{"id":8309,"date":"2020-02-07T22:35:13","date_gmt":"2020-02-07T22:35:13","guid":{"rendered":"http:\/\/somametrics.com\/clone\/?p=8309"},"modified":"2021-10-12T23:42:09","modified_gmt":"2021-10-12T23:42:09","slug":"sales-metrics-and-kpis","status":"publish","type":"post","link":"https:\/\/somametrics.com\/clone\/sales-metrics-and-kpis\/","title":{"rendered":"Sales Metrics and KPIs in B2B Sales"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"8309\" class=\"elementor elementor-8309\" data-elementor-settings=\"[]\">\n\t\t\t\t\t\t<div class=\"elementor-inner\">\n\t\t\t\t\t\t\t<div class=\"elementor-section-wrap\">\n\t\t\t\t\t\t\t<section class=\"elementor-element elementor-element-cb835b4 elementor-section-boxed elementor-section-height-default elementor-section-height-default elementor-section elementor-top-section\" data-id=\"cb835b4\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t\t\t<div class=\"elementor-row\">\n\t\t\t\t\t<div class=\"elementor-element elementor-element-c6fcde7 elementor-column elementor-col-100 elementor-top-column\" data-id=\"c6fcde7\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-column-wrap elementor-element-populated\">\n\t\t\t\t\t\t\t<div class=\"elementor-widget-wrap\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-ebe6d3c elementor-widget elementor-widget-text-editor\" data-id=\"ebe6d3c\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-text-editor elementor-clearfix\"><p><span style=\"font-weight: 400;\">Optimizing sales productivity requires a top-down approach that synthesizes business sales goals with an individual representative\u2019s daily performance. Sales metrics, specifically key performance indicators, provide visibility into the fundamental factors that ultimately drive sales initiatives and scalable growth.\u00a0<\/span><\/p><h2><span style=\"font-weight: 400;\">What are Metrics and KPIs?<\/span><\/h2><p><span style=\"font-weight: 400;\">Sales metrics and key performance indicators (KPIs) are oftentimes used interchangeably, but are more accurately described as two sides of the same coin.\u00a0<\/span><\/p><p><b>Sales metrics<\/b><span style=\"font-weight: 400;\"> are data points that represent performance, whether it be for an individual, team, or company. They are broadly used to track progress towards goals, predict future growth, and identify any complications that may arise with sales plans and targets midway through a sales cycle.<\/span><span style=\"font-weight: 400;\">1<\/span><span style=\"font-weight: 400;\"> Many companies set goals based on <\/span><b>lagging indicators<\/b><span style=\"font-weight: 400;\">, a type of metric that reports on previous time periods such as total sales or revenue per time period. <\/span><b>Leading indicators<\/b><span style=\"font-weight: 400;\">\u2014number of follow up calls, number of calls to prospects\u2014are metrics that can have a real-time impact on course corrections.<\/span><span style=\"font-weight: 400;\">4<\/span><\/p><p><b>KPIs<\/b><span style=\"font-weight: 400;\">, however, are the key sales metrics specifically identified to best track the performance of a business or individuals with their respective objectives. Understanding these key indicators can turn numbers like first response time into actionable growth plans. Because there are many common metrics across managing sales teams, it is important to identify KPIs that are relevant within the specific industries and company departments.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">Sales metrics and KPIs are the backbone of an increasingly data-driven sales industry. On their own, KPIs are just numbers on a dashboard; they become meaningful only when analyzed for underlying trends and themes that can contribute to making a sales team more efficient.<\/span><span style=\"font-weight: 400;\">2<\/span><span style=\"font-weight: 400;\"> By examining drivers for successful goal attainment, B2B businesses can use strategic insights from KPIs as a means to align key targets with company growth.<\/span><span style=\"font-weight: 400;\">3<\/span><span style=\"font-weight: 400;\"> Without metrics, nothing else matters.<\/span><\/p><h2><span style=\"font-weight: 400;\">Best Practices in Managing Sales Performance<\/span><\/h2><p><span style=\"font-weight: 400;\">Monitoring the right KPI metrics can be the difference between driving scalable growth and fighting a flatlining revenue. A Salesforce study revealed that high-performing sales teams are 3.5 times more likely to use sales performance analytics than underperforming teams, which enable them to measure performance during a set time period against goals.<\/span><span style=\"font-weight: 400;\">4<\/span><span style=\"font-weight: 400;\"> Around 97% of B2B marketing decision makers also say growing revenue, a common KPI, is a top priority.<\/span><\/p><p><span style=\"font-weight: 400;\">Metrics are not intended to be the final outcome, but rather a measure of progress. Consequently, it is important to translate sales KPIs into initiatives that make sense to both the executive team and sales representatives themselves. By choosing a mix of lagging indicators and leading indicators, companies have access to data they can interpret in relevant contexts; action-oriented KPIs inspire action and can help uncover possible causes when goals are not met. Managers and executives can then compare dashboard analytics with previously established benchmarks in order to assess trends in sales activity and give the directions necessary to yield the best results.