Sales metrics are crucial for gauging performance and ensuring consistent forecasting across your sales organization. They can tell you where efficiencies and successes are occurring or are lacking. With so much data available, thanks to widespread use of sales automation platforms, it’s easy to get overwhelmed.

As a sales leader, you’re likely using some type of sales metrics on a weekly, monthly, quarterly and/or annual basis. But are you focusing on the right ones? Some metrics are more useful than others, and many are just a waste of time. Some only focus on lagging activities from the sales team’s perspective, such as revenue or number of calls or proposals. Others are tracking leading indictors focusing from the buyer’s perspective. And, others are doing both.

Ditch the Lagging Sales Metrics

Sales metrics that focus on things like the number of meetings with a client, number of calls the rep placed, call-to-meeting ratios, and how many RFPs went out to prospects are not useful at all. These are “lagging indicators,” which analyze activities after they’ve already started trending.

A salesperson being measured this way is more likely to meet with a client without having performed discovery beforehand, or sent a proposal or gave a product demo way too early in the process. Lagging activities focus on the sales rep’s own point of view rather than the buyer’s, and actually encourages focus on the wrong activities.

Focus on the Buyer, Not the Seller

Metrics that are derived from the buyer’s perspective indicate whether or not everyone is heading in the right direction. Sales metrics should focus on buyer-focused activities. Here are some examples:

• Tracking engagement of the customer or prospect in the buying process; such as:
  • Are they actively participating in strategy discussions sharing business outcomes, priorities and timelines?
  • Are they taking the time to review and provide feedback on your proposal or presentation?
• Tracking the number of CXO relationships where relationships are defined as, for instance, twice a year strategic reviews

Measuring these activities translate into valuable sales metrics because they provide insight into where the prospect or customer is in their buying process by showing the engagement level of the buyer.

The Essentials Every Sales Leader Should Know

In addition to tracking leading indicators, sales leaders should also be employing a basic set of metrics to pinpoint potential problems that may be brewing before they get out of hand. The following sales metrics are the first step to uncovering potential issues your sales team may experiencing with qualification, dealing with objections, or engaging decision makers with the right messages, for example.

• Percentage of sales team hitting quota – Is more coaching or training needed? Is there a bigger problem at hand?
• Average deal size – Are we winning larger deals, or are they getting smaller?
• Conversion or win rate – Are our close rates improving over time?
• Revenue from new clients vs. upsells vs. renewals – Are we relying too much on existing client revenues, while competitors are acquiring new ones?
• ROI on sales costs (time and money) – Are costs justifying the results?
• Sales cycle leakage – At which sales stages are prospects dropping out most often?

Make Your Sales Metrics Your Own

Sales leaders cannot afford to rely only on their intuition to guide their decisions. Take a look at your sales process and determine the right metrics for your organization, and make sure your sales team knows exactly what they are.

Although each company will need to determine which sales metrics are crucial to their organization, those who focus on the buyer’s level of engagement will be able to forecast more consistently and accurately. They will also be able to gain clearer insights into how each sales rep is performing and what skills are required to improve effectiveness at every stage of the sales cycle.