Sales metrics explained

What are sales metrics and why are they important?

Sales metrics are quantitative measures used to track and evaluate your sales performance. They provide valuable insights into the effectiveness of your sales strategies, the efficiency of sales teams, and the overall health of the sales pipeline. Understanding and analyzing these metrics is helpful as they provide actionable data to optimize your sales processes, identify areas for improvement, allocate resources effectively, and ultimately drive revenue growth.

KPIs vs sales metrics

Key performance indicators (KPIs) are specific, measurable indicators that reflect the performance of your business in achieving its strategic objectives. Examples of sales KPIs might include revenue growth rate, customer retention rate, market share, or customer lifetime value. 

Sales metrics focus on the day-to-day operations and activities within the sales function of your business. They provide detailed insights into areas like lead generation, pipeline management, sales conversions, sales cycle length, customer acquisition costs, and average deal size. 

How to choose the right sales metrics

Sales metrics can play varied roles and require adjustments to address specific challenges. Tailoring these metrics allows businesses to focus on what drives success in their unique market.

SMB

For small and medium-sized businesses (SMBs), sales metrics reflect how efficiently resources are allocated and the depth of customer engagement. Key metrics for SMBs might include customer acquisition cost (CAC), lifetime value (LTV) to CAC ratio, and churn rate. These metrics help SMBs optimize their limited resources and focus on long-term customer retention.

Enterprise

In enterprise sales, the focus shifts towards large-scale management and complex sales cycles. Metrics such as lead response time, opportunity win rate, and account penetration are important. Enterprises benefit from tracking these to ensure their teams effectively navigate the decision-making processes.

B2B vs B2C

The distinction between B2B (business-to-business) and B2C (business-to-consumer) metrics reflects different sales dynamics and customer behaviors. Due to the complexity and higher value of transactions, B2B metrics often emphasize lead quality, pipeline volume, and sales cycle length. In contrast, B2C metrics might focus more on transaction volume, customer acquisition costs, and immediate conversion rates.

Important sales metrics for your business

Sales performance metrics

Average sales cycle

The average sales cycle measures the time from initial contact to deal closure, including lead generation, qualification, nurturing, presentations, negotiations, and closure. Analyzing this cycle offers valuable insights into sales process efficiency and can guide you in optimizing strategies, setting realistic timelines, and driving faster revenue generation.

Calculation: 

Step 1: Calculate the amount of time from first contact to closing the deal for all sales in the set period.

Step 2: Add all those numbers to get the total number of days for all sales combined.

Step 3: (total number of days for all sales combined / total number of deals) = number of days for average sales cycle.

Average deal size

Average deal size is the mean monetary value of sales transactions or deals closed by your company over a specific period, such as a month, quarter, or year, indicating the typical value of sales your business generates.

Calculation: Total revenue generated / total number of closed won deals = Average deal size

Lead to opportunity conversion rate

The lead to opportunity conversion rate measures the percentage of leads progressing into qualified sales opportunities within a timeframe, indicating sales team effectiveness. This metric is calculated by dividing the number of converted opportunities by the total number of leads generated, then multiplying by 100 to express it as a percentage. 

Calculation: (Number of leads converted into opportunities / total number of leads received) X 100 = lead to opportunity conversion rate (expressed as a percentage)

Sales per rep

Sales per rep refers to the average revenue each sales representative generates within a specific period, indicating individual productivity and contribution to overall sales performance. Implementing a sales spiff can further motivate reps and boost their performance.

Calculation: Add the number of sales or sales revenue for each rep for a set period.

Sales by region

Sales by region refers to the distribution and analysis of sales revenue generated from different geographical areas or territories, providing insights into regional performance, market trends, and opportunities for growth or optimization. 

Calculation: Track your sales by regions you’ve identified.

Sales productivity metrics

Time to first action

“Time to first action” refers to the time it takes for a sales representative to perform the first action (call, email, etc.) after the lead is identified. It reflects the speed and efficiency of initial engagement efforts. 

