Sales KPIs increase conversions, drive business growth, and support sustainability. Avoid vanity metrics and focus on these three critical KPIs.
The right sales KPIs will optimize win rates, boost sales, and increase market share. These metrics are critical to your business growth strategy and long-term sustainability. Just what are the "right" KPIs?
So-called vanity metrics like social media followers can distract some businesses, especially younger startups. Simply amassing followers doesn’t guarantee customers, however.
Unlike these vanity metrics, value-based sales KPIs give you usable information about your target audience – and what it takes to convert them to customers. Data-driven metrics reveal each sales action's outcomes, showing what steps are required to meet a set goal.
Notoriously pressed for time and money, startups must strategize and allocate resources for maximum traction.
- Data-driven KPIs can optimize sales, drive business growth, and support long-term sustainability.
- Critical KPIs for early-stage success include outreach attempts, conversations to conversions, and sales cycle length.
- KPI measurement and analysis is a constant process, and KPIs will evolve as businesses grow and their needs change. As your business matures, more granular KPIs will be needed.
The Most Critical KPIs for Sales
The “right” KPIs will vary among companies. For example, early-stage startups have different metrics needs than larger, more established enterprises. Here’s a list of KPIs that are the basis for sales efficiency and success, and should be part of every startup’s metrics. This list is by no means exhaustive, however.
Track how many people you engage with and how many touchpoints (for example: phone calls, LinkedIn messages, emails) are required to start a conversation. From this point, determine how many conversations it takes to get a definitive reaction: a "yes," "no," or "later."
Of course, the content of the conversation matters as well. You can then determine why a contact is or isn’t engaged or converting. This information allows you to tweak sales strategies for future success.
Conversations to Conversions
The goal of engaging a potential lead in conversation is to achieve a conversion. Track how many of those conversations accomplish this end goal. For example, you might have 20 engaged conversations that end up in 12 rejections, four possibilities for follow-up, and four closed deals. Are those results in alignment with your business goals? If not, it's time to reconsider sales strategies.
Again, the content of conversations is critical. This isn’t just a numbers game. Examine the reason for those 12 rejections. Possibilities range from timing issues to budget limitations or a competitive landscape.
Sales Cycle Length
Based on the two KPIs above, you can determine your sales cycle length – how long it takes from the first point of contact to a final decision. The shorter the time to revenue, the more productive the business.
Once you know how many touchpoints it takes to reach your target audience in a set period, you can measure the output of the time your sales team is putting in – and take steps to maximize efficiency. For startups with limited resources, this is invaluable. You can determine what resources you need – from sales materials to people – to take the right actions to achieve your end goal.
KPI Measurement Is a Perpetual Process
A comprehensive CRM tool can help track, organize, and analyze KPIs. For example, you can see how many contacts engage across different channels (e.g., emails versus phone calls) and determine which stage of the conversation they are in to assess potential conversion prospects.
These metrics can change by the minute. This is why KPI capturing should be continual. Perpetual monitoring allows for proactive rather than reactive sales.
For analytics purposes, metrics can be categorized timewise (weekly, monthly, quarterly). This allows you to identify trends. For example, if your sales spike in the third quarter, you want to know why. You can then align your marketing and sales teams to leverage this information to your advantage.
Expect Sales KPIs to Evolve with Your Business
KPIs should never be stagnant. Your sales metrics will evolve as your business grows. KPIs will likely become more granular as your operations mature. However, at all stages of business development, you should have sufficient value-based KPIs to determine if your sales model is viable.
It's never too late to implement or change KPIs if you feel they aren't working for you. The bottom line is you need to implement them, or you risk scaling up at the wrong time (or not at all). This is especially critical when you consider that 70% of startups fail due to premature scaling.