Sales metrics: Understanding what to track and how to do it

There is a huge number of sales metrics that teams track, from win/loss rates to sales cycle lengths, but which ones should your specific business measure?

Depending on the size of your company, your ACV (average contract value), the makeup of your sales org, your sales methodology, and so on, the specific mix of metrics that are relevant to you will vary.

Keep reading to learn more about tracking sales metrics and KPIs, including what they are, when to use them, and how you can use them to boost your sales.

What are sales metrics?

Put simply, sales metrics are the measurements you use to quantify different aspects of your sales process.

For example, “revenue” is a fairly straightforward metric that shows you how much money is coming into your business. However, not all metrics are quite this simple or as easy to interpret.

Some metrics—Customer Lifetime Value (CLV), for example—involve a bit more nuance. The key is understanding how much (or how little) you can infer from tracking each metric, and what other contextual information you need to leverage those insights effectively.

Types of sales metrics

Sales metrics can fall into many categories. Here are five of the most common and useful sales metric categories:

Sales performance metrics

Sales performance metrics measure how effectively your sales teams and strategies are working. Sales performance metrics are useful for helping you manage your team in the most efficient and impactful way possible.

Ultimately, metrics that measure sales performance show managers and leaders how teams are performing on both an overall and an individual level. They show which team members deserve recognition for great performance, and which can use extra support or training.

Examples of sales performance metrics include things like deals won, sales velocity, leads generated, among others.

Sales efficiency metrics

Sales efficiency metrics—which are sometimes also known as sales productivity metrics—are similar to sales performance metrics, but tend to focus more on productivity than on overall results.

In other words, while sales performance metrics might track the number of deals a sales rep converts, sales efficiency would track the percentage of success in getting those conversions. For example, a rep might record 10 conversions in a quarter which sounds impressive, but their conversion rate might be only 0.07%—which makes that number look less efficient.

Comparing sales efficiency and sales performance metrics is a good way to get a nuanced picture of performance.

Examples of sales efficiency metrics include call-to-meeting ratio and time spent selling.

Customer relationship metrics

Customer relationship metrics measure how your customers feel about your company, and how loyal they are to your brand. These metrics are sometimes shared between sales and customer success or support teams.

Customer relationship metrics are important because customer retention is cheaper than bringing in new prospects. Customers who have a good relationship with your brand are likely to be loyal, and this loyalty translates into revenue as loyal customers buy again and again. Examples of customer relationship metrics include Customer Satisfaction (CSAT), customer retention rate, and customer lifetime value (CLV).

Sales activity metrics

Sales activity metrics track the raw activities and tasks that your sales team members execute during the working day.

For example, sales activity metrics might record the number of calls and outreach emails each team member makes.

Sales activity metrics are complementary to sales efficiency metrics. They’re often studied together and then cross-referenced with sales performance metrics to get a clear idea of how each team member works, their individual strengths and weaknesses, and so on.

SaaS-specific sales metrics

SaaS sales metrics track the performance of SaaS sales strategies.

SaaS (Software as a Service) sales often have to be assessed differently due to the nature of the subscription-based model. Because of this, a slightly different approach using a SaaS-specific set of metrics is needed to get a full understanding of how SaaS sales strategies are performing.

SaaS-specific sales metrics include KPIs (key performance indicators) like monthly recurring revenue (MRR), free trial conversion rate, and average revenue per user (ARPU).

35 Key sales metrics examples

Now that we’ve covered the major categories, let’s look at specific examples of the best sales metrics to track, what they measure, and how they can be used:

Sales performance metrics

Win rate

Of the sales metrics that matter, this one is at the top of many lists. Win rate measures the proportion of customers that a sales rep “wins.” In other words, this is when a lead or prospect makes the purchase and becomes a paying customer.

A high win rate usually indicates good sales performance, but win rate alone does not necessarily indicate a good product or high customer satisfaction. It’s always worth studying win rates in tandem with things like your customer satisfaction rate and customer retention rate.