Calculation: (Sum the time values to the first action for each user) / Total number of interactions = Average time

Sales activity metrics

Sales activity metrics are quantitative measures used to track and evaluate the various actions and interactions performed by sales teams and individual sales representatives throughout the sales process, providing insights into productivity, effectiveness, and engagement levels.

Lead response time

Lead response time refers to the time it takes for your sales representative or team to respond to a lead or prospect after the initial contact or inquiry, reflecting the speed and effectiveness of the sales team's follow-up process.

Number of calls made

The number of calls made represents the total volume of outbound or inbound phone calls initiated or received by your sales representative or team within a specified timeframe, indicating their level of proactive communication and engagement with prospects or clients.

Number of emails sent

The number of emails sent quantifies the total volume of outbound email messages sent by your sales representative or team within a specific period, reflecting their level of communication and outreach efforts to engage with prospects or clients.

Calculation: Total up the number of emails sent during a set time

Quota attained

Quota attained refers to the achievement or fulfillment of a predetermined sales target or quota by your sales representative or team within a specified period, reflecting their success in meeting or exceeding performance expectations.

Win rate

Win rate is the percentage of deals or opportunities won out of the total number of deals pursued or opportunities presented, indicating the success rate of your sales efforts in closing deals and converting leads into customers.

Sales pipeline metrics

Total open opportunities and total closed opportunities

Total open opportunities refer to the number of potential deals or sales opportunities currently active and in progress within your sales pipeline. Total closed opportunities refer to the number of deals or sales opportunities successfully closed or won within a specific period. 

Total opportunity value

Total opportunity value refers to the cumulative monetary worth of all active sales opportunities within your sales pipeline or period, providing an estimate of the potential revenue that could be generated if all opportunities are successfully closed or won.

Ratio of leads to marketing qualified leads (MQL)

The ratio of leads to marketing qualified leads (MQL) quantifies the proportion of total leads generated compared to the subset of leads that have been qualified by marketing based on specific criteria, reflecting the effectiveness of lead qualification efforts in identifying potential sales opportunities.

Sales pipeline leakage

Sales pipeline leakage refers to the loss or reduction of potential revenue opportunities at various stages of your sales pipeline due to inefficiencies, missed follow-ups, or stalled deals, highlighting areas where the sales process may need improvement to minimize revenue loss.

Sales funnel metrics

Lead velocity rate

This metric measures the rate at which new leads are being generated over a specific period. Typically, it’s used to compare the current period’s lead generation to the previous period.

Lead Velocity Rate helps assess the scalability and growth of your lead generation efforts and indicates sales revenue. A positive rate indicates you are consistently increasing your pool of prospects.

Calculation: ((Number qualified leads in the current month - Number of qualified leads in last month) / Number qualified leads in last month) * 100 = Lead Velocity Rate (expressed as a percentage)

Opportunity count across stages

This metric tracks the number of sales opportunities in each stage of your sales pipeline.

Opportunity Count Across Stages provides visibility into opportunities within your sales process, like identifying bottlenecks or areas where opportunities tend to stall.

Calculation: Count the number of opportunities in each stage of your sales pipeline.

Time spent on each stage

This metric measures the average amount of time that sales opportunities remain in each stage of the sales pipeline.

It can provide insights into the efficiency of your sales process and identify stages where there may be problems, like when opportunities may be slowed down or taking too long to advance.

Calculation: You can calculate the average time opportunities spent in each stage by analyzing the historical data in your CRM or sales tracking system. If using a spreadsheet, you can calculate the average amount of time sales opportunities spent in each stage across all opportunities in the set period. Then, compare the averages calculated to see where opportunities are spending more or less time. 

Sales velocity

This metric quantifies how fast a prospect moves through the sales pipeline.

Sales Velocity provides a full picture of your customer journey and can be helpful for sales forecasting. It can also provide insights into what’s working and where there may be problems, helping you identify areas for improvement and growth.

Calculation: (Number of opportunities X Deal value X Win Rate) / Sales Cycle Length = Sales Velocity

Inside sales metrics

Lead conversion rate

This metric assesses the percentage of leads that successfully convert into paying customers.