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">With many companies increasing their use of KPIs and sales metrics, only the smart companies will see their sales increase as a result. For example, the number of follow-up calls that directly result in sales is a clearly defined and measurable KPI, allowing sales managers to tweak this variable and measure the results.<\/span><span style=\"font-weight: 400;\">4<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">Clearly defining KPIs is an effective first step, but what is truly powerful is using these indicators as strategic levers towards a greater initiative of driving new sales growth. Only after establishing KPIs that monitor productivity can a business make strides towards their overall business goals.<\/span><\/p><p><img class=\"aligncenter wp-image-8378 size-full\" src=\"http:\/\/somametrics.com\/clone\/wp-content\/uploads\/2020\/02\/sales_graph_laptop.jpeg\" alt=\"\" width=\"991\" height=\"717\" srcset=\"https:\/\/somametrics.com\/clone\/wp-content\/uploads\/2020\/02\/sales_graph_laptop.jpeg 991w, https:\/\/somametrics.com\/clone\/wp-content\/uploads\/2020\/02\/sales_graph_laptop-300x217.jpeg 300w, https:\/\/somametrics.com\/clone\/wp-content\/uploads\/2020\/02\/sales_graph_laptop-768x556.jpeg 768w\" sizes=\"(max-width: 991px) 100vw, 991px\" \/><\/p><h2><span style=\"font-weight: 400;\">Sales Team KPIs<\/span><\/h2><h3><span style=\"font-weight: 400;\">General B2B Sales KPIs<\/span><\/h3><p><span style=\"font-weight: 400;\">At baseline, KPIs can connect how a B2B sales team directly relates to a company\u2019s overall performance, health, and growth potential. It is important for sales executives and managers to interpret and use KPI data about their teams continuously throughout the sales cycle.<\/span><\/p><ol><li style=\"font-weight: 400;\"><b>Marketing qualified leads (MQL) to sales qualified leads (SQL)<\/b><span style=\"font-weight: 400;\">, also known as lead to opportunity, is a KPI that requires synergy between marketing and sales departments. In the MQL stage, businesses have expressed interest in products or services through signing up for the email list, downloading website content, or other avenues. A company moves into the SQL stage after they have been vetted to speak with a salesperson and have potential to become a prospect client. The MQL to SQL conversion rate can determine if marketing efforts are leading to a high-quality pipeline, as well as provide visibility into the quality and volume of leads handed over to a sales team.<\/span><span style=\"font-weight: 400;\">6<\/span><\/li><\/ol><ol><li style=\"font-weight: 400;\"><b>Net new revenue attainment<\/b><span style=\"font-weight: 400;\">, the total additional revenue generated from acquiring new customers and investing in existing businesses, can reflect the overall contribution to a business\u2019s revenue growth. By comparing planned and actual revenue performance, sales leaders can then identify the changes needed on a representative level in order to increase organizational attainment percentage (percentage of the revenue plan that was achieved).<\/span><span style=\"font-weight: 400;\">3<\/span><\/li><\/ol><ol><li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The <\/span><b>Net Promoter Score (NPS)<\/b><span style=\"font-weight: 400;\"> is a growth-focused leading indicator that measures company health from customer loyalty and satisfaction. If revenue is dropping and\/or the number of leads decreases, the NPS can assist sales KPIs in understanding their customer base. Knowing if and why customers lack loyalty enables businesses to uncover what is turning away potential customers and improve the sales experience of existing clients.<\/span><span style=\"font-weight: 400;\">5<\/span><\/li><\/ol><ol><li style=\"font-weight: 400;\"><b>Sales cycle length<\/b><span style=\"font-weight: 400;\"> offers information about where the sales process is stalling, time-to-onboard, and churn rates. With data on the average time taken from first contact to closing the deal, managers can identify what sales cycle length produces the highest number of closed-won businesses and the success rate of those deals down the line to adjust accordingly. For example, if a representative is closing deals in record speed but frequently have dissatisfied customers who churn after a few months, a longer sales cycle length could result in a higher retention rate.<\/span><span style=\"font-weight: 400;\">7<\/span><\/li><\/ol><h3><span style=\"font-weight: 400;\">Prospecting<\/span><\/h3><p><span style=\"font-weight: 400;\">Lead generation and pipeline creation KPIs are useful metrics for sales prospecting as representatives make outbounding efforts in hopes of creating opportunities.<\/span><\/p><ol><li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The <\/span><b>number of accounts contacted<\/b><span style=\"font-weight: 400;\"> is a leading indicator of how many opportunities the sales team will move forward to account executives; this can include the total number of companies prospected, as there may be multiple points of contact, and total number of companies that have responded to outreach. A conversation between sales representatives and account executives should occur to establish the level of contact needed before the moving converting a prospect into a sales opportunity.