Conversion rate

Conversion rate sounds a lot like win rate, and it is indeed similar, but conversion rate can refer to other stages of the sales journey too. A Stage 1 opportunity can “convert” to a Stage 2 opportunity—but it’s not a won deal yet.

Sales velocity

This measures how quickly each opportunity moves through the sales pipeline.

A high sales velocity will see customers go very quickly from first contact to conversion. Lower sales velocity could indicate a sticking point somewhere in your pipeline, or an aspect of the sales process that your agents are struggling with.

Sales cycle length

Sales cycle length measures the amount of time it takes for a lead to become a customer.

How does this differ from sales velocity? Well, the sales cycle length metric is more focused on the customer’s experience as a whole, while sales velocity focuses on the time it takes for an opportunity to get from one stage in the pipeline to the next.

The two are intrinsically linked, but one concentrates on individual deals while the other is more about sales cycles as a holistic system.

Customer acquisition cost (CAC)

CAC measures the total cost of bringing in a new customer, including everything from marketing to salesperson salaries and so on.

It’s an important metric, because if your CAC is more than your CLV (Customer Lifetime Value—we’ll go into this more in a moment) you will lose more than you gain.

For example, if it costs you £100 to bring in an average customer but the average customer only spends £75 with your brand, you’re actually losing money every time you win a customer—which means you need to rethink your customer acquisition strategy.

Sales qualified leads (SQL) Ratio

This metric measures the number of qualifiable leads against the number of leads that go nowhere.

A high SQL ratio shows that your teams are good at identifying worthwhile prospects, and aren’t wasting time chasing ice-cold leads that will never convert.

Lead-to-customer conversion rate

This measures the percentage of leads that convert into customers. It differs from the SQL ratio in that it focuses on the full journey of the customer, right through from lead to conversion.

It’s useful for telling you how well your lead nurturing and deal closing strategies are working, whereas the SQL ratio is better at pinpointing how good your team is at identifying and focusing on the best leads.

Sales forecast accuracy

Depending on your business, you’ll likely have to produce a sales forecast on a monthly or quarterly basis—it’s an educated prediction of how many sales the business can expect based on past data, the current state of the market, and more.

Sales forecast accuracy shows you how close your predictions are to reality. This metric helps you to refine your forecasting methods, which in turn helps with tasks like resource allocation and strategic planning.

Total revenue

Total revenue is pretty simple—it’s the amount of money generated from sales within a specific time period.

It’s a very useful metric, but isn’t as insightful as you might think when taken in isolation. To draw actionable insights about the overall success of a sales period, you need to compare your total revenue with other metrics, such as CAC and YOY (year-over-year) growth.

Average deal size

This measures the value of each deal, usually in immediate monetary terms. However, SaaS or other subscription-based businesses may use a very similar metric called average contract value (ACV) which measures the value of each subscription over time.

Tracking your average deal size or average contract value helps you to identify trends in buying behaviour and pivot your sales strategy accordingly.

Revenue by product or service

This metric breaks down your revenue according to the product or service that generated it. It’s a very useful way to see which offerings are making the most money for you, and which need to either be revamped or repurposed as loss leaders.

Market penetration

Market penetration measures how far your brand has reached within a particular market. It’s not always easy to measure, but indicators of market penetration include brand recognition and product purchase percentage compared to key competitors.

Percentage of revenue from new business

For subscription-based businesses, retained customers are likely to drive a large proportion of your revenue per year. These customers will need to be filtered out when you’re looking at sales performance from a net-new perspective.

While the kind of nurturing strategies required to maintain customer loyalty should definitely be measured and rewarded, it’s also useful to know how well you’re doing at bringing in new customers.

By measuring the percentage of revenue from new business, you can gain insight into how well your outreach sales teams are performing.

Year-over-year growth

YOY growth measures your growth rate within two comparable periods.

For example, you might measure the first quarter of one year against the first quarter of the year before. This helps to show you your rate of growth and to identify potential drivers of significant changes in your financial performance.

