious vision for their business, first they need to embrace people management. People management focuses on having each employee reach their full potential by managing them. People managers lead their employees into training and developing their skills, meeting new goals, defending them by understanding employee law, and encouraging them to improve. Some of the practices in people management include:

  • Training and development. Managers ensure that employees receive enough orientation to start their job and that they receive evaluation and feedback to encourage them to grow and take on more responsibility.
  • Decision making. A manager must make the final decision when it comes to employee recognition or discipline with fair, objective decisions.
  • Managers must work as mediators for employee grievances, help the employees feel confident about their job, and carry out evaluations.
  • Overseeing teamwork. Despite delegating teamwork to employees, managers must make sure the team is performing its duties within budget and deadlines.
  • Role modeling. A manager sets a good example for the other employees by behaving like a professional and treating other employees with respect and dignity.
  • Managers oversee the progress of employees, and if necessary, set up programs and identify opportunities for improvement to ensure employee growth within the company.

By embracing something as structured as people management, RCLs can motivate employees to align to the greater vision for the organization.

 

Actions of RCLs

Advocates for change leadership are very different from regular management roles. While managers strive to keep everything controlled and running, RCLs are all about shaking the business up. RCLs have skills that make them stand out from other types of leadership.

  • Linchpin linkages. Forging connections in the marketplace, RCLs engage with the customers and find out what the competition is doing. Then, the leaders use the information to energize their work teams into improving their performance.
  • 360-degree impact. Often in middle management positions, RCLs inspire their vision first among the employees they are directly responsible for. Later, the leaders also try to influence the executives and people above them to bring changes, with varying degrees of success.
  • An expandable toolkit. RCLs have specific problem-solving skills or tools. However, they are always looking for new approaches and techniques, and do not get complacent in the techniques they already have. These leaders adapt to new situations.
  • Switch-hitting leadership capacity. In change leadership, there is no single type of leadership approach. RCLs have different approaches to leading depending on each of the employees. In the case their methods cannot adapt to the situation, RCLs delegate others to help lead the current vision for the team to completion.

 

Characteristics of RCLs

While individual change leaders may have their own unique approaches at leadership and driving the company to meet a unified vision, they all share a few characteristics:

  • Excited and committed to a vision that will improve the future of the organization
  • Courage to face and combat norms, power bases, and failures to fulfill their goal
  • Motivated and make sure to spread that motivation to others
  • Take the initiative in challenging the status quo and thinking outside the box to solve problems
  • Care for the way the company treats other employees, particularly the ones on their team and under their watch.
  • Sense of humor, even in the worst of times, to motivate everyone around them to keep focused on the larger vision for the company

 

Shortage of Change Leaders

Change leadership rarely comes from the top because the people involved have the least incentive to drive a large, overwhelming change that extends all the way to the smallest employees. Most RCLs originate from middle management positions. However, there is a shortage of RCLs since most management positions are traditional and more akin to change managers. Experts argue that the shortage can end by both bringing in outside talent specialized in real change and instructing managers on change leadership methods.

 

Boost Your Change Leadership Skills

Becoming a strong, efficient change leader requires patience and practice. Inspiring employees to follow your vision is a skill that develops over time. If you want to learn more about how to influence others, then consider investing in some lessons. SNI’s influence training course is based on Aristotle’s philosophy on the three elements of influence (ethos, pathos, and logos) to build credibility, engage emotion, demonstrate logic, and engage action. Call us today to join our program and maximize your leadership success.