Lead Conversion Rate helps you assess the effectiveness of your lead nurturing and conversion strategies. It provides the percentage of leads that took the action you wanted them to take, such as buying your product or signing up for a service.

Calculation: (Number of leads converted to customers / Total number of leads generated) X 100 = Lead Conversion Rate (expressed as a percentage)

Calls/emails per day

This metric tracks the number of calls and/or emails a rep or team makes in a day.

Monitoring this metric helps you assess the sales team’s or specific rep’s activity and outreach efforts. These can be essential for lead engagement and deal closure.

Calculation: Count the number of calls and emails made in a day

Average call duration

This metric assesses the average length of sales calls your sales team or specific rep makes.

This average can help you judge the effectiveness and quality of sales conversations. For instance, longer durations may suggest more engaging and productive interactions.

Calculation: (Sum the total call duration for a set period) / total number of calls

Number of follow-ups per lead

This is the total number of follow-ups made for a particular lead. This can include all forms of follow-ups, such as calls, emails, or social media reachouts.

Most leads require more than one interaction before converting into a sale. 60% of customers say no four times before saying yes — highlighting the importance of following up with leads. But, you also don’t want to follow up so often that you annoy the prospect. So calculating this number can help ensure your sales team is following up appropriately.

Calculation: Add the number of follow-ups made for each lead to get the total number

Pipeline value

This metric provides the total estimated value of all sales opportunities in your pipeline.

The Pipeline Value is a snapshot of the potential revenue you can generate if all opportunities are successfully closed. It can help with revenue forecasting and resource allocation.

Calculation: Sum your estimated values of all opportunities in your pipeline

Customer acquisition cost (CAC)

CAC represents the cost incurred to acquire a new customer, including marketing and sales expenses.

This metric is essential for evaluating and monitoring the efficiency of your customer acquisition strategy. It can help you optimize spending and improve ROI.

Calculation: Sum up all the costs related to acquiring customers and divide it by the number of new customers acquired during that period

Outbound sales metrics

Email metrics

Email response rate

This measures the percentage of sent emails that receive a response, including a reply, follow-up action, or engagement from the recipient.

Email Response Rate helps you assess the effectiveness of your email outreach campaigns. Higher response rates suggest more engagement and a more successful campaign.

Calculation: (Number of responses received) / (Total number of emails sent) X 100 = Email response rate (expressed as a percentage)

Email open rate

This measures the percentage of sent emails that are opened by the receivers.

Email Open Rate helps monitor email engagement at the initial stage and helps evaluate the performance of your emails. A high open rate suggests your email subject lines and sender name effectively grab attention.

Calculation: (Number of opened emails) / (Total number of emails delivered) X 100 = Email Open Rate (expressed as a percentage)

Click-through rate (CTR)

CTR assesses the percentage of people who clicked on a link or call-to-action in an email or a webpage.

This metric helps assess the effectiveness of your emails or content strategies. Specifically, it’s looking at your success at getting readers to take the desired action.

Calculation: (Number of clicks) / (Number of delivered emails or impressions) X 100 = CTR (expressed as a percentage)

Conversion rate

This metric assesses the percentage of users who completed a desired action (i.e., a conversion), such as filling out a form or clicking a link in an email.

Conversion Rate can reveal the effectiveness of a marketing or sales strategy, such as an ad, an email, or a webpage. It can also help provide insights into business objectives and revenue.

Calculation: (Number of users who did the desired action / Total number of visitors or interactions) X 100 = Conversion Rate (expressed as a percentage)

Unsubscribe rate

This metric indicates the percentage of people who opt-out or unsubscribe from your emails.

Your Unsubscribe Rate can help evaluate the health of your email list and whether you have subscribers who are engaged and interested in your emails.

Calculation: (Number of users unsubscribed / Number of emails delivered) X 100 = Unsubscribe Rate

Forward rate

This metric assesses the percentage of subscribers who forward your email to others.

A high forward rate indicates that your email content is valuable.

Additionally, when subscribers share your content, it can potentially help you reach new prospects.