Sales efficiency metrics

Sales efficiency ratio

Sales efficiency is calculated by dividing sales revenue by the cost of making those sales. It’s similar to CAC, but with more of a focus on revenue and efficiency.

Ultimately, it helps you calculate ROI and work out where you can allocate support and resources for a more streamlined, efficient, and successful sales process.

Call-to-meeting ratio

This metric shows you how good your sales reps are at converting initial contact (like calls or emails) into scheduled sales meetings.

A high call-to-meeting ratio usually indicates that the agent is good at engaging leads. In larger sales orgs, you’ll often have a different set of sales reps responsible for booking meetings—usually SDRs or BDRs—while AEs close the deal. (This metric should always be looked at in conjunction with the number of sales calls a rep makes to better understand efficiency.

Opportunity-to-close ratio

This measures how many qualified opportunities a team or agent had, against the number of deals they managed to close. A high opportunity-to-close ratio indicates that your teams and agents are good at turning opportunities into closed deals, and helps you forecast more accurately as well.

Time spent selling

Actively selling is only a part of what a sales team does. Often, reps also spend time on administrative tasks like logging data and transcribing calls.

The time spent selling metric tells you where time is being wasted or spent on low-value tasks, and helps you find ways to optimise agents’ selling time.

Follow-up response time

It doesn’t take long for a sales pitch to drift out of a prospect’s mind. So, following up regularly is crucial to increasing conversions.

If you’re selling a product or service with a long sales cycle or that requires many follow-ups to close a deal, measuring follow-up response times is crucial for understanding whether your sales reps are checking in enough or letting deals slip through the cracks.

LTV:CAC ratio

The LTV:CAC ratio measures Customer Lifetime Value against Customer Acquisition Cost. It’s important because it helps businesses assess the efficiency and profitability of their customer acquisition efforts. A high LTV:CAC ratio indicates that customers generate significantly more revenue over their lifetime than the cost to acquire them, which indicates sustainable growth. Conversely, a low ratio suggests that acquisition costs may be too high or customer retention too low, which can potentially lead to financial strain later on.

Payback period

The Payback period refers to the amount of time it takes to earn back the cost of acquiring a customer.

For a subscription-based service, the payback period is likely to be longer, as revenue will come in on a monthly basis, and possibly be delayed due to free trial periods.

So, subscription-based services should take things like the LTV:CAC ratio into account as well when considering their payback period.

Customer relationship metrics

Customer satisfaction (CSAT)

Customer satisfaction is a tricky metric to track, as there are a lot of things customers could be “satisfied” or “unsatisfied” by. Typically, customer satisfaction is measured in relation to specific customer support interactions, but some sales teams might find it useful to measure CSAT as well.

For example, after a purchase or contract signing, you could send an automated survey to gauge the buying experience and ensure the sales process met customer expectations. Or, you might send a CSAT survey after a prospect’s free trial has ended to understand if the product met their needs and what factors influenced their decision to purchase (or not)..

Unfortunately, the results of CSAT surveys are often skewed, as only the most happy and most unhappy customers or prospects take the time to complete them.

Because of this, it’s useful, then, to have an Ai tool like Dialpad’s Ai CSAT, which can infer customer satisfaction from up to 100% of customer calls. This provides a much more holistic—and accurate—view of your overall customer satisfaction:

Customer retention rate

Measuring your customer retention rate is a good way to understand customer loyalty and whether your products or services are measuring up to your customers’ expectations.

Retention rate is usually measured by tracking the percentage of customers who continue to do business with a company over a specific period:

(Customers at the end of a time period - New customers acquired) / Customers at the start of the time period x 100. A loyalty programme can help you to improve your customer retention by incentivising customers to stay with loyalty cards and discounts.

Customer lifetime value (CLV)

This metric measures the dollar value each customer represents for your business over the course of their time as your customer.

For example, a customer who’s likely to buy from you again and again, to post about your products using your hashtags, and tell all their friends about how great you are will have a high CLV. One who buys once and then disappears will have low CLV.

If your CLV metrics are dropping, it could be an indicator that you need to work on your customer retention efforts.