<\/span><span style=\"font-weight: 400;\">3<\/span><\/li><\/ol><ol><li style=\"font-weight: 400;\"><b>Average lead response time<\/b><span style=\"font-weight: 400;\"> is how long it takes for a sales representative to respond to a contact made from a lead. A Harvard Business Review study \u201cThe Short Life of Online Sales Leads\u201d comments on the idea that time kills all deals, revealing that the average company responds to leads within 42 hours of an inquiry\u2014if at all.<\/span><span style=\"font-weight: 400;\">8<\/span><span style=\"font-weight: 400;\"> Every minute matters in sales. Ideally, representatives should follow up with leads quickly to increase the chance of it being high quality. To decrease lead response time, representatives can explore options in live chatbots and automated email workflows.<\/span><\/li><\/ol><ol><li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">An ideal sales process is defined by low <\/span><b>system touch, <\/b><span style=\"font-weight: 400;\">or low customer interactions that indicate salespeople are efficiently closing new leads. Salesforce estimates it takes six to eight touches to generate viable sales leads, while other sources report seven to thirteen.<\/span><span style=\"font-weight: 400;\">10<\/span><span style=\"font-weight: 400;\"> If an individual has missed their target quota and additionally has a high number of touchpoints per closed-lost deals (ex. 4 video meetings, 15 email correspondences, 8 phone calls), they may benefit from restrategizing their techniques which can refine the overall team\u2019s average sales cycle.<\/span><\/li><\/ol><ol><li style=\"font-weight: 400;\"><b>Opportunity creation by lead source<\/b><span style=\"font-weight: 400;\"> is a KPI that should be consistently monitored. For outbound SDRs, this metric is commonly the percentage or number of sales opportunities created through proactive outreach on different platforms. B2B sales have a low average conversion rate of only 10 to 15% of opportunities typically leading to sales. Tracking the common sources of sales opportunities gives representatives the data that shows what efforts are effective in driving sales opportunities.<\/span><\/li><\/ol><ol><li style=\"font-weight: 400;\"><b>Pipeline creation<\/b><span style=\"font-weight: 400;\"> is an important predictor of revenue generation, and should be monitored on a weekly, monthly, and quarterly basis; the more visibility into a sales pipeline, the more visibility into revenue. If the opportunity pipeline is decreasing in size, representatives have the information to identify where in the process prospects are leaving and improve those areas; insight may lead back to the quality of opportunity creation from certain lead sources.<\/span><span style=\"font-weight: 400;\">10<\/span><\/li><\/ol><h3><span style=\"font-weight: 400;\">Field Sales and Inside Sales<\/span><\/h3><p><span style=\"font-weight: 400;\">Metrics on new businesses and existing businesses are critical for field sales and inside sales representatives. These KPIs not only position efforts as contributing to larger team goals, but also stimulate healthy motivation to reach on-target earnings.<\/span><\/p><ol><li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Once sales development reps (SDRs) track where leads are coming from, a KPI on <\/span><b>estimated revenue by lead source<\/b><span style=\"font-weight: 400;\"> can measure what portion of a company\u2019s revenue derives from major sources. If a company has $40,000 revenue in sales with half from social media engagement, then social media outreach would account for 50% of total revenue. Comparing current metrics with historical data can both show profitability of each source and figure out where sales representatives should be dedicating efforts in order to meet revenue targets.<\/span><\/li><\/ol><ol><li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The <\/span><b>average revenue per account (ARPA)<\/b><span style=\"font-weight: 400;\"> is the average revenue per customer upon closing a deal. Tracking ARPA by business segment is useful for comparing average sales prices or transaction sizes within respective market averages. ARPAs can expose trends in account expansion and contraction and evaluating effective or changing pricing plans within monthly cohorts. This metric varies depending on product and pricing levels, so constant data collection from past quarters and years can serve as effective benchmarks and target predictions.<\/span><span style=\"font-weight: 400;\">11<\/span><\/li><\/ol><ol><li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">A <\/span><b>new business win rate<\/b><span style=\"font-weight: 400;\"> assesses how efficiently account executives are turning qualified leads into new customers and revenue. Important things to keep in mind when analyzing new business win rates are lead source and cohorts: inbound opportunities will inherently have a higher win rates than outbounding efforts, and win rates will fluctuate as companies in the pipeline mature at different stages. Ultimately, the goal of new business win rates is to establish reliable benchmarks to predict future targets. Representatives can improve win rate calculations by cross-referencing win rates of cohorts with past data or computing the metric on a rolling basis.