The importance of KPIs in the world of sales
Facing dynamic and complex realities, the creation of summary KPIs on commercial performance becomes an essential step to guarantee a truly effective commercial action.
However, beware: KPIs are not just numbers to include in monthly or weekly sales reports. They are rather key indicators aimed at understanding the health and performance of the company. They provide, in other words, information allowing timely and reasoned changes necessary to achieve strategic objectives. Facing dynamic and complex realities, the creation of summary KPIs on commercial performance becomes an essential step to guarantee a truly effective commercial action.
However, beware: KPIs are not just numbers to include in monthly or weekly sales reports. They are rather key indicators aimed at understanding the health and performance of the company. They provide, in other words, information allowing timely and reasoned changes necessary to achieve strategic objectives. Facing dynamic and complex realities, the creation of summary KPIs on commercial performance becomes an essential step to guarantee a truly effective commercial action.
> Monitor the commercial health of the company
> Measure progress over time
> Make adjustments compared to undertaken actions
> Solve old problems and consider new opportunities
> Analyze and compare different models
Below, we have identified 10 of the most popular KPIs for evaluating sales performance.
The 10 Most Popular Sales KPIs
Variance to Sales Goals
Tracking goals, via sales reports, allows you to determine whether actual revenue is in line with forecasts.
This makes it easy to quickly identify any inconsistencies or worrying trends, as well as regularly revise targets if necessary.
This index also allows you to analyze the performance of the sales team and identify individual salespeople who may need support.
This makes it easy to quickly identify any inconsistencies or worrying trends, as well as regularly revise targets if necessary.
This index also allows you to analyze the performance of the sales team and identify individual salespeople who may need support.
Here are some additional details about each KPI:
Tracking the absolute number of sales opportunities is a key element of effective sales department management.
While marketing teams focus on leads that are not yet qualified, the focus of the sales area is on opportunities resulting from already “hot” leads.
While marketing teams focus on leads that are not yet qualified, the focus of the sales area is on opportunities resulting from already “hot” leads.
Score for each sales opportunity
Another useful KPI is to adopt a scoring model to assess the likelihood of success of each sales opportunity.
This involves assigning a normalized number to each sales opportunity, using, for example, a scale of 1 to 5.
This allows individual cases to be prioritized in order to make the best use of sales resources, both human and budgetary.
This involves assigning a normalized number to each sales opportunity, using, for example, a scale of 1 to 5.
This allows individual cases to be prioritized in order to make the best use of sales resources, both human and budgetary.
Lead conversion rate
The lead conversion rate measures the ability to transform subjects interested in the purchase into real customers.
It is therefore strategic to establish a baseline to understand how many leads need to be converted into customers and thus keep the sales team at full capacity.
It is therefore strategic to establish a baseline to understand how many leads need to be converted into customers and thus keep the sales team at full capacity.
Average cost per lead
This is a KPI adopted to highlight the cost to the company of generating a single lead.
An extremely precise average cost takes into account all expenses related to the Marketing and Sales departments (including the salaries of the teams involved).
An extremely precise average cost takes into account all expenses related to the Marketing and Sales departments (including the salaries of the teams involved).
Sales revenue per salesperson
This is a KPI adopted to highlight the cost to the company of generating a single lead.
An extremely precise average cost takes into account all expenses related to the Marketing and Sales departments (including the salaries of the teams involved).
An extremely precise average cost takes into account all expenses related to the Marketing and Sales departments (including the salaries of the teams involved).
Opportunity-to-win ratio
This is a measure of the effectiveness of the sales team and individual salespeople against the actual closing of deals.
While tracking lead opportunities gives an idea of how initial contacts turn into negotiations, this sales performance KPI measures how approaches are converted into contracts, highlighting weaknesses and areas for improvement.
Some salespeople, in fact, are good at maintaining relationships with prospects, but they may show weaknesses in closing deals.
While tracking lead opportunities gives an idea of how initial contacts turn into negotiations, this sales performance KPI measures how approaches are converted into contracts, highlighting weaknesses and areas for improvement.
Some salespeople, in fact, are good at maintaining relationships with prospects, but they may show weaknesses in closing deals.
Churn rate and retention rate.
These KPIs refer to the percentage of customers (and revenue) lost or retained over a given period.
Precisely controlling these values allows for more effective feedback on the company’s and brand’s revenues more generally.
Precisely controlling these values allows for more effective feedback on the company’s and brand’s revenues more generally.
Average profit margin
The average profit margin allows managers to assess the profitability of the entire product/service range offered, while giving appropriate importance to the search for optimal margins in each commercial transaction.
Relative product sales
A KPI inherent to business performance that allows for a comparative evaluation of the sale of each item relative to the others.
This KPI becomes particularly important when evaluating the effectiveness of product-specific campaigns.
This KPI becomes particularly important when evaluating the effectiveness of product-specific campaigns.
Conclusion
As we have seen, each KPI focuses on key variables in the broader process of sales performance management.
Although each entity may have more specific performance indicators, those listed are undoubtedly a good comparison for all companies adopting data-driven sales management approaches.
Although each entity may have more specific performance indicators, those listed are undoubtedly a good comparison for all companies adopting data-driven sales management approaches.