Net promoter score (NPS)

NPS is a metric typically based on a single-question survey that asks customers how likely they are to recommend a brand, product, or service to their networks.

A high NPS tells you that your customers are having a good experience, are relatively loyal, and that you can rely on them to boost your brand reputation. A low NPS indicates that your customers are not likely to share positive word-of-mouth about your business, and that it would be wise to understand why your customers are so dissatisfied before your reputation starts to suffer.

Customer effort score (CES)

Customer effort score measures how easy your customers find it to use your product or service. Like the NPS, this is usually self-reported via a single-question survey.

For example, you might create an app pop-up that asks your customers to quickly rate how easy they find it to use your app on a scale of 1 to 10. Ideally, this pop-up would appear at an unobtrusive time (such as during loading screens or while the app updates). You can then use what you’ve learned to adjust your product for greater ease of use.

Sales activity metric

Number of calls made or emails sent

Calls and emails are often the first point of contact between your sales team and potential customers. The more calls and emails a rep or agent is making, the more conversions they’re likely to get—sales activity metrics often directly impact sales rep performance metrics.

Tools like Dialpad Sell help sales teams maximise their opportunities. For example, the voicemail drop feature. Sales reps can simply record a message and click a button to “drop” it into a call when they hit a prospect’s voicemail. Instead of spending minutes reciting the same thing every time, it takes just a second to drop the prerecorded message:

Percentage of time spent selling

We mentioned time spent selling as a sales metric earlier. That measure simply gives you raw figures in terms of how many hours a rep spends on direct sales. Percentage of time spent selling puts that into perspective and shows managers the proportion of time taken up by sales vs. non-sales activities.

If you find your agents’ percentage of time spent selling is very low, you may need to find ways of taking non-sales activities off their plates, perhaps by adopting an Ai solution that can automate the transcription of sales calls to cut time spent on note-taking and data entry:

Follow-ups sent

Following up is a crucial part of selling. Without a timely follow-up, all that groundwork laid in the initial call or email could be wasted.

A decent amount of your team’s sales activity should involve follow-ups—including sending follow-up proposals, reminders, and more. Tracking the number of follow-ups sent helps you to make sure that your teams are focusing on the right activities during their working day.

Sales demos held

Sales demos can make or break a deal, so it’s important to track how many demos your team is doing (and how many are successful). But scheduling, hosting, and then following up after a sales demo involves quite a bit of legwork. To help your reps be more efficient, consider equipping them with a solution that consolidates and automates these tasks.

Dialpad Sell, for example, integrates with Google Calendar and Microsoft 365 to automatically send an invite with a meeting link for the demo to prospects.

Sales reps can then host the demo with Dialpad’s secure video conferencing feature, which makes it quick and easy to set up and join meetings—prospects can join via a web browser without downloading any software.

SaaS-specific sales metrics

Monthly recurring revenue (MRR)

MRR tracks the revenue that you receive on a monthly basis from your subscriptions. It doesn’t count one-off payments—only (as the name suggests) payments that recur each month.

MRR is one of the most important sales metrics for SaaS companies, as it’s useful for assessing both the health of your business revenue and customer loyalty. A steady MRR number can help predict future revenue with more confidence and a higher degree of accuracy.

Annual recurring revenue (ARR)

Similar to MRR, ARR measures the revenue that you earn year-on-year. It’s useful for brands that use an annual rather than (or in addition to) a monthly subscription billing system.

Customer churn rate

Your churn rate is the rate at which customers stop doing business with you.

To calculate your churn rate, define a measurement period, note the number of customers you had at the start of that period, and the number you had at the end. Then, divide your starting number with the amount of customers you lost, and multiply by 100 to get your churn rate percentage.

A low churn rate indicates good customer retention (and it is possible to achieve negative churn). A higher churn rate means you may need to work on your customer nurturing tactics.

Free trial conversion rate

Many SaaS businesses offer initial free trials, or even freemium pricing tiers. A major aim for these businesses is to persuade triallers or freemium users to become paying customers. Your free trial conversion rate measures how successfully you are doing this.