Calculation: (Number of forwarded emails / Number of delivered emails) X 100 = Forward Rate (expressed as a percentage)

Engagement over time

This metric measures the changes in email engagement over a specific period, such as your open rates, click-through rates, and response rates. This is essential to identify trends and optimize your email campaigns or content strategy.

Phone metrics

Call response rate

This measures the percentage of calls that result in a response.

A high call response rate suggests your phone outreach efforts are working, with reps being able to initiate conversations with prospects and get the person to take action.

Calculation: (Number of calls resulting in a response / Total number of calls made) X 100 = Call Response Rate (expressed as a percentage)

Number of calls to close

This metric measures the average number of phone calls needed to close a deal successfully.

The number of Calls to Close can give you insights into the efficiency of your sales outreach and help improve call strategies.

Calculation: Number of deals closed / Total number of calls made = Number of Calls to Close

Call conversion rate

This metric measures the percentage of phone calls that result in a successful conversion, like a sale or an appointment.

Call Conversion Rate provides insights into the effectiveness of sales calls in achieving your desired outcomes.

Calculation: (Number of successful conversions from calls / Total number of calls made) X 100 = Call Conversion Rate (expressed as a percentage)

Voicemail response rate

This metric measures the percentage of voicemails left that result in a follow-up or response.

This rate gives insights into how effective your voicemail messages are in getting people to follow up and engage with you. A low rate may suggest that you need to adjust the messages left or your voicemail strategy.

Calculation: (Number of responses from voicemails / Total number of voicemails left) X 100 = Voicemail Response Rate (expressed as a percentage)

Number of decision-maker contacts

This tracks the number of contacts made with people who have the authority to decide the purchasing process.

This information can provide insights into how many contacts it takes when talking to decision-makers who can approve buying decisions. This also can inform your sales process.

Calculation: Total your number of contacts made with the decision-makers

Field sales metrics

Number of in-person visits

This metric assesses the amount of face-to-face meetings or visits your team made with potential or existing clients.

This metric can provide insights and benchmarks on the level and effectiveness of your in-person sales efforts. You can use this to help guide decisions on in-person sales strategies.

Calculation: Total up the number of in-person visits made

Territory coverage

This performance indicator assesses the number of customers the sales team visited in their sales districts during a set time.

This metric can provide insights into the effectiveness of how well a team or rep is covering a certain geographic territory. It can also help you make decisions on whether additional reps are needed in an area or how well an area is being covered so you have balanced sales districts.

Calculation: (Number of customers visited / Total number of customers in that area) X 100 = Territory Coverage (expressed as a percentage)

Travel costs

This provides you with information on the expenses your sales team has while visiting clients or leads in person.

Tracking travel costs can help you manage and optimize expenses so your sales team stays within the budget.

Calculation: Total all travel-related expenses

Revenue per visit

This metric measures the average amount of money generated from each in-person visit with a client or prospect.

It can help you evaluate the effectiveness of in-person sales, including your return on investment.

Calculation: Total revenue from in-person visits / Number of visits = Revenue Per Visit

Conversion rate

This assesses the number of in-person visits that lead to the desired outcome, such as signing up for a service or buying a product.

This measure can help you see how well your in-person visits lead to your desired actions. For instance, a low conversion rate may suggest adjusting something in your sales process or the messaging and focus of your in-person visits.

Calculation: (Number of in-person visits that led to the desired action / Total number of in-person visits) X 100 = Conversion Rate (expressed as a percentage)

Time spent per visit

This measures the duration of in-person meetings with prospects or clients.

This information can provide insights into how long sales reps may need to reserve for in-person visits. It also can help you assess the effectiveness of visits.

Calculation: Total time spent / Number of visits = Time Spent Per Visit

SaaS sales metrics

SaaS sales metrics are quantitative measures used to evaluate the performance and success of software-as-a-service (SaaS) businesses.

Annual recurring revenue (ARR)

Annual recurring revenue (ARR) calculates the total annualized revenue generated from subscription-based contracts or recurring billing arrangements, providing a measure of the predictable and sustainable revenue stream a SaaS business generates over one year.