<\/span><span style=\"font-weight: 400;\">3<\/span><\/li><\/ol><ol><li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Together, <\/span><b>gross customer churn rates<\/b><span style=\"font-weight: 400;\"> and churn dollars provide insight into customer behavior. Because it is anywhere between five and 25 times as expensive to acquire a new customer than to retain an existing one, customer retention and expansion are key for driving sustainable revenue growth. Recognizing patterns in large churn events or the occurrence of many smaller churns across an existing customer base indicate what products and services inspire customers to return and contribute to company revenue, which allows representatives to optimize that information.\u00a0<\/span><\/li><\/ol><ol><li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">SDRs can determine if certain verticals are responding well to products or service pitches by tracking <\/span><b>upsell and cross-sell numbers<\/b><span style=\"font-weight: 400;\">. Established credibility and knowledge of client preferences provide encouragement to expand customer accounts and decrease the likelihood that a company will churn. The more integrated a customer is, the more difficult it becomes for them to switch vendors.<\/span><span style=\"font-weight: 400;\">12<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/li><\/ol><ol><li style=\"font-weight: 400;\"><b>Percentage of time spent demoing<\/b><span style=\"font-weight: 400;\"> is a KPI that can provide insight into an SDR\u2019s productivity and help understand how long it takes to reach revenue targets. This metric tracks how much time is spent demonstrating products to potential customers. The faster an individual can hit sales targets, the faster a company can hit sales productivity.<\/span><span style=\"font-weight: 400;\">10<\/span><\/li><\/ol><p><img class=\"aligncenter wp-image-8388 size-full\" src=\"http:\/\/somametrics.com\/clone\/wp-content\/uploads\/2020\/02\/revenue.png\" alt=\"\" width=\"1366\" height=\"768\" srcset=\"https:\/\/somametrics.com\/clone\/wp-content\/uploads\/2020\/02\/revenue.png 1366w, https:\/\/somametrics.com\/clone\/wp-content\/uploads\/2020\/02\/revenue-300x169.png 300w, https:\/\/somametrics.com\/clone\/wp-content\/uploads\/2020\/02\/revenue-1024x576.png 1024w, https:\/\/somametrics.com\/clone\/wp-content\/uploads\/2020\/02\/revenue-768x432.png 768w\" sizes=\"(max-width: 1366px) 100vw, 1366px\" \/><\/p><h2><span style=\"font-weight: 400;\">Case Study: Intercom<\/span><\/h2><p><span style=\"font-weight: 400;\">Intercom is a business chatbot unicorn that provides a platform for businesses to communicate with customers. Since its founding in 2011, the company has used KPIs to drive business closer to the next level of sales growth.<\/span><\/p><p><span style=\"font-weight: 400;\">As Intercom\u2019s customer base moved upmarket in 2014, the company utilized KPIs as a way to monitor new outbound initiatives that would help reach global revenue targets. LB Harvey, Intercom\u2019s SVP of Sales &amp; Support, hired outbound sales representatives to sell to larger companies, working with the finance team to establish realistic metrics and timelines. This process of explicitly defining KPIs on win rate, new net revenue, and number of opportunities created allowed the department to plan for how they could achieve an ROI of 4X on each outbound SDR.<\/span><\/p><p><span style=\"font-weight: 400;\">Harvey also shared the importance of KPIs during product launches. When Intercom launched their new sales and marketing chatbot, setting a specific target for new net revenue gave sales managers the opportunity to come up with a clear amount of pipeline each representative needed to create. Tracking a dedicated KPI ensured that their \u201cinvestment in our product has a positive financial impact.\u201d<\/span><\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Optimizing sales productivity requires a top-down approach that synthesizes business sales goals with an individual representative\u2019s daily performance. Sales metrics, specifically key performance indicators, provide visibility into the fundamental factors that ultimately drive sales initiatives and scalable growth. What are Metrics and KPIs? Sales metrics and key performance indicators (KPIs) are oftentimes used interchangeably, but &#8230; <a title=\"Sales Metrics and KPIs in B2B Sales\" class=\"read-more\" href=\"https:\/\/somametrics.com\/clone\/sales-metrics-and-kpis\/\">Read more<\/a><\/p>\n","protected":false},"author":4,"featured_media":8316,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"generate_page_header":""},"categories":[901,1],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v17.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Sales Metrics and KPIs in B2B Sales - SOMAmetrics<\/title>\n<meta name=\"description\" content=\"Sales metrics, specifically KPIs, provide visibility into the fundamental factors that ultimately drive sales initiatives and scalable growth.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"http:\/\/somametrics.com\/clone\/sales-metrics-and-kpis\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Sales Metrics and KPIs in B2B Sales - 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