Average revenue per user (ARPU)

High value customers are important to SaaS businesses, as they are likely to keep on renewing and upgrading their subscriptions.

Typically, ARPU is one of the core metrics that SaaS companies measure, with the goal of identifying and tracking high-value customers, and increasing the amount of revenue they bring in over time.

How to track sales metrics more effectively

So, now you hopefully have a better idea of which sales KPIs and metrics are important, and how they can help you. But how can you track this data effectively?

Here are a few tips for tracking sales metrics more easily:

Always align metrics with goals and objectives

The metrics we’ve covered in this article are just a small selection of all the KPIs a sales org can track. If you want to get deep into micro-metrics, you can, and there are plenty of tools out there to help you do so.

This does raise a bit of a problem: How can you make sure that the metrics you’re tracking are relevant for your business?

Without a measurement strategy, you could waste a huge amount of time and resources tracking and analysing metrics that don't impact the business in a meaningful way.

That’s why it’s important to think of metrics at the very start of your sales strategising process, when you’re setting down your goals and objectives.

The metrics you follow should be directly linked to those goals and objectives. This helps you to both narrow down your field of analysis and gain a clearer picture of how well you’re progressing towards your goals.

For example, if your goals for this quarter are to improve sales performance by increasing your conversion rate, you could focus on metrics like:

• Conversion rate

• Percentage of revenue from new business

• Lead-to-customer-conversion rate

If your goal is to increase customer loyalty, you could look at:

• Churn rate

• CSAT

• Customer retention rate

• NPS

Use the right tools

The right tools can make a massive difference both to how you track your sales metrics, and how you put what you’ve learned from them to use.

For example, sales automation tools can take care of a huge number of repetitive tasks including data gathering, lead scoring, and reporting.

This not only helps managers spend more time on actually interpreting the data and uncovering insights, it also removes a burden from sales reps and frees them up to concentrate on selling and closing deals.

Look for features and capabilities like:

• Automatic activity logging. Call logging and sales call reporting are crucial for capturing sales data, but it also takes a lot of selling time away from your reps.
  
  Tools like Dialpad Sell can automatically log and even transcribe calls and call activities, leaving your reps free to do what they do best: sell.

• Integrations with other tools your team already uses. Your sales platform, contact centre, and CRM should, ideally, sync seamlessly with one another. This enables the quick and easy transfer of data between platforms, and gives your reps access to crucial data exactly when they need it, without having to toggle back and forth between different applications.

• A user-friendly analytics dashboard. Look for a tool that not only presents key sales data in a clear and intuitive way, but also leverages Ai to provide conversational insights, trend analysis, and real-time recommendations.

• Sales Ai. Sales Ai has a number of functions, and its capabilities are increasing all the time. Dialpad Ai, for example, can help with everything from quality assurance to sales methodology adherence to real-time coaching.

Benchmark performance against industry standards

If you’re able to find data for your peers or competitors, it can be helpful to analyse your own metrics against those industry standards.

This comparison will also help you to identify areas which need improvement, and areas where you may have a competitive advantage. (The only thing to note is this isn’t always possible because it may be difficult to find comparable companies that are a similar size with similar products and services.)

Continually analyse and review metrics

Measuring and analysing your metrics shouldn’t be something you do every now and again. It should be something you do regularly.

Some metrics you obviously can’t measure in real-time. Annual revenue, for example, can only really be measured once a year. Others need day-to-day monitoring in order to get key insights.

For example, if your customer retention rate suddenly plummets and your churn rate hits the roof, that’s something that needs to be addressed immediately—but you would only be able to do that if you were regularly looking at your metrics.

Track the right sales metrics and help reps to close more deals

By identifying and tracking the right sales metrics for your business, you can arm yourself with crucial insights about everything from your prospects to individual team member performance.

With Ai sales tools, you can uncover even more insights from the cold outreach, discovery, and demo calls that your team is already having every day. See how to do this with solutions like Dialpad Sell!