The biggest indicator of sales team success is obvious: revenue. But, if that’s all you’re measuring, by the time you’re seeing data it’s too late to change the results.
So while revenue is the ultimate KPI, in order to most effectively measure sales team performance, you need to also monitor leading indicators down the funnel in order to have visibility into how you’re tracking toward your revenue goal and provide your team the opportunity to adjust their efforts accordingly.
Sales Team Performance Metrics
Your sales reps and your management team both need to have a shared understanding of what metrics need to be reached throughout the funnel in order to hit that ultimate revenue goal.
You can set these goals by using past sales performance data and working backward up the funnel from your revenue goal:
- Based on your win rate and average deal size, how many opportunities need to be opened?
- How many discovery calls do you need to book in order to open that many opportunities?
- How much outreach do you need to conduct in order to book that many discovery calls?
Outside of the funnel itself, to gain a holistic understanding of your revenue performance you should also be looking at:
- Win rate: In terms of number of deals and the size of those deals, are you on track to hit your revenue goal?
- Pipeline creation: Are you creating sufficient opportunities up the funnel to achieve your revenue goals?
- Average deal value: Will the size of your deals require you to close more or less opportunities than you have in your pipeline?
- Average deal cycle: Is there an opportunity to improve your performance by increasing deal velocity?
- CAC: Is the amount of time and resources you’re investing into each deal worth the results you’re achieving?
- Forecasting Consistency: How reliable are pipeline projections? How consistent are reps at closing deals within the timeframe they’ve established for themselves?
On the tactical side, you should also be measuring indicators of activity level:
- Speed to lead: How quickly are your sales reps following up with leads when they come in?
- Outreach attempts per contact: Is there a sufficient amount of nurture being done?
- Connect ratio: How many outreach attempts is it taking to get a prospect to respond? How effective is your messaging?
Another commonly used activity performance metric is the overall quantity of outreach. While this can be good to look at if there’s severe underperformance, in regular reporting I think it’s more important to focus on the quality of outreach, which you can see through that connect ratio.
While as the manager you may be reviewing performance metrics more frequently, sales reps also need to have access to that data in order to improve their own performance. So, you should leverage dashboards to help your team understand how their efforts are tracking toward their goals.
To gain the most value from those dashboards, they should be as easily accessible as possible. Ideally, they’d live in the same tool where you’re managing your sales activities so reps wouldn’t need to switch platforms to see that information.
Measuring sales team performance is essential to ensuring your team is working in the same trajectory as your company’s goals. If you don’t measure your sales team’s performance in terms of both leading indicators and revenue quota attainment, you won’t be able to clearly forecast how your team is contributing to broader company goals.
The smaller performance metrics around activities and funnel progression are what enable you to predict your revenue, and those predictions are essential for informing business decisions. Do you need to hire more people to help with customer onboarding and customer service due to the number of deals in flight that are likely to close? Do you need to hire more sales reps because you’re receiving more leads than your team can conduct quality outreach with?
These smaller performance metrics also can indicate where your team needs to improve. If your team reaches the goal for booking discovery calls but fails to conduct enough solution pitches, maybe unqualified prospects are being brought in for discovery calls. If your team is conducting the right quantity of outreach but it’s not resulting in meetings being booked, maybe your messaging isn’t touching on the right value proposition.
Measuring how your sales team is performing enables you to improve that performance.
Beth is a Senior Manager of Revenue Operations at New Breed and specializes in optimizing how processes and platforms support revenue growth.