Monthly recurring revenue (MRR)

Monthly recurring revenue (MRR) quantifies the total revenue generated from subscription-based contracts or recurring billing arrangements on a monthly basis, providing a snapshot of the predictable and recurring revenue stream generated by a SaaS business each month.

Average revenue per user (ARPU)

Average revenue per user (ARPU) calculates the average monthly or annual revenue generated per individual customer or user, providing insights into the value derived from each customer relationship and helping SaaS businesses assess pricing strategies and customer segmentation.

Customer acquisition cost (CAC)

Customer acquisition cost (CAC) quantifies the total cost incurred by a company to acquire a new customer, including expenses related to sales and marketing activities, providing insights into the efficiency and profitability of acquiring customers in relation to the revenue they generate.

Tools and technologies for tracking sales metrics

Various tools and technologies, such as customer relationship management (CRM) systems, sales analytics platforms, and business intelligence software, can help track and analyze sales data and metrics effectively, providing real-time insights, data visualization, and reporting capabilities to support informed decision-making and optimize sales performance.

Track sales metrics using Freshsales CRM

Freshsales is a comprehensive CRM solution that offers robust features to help your business track and analyze sales metrics effectively. With Freshsales, your sales teams can easily monitor key metrics such as lead response time, conversion rates, sales cycle length, deal velocity, and more. The platform provides customizable dashboards and reports that offer real-time insights into sales performance, allowing your teams to identify trends, spot opportunities, and make data-driven decisions.

Freshsales enables you to track leads and opportunities through various stages of the sales pipeline, capturing important details about interactions, activities, and outcomes. This visibility helps your teams prioritize leads, focus on high-potential opportunities, and streamline their sales processes.

Common mistakes with sales metrics

Sales metrics and KPIs are important tools that provide key insights you can use to grow and maintain your business effectively. But if not used effectively, they can lead to confusion or feeling overwhelmed.

Here are some common mistakes to avoid.

• Relying too much on one sales metric. As you’ve seen, there are various useful metrics, but depending too much on any one metric can prevent you from seeing the whole picture. 

• Not fully investigating what a metric result means. You can often gain more insights into your business by digging into why you got the result you received. Also, it helps to look at some metrics together. For instance, if your customer satisfaction goes up, that’s great. But looking closer, you may see that your total number of clients decreased as this rate increased. Perhaps this suggests that unhappy customers left or your lead generation is more selective than in the past. These are all questions to dig into as they may help you make better-informed lead-generation decisions. 

• Measuring too much. There are so many possible metrics to measure. But you can’t monitor everything — it can lead to confusion and overwhelm. Instead, identify a few key metrics that will help you address the current challenges and questions for your business stage. 

• Setting unrealistic expectations. Whether it’s goals for your sales team, business, or revenue, you want to set realistic goals that fit your business type and industry. So, while a quota attainment goal of 90% would be great, it’s improbable in most industries.

• Not analyzing your metrics consistently. The data can only help you if you analyze it and monitor it regularly. Setting aside enough time consistently to evaluate, review, and share the results is important.

Leading vs lagging sales metrics

Leading and lagging sales metrics are indicators that assist you in understanding your current business conditions and trends. Together, they can help determine if you’re on track to meet your goals and objectives.

Leading sales metrics are more forward-looking, providing information on where you’re heading or trending. Since this is looking more toward where you’re heading, you still have time to take action to influence or change the trend.

Lagging sales metrics focus on the results or what has already happened. These measures can show areas working as expected and highlight things that need to be changed. For instance, you can use this information to help develop or improve your sales plan.

Track sales metrics using Freshsales CRM

Tracking sales metrics is an essential way to determine if your business, sales team, and sales processes are working effectively. 

Identifying, prioritizing, and creating a plan to evaluate the results of key sales metrics consistently will help you better understand your business, make better-informed decisions, and accurately assess your progress. A CRM, like Freshsales, can make this process of monitoring and staying on top of all of your sales metrics easier. So you can not only stay on top of but also increase the chance of hitting all of your sales goals.