The Most Important Sales KPIs for 2022 (Plus Resources to Measure Them)

Jan 1, 2020

Successful businesses are always looking for ways to improve. However, you can’t improve what you can’t measure.

When you’re looking to maximize sales in any business, specific Key Performance Indicators (KPIs) for sales can serve as a guiding light. Sales KPIs can help everyone on your sales team understand where they are and where they need to be for success.

We have compiled the most essential and insightful sales metrics to help you fully understand exactly what is happening in your business. This will allow you to close more deals and generate more profit–without getting bogged down with the nitty-gritty.

Read on to discover what exactly essential sales KPIs are, how to measure, and put them to practical use. We also included some templates and examples of smart goals for sales goals to help get you started.

Here’s everything you need to know about sales KPIs.

Best Sales Goals = KPIs

A sales KPI, sometimes also referred to as a sales metric, is a specific performance measurement used to track the effectiveness of the current sales process and sales activities within that process. They gauge everything from how many qualified leads result in a deal closed to how much a new customer costs.

Sales KPIs are most often used by the sales managers within the sales teams. They are especially helpful for field sales managers who are not always in the field to keep tabs on precisely what is going on. Upper management also uses KPIs to help gauge the growth of the company overall. If more deals are closing and the average value of those deals is going up, so are profits. An increase in profits signals to leadership that they should continue to scale up.

KPIs are so important because they can give accurate overall visibility into your sales team’s performance and product performance against your sales and organizational goals. They also help track the relevancy of your sales activities. When you use these kinds of metrics to measure sales performance, you can optimize your sales funnel and sales cycle length.

Let’s take a look at some of the essentials and go over how to measure KPIs.

KPIs to measure closing

Lead Response Time

Imagine you’re finally ready to spring for a new sound system. You know what you want and have saved up the cash to pay for it. You drive on over to RadioShack (RIP) and tell a salesperson you’re interested in some speakers.

“Great,” they say, “Let me get back to you in 42 hours.”

Wait. What?

This is a horrible sales move, but businesses do it online all the time. In fact, according to James B. Oldroyd in The Short Life of Online Sales Leads, the average response time of companies is 42 hours, and that’s only considering companies that respond within the first month at all.

Why is this such a big deal? Chris Gutman from HubSpot puts it eloquently: “When you first showed up at RadioShack, you were as warm as a lead can be–you were ready to bite. Forty-two hours later, you’ve gone cold. Now, the sales rep will have to build you back up to the point where you’re ready to buy all over again.”

And that’s assuming you haven’t already gone to the Best Buy down the street.

According to InsideSales.com, 35-50% of sales go to the vendor that responds first. And minutes matter. The Lead Response Management Study found that leads who are contacted within just five minutes are 21 times more likely to bite than those reached in 30 minutes.

The lead KPI to look at and measure is your Lead Response Time. Speeding up your Lead Response Time is essential to maximizing your company’s conversions. It is an easy way to land more sales without buying more tools, changing tactics, or significantly changing your strategy.

It’s vital to your sales to know where your LRT is and dial it up.

How to Measure LRT

No formula is required here. All you need to do is compare the time a lead contacted your business, and when they received attention from one of your reps.

To discover what speeding up your Lead Response Time could do for your business, consider keeping a log of how long it took for your reps to respond to each lead and the outcome of the interaction. Studies show there will be a correlation between Lead Response Time and another critical KPI, your Opportunity Win Rate.

Opportunity Win Rate (Sales Closing Ratio)

If you’re not successfully closing sales and winning opportunities, then all these other statistics don’t matter–and probably can’t even be calculated. And if you have studied statistics, you know that the more data points you have, the better.

Opportunity Win Rate is one of the most basic sales KPI. As Gary Smith points out, it can be interpreted in one of two (equally valuable) ways.

Source: Gary Smith Partnership

Count Percentage

The blue columns in the graph above represent the percentage of leads that were converted into customers in a month (also the percentage of deals closed or conversion rate).

This can get complicated if you have a long sales cycle. For example, if you begin communicating with a customer in March but don’t close the deal until May, it can be unclear which month should “get” that deal.

To simplify matters, Gary Smith recommends logging deals the month they close–win or lose–regardless of when you got the lead.

Value Percentage

A low count percentage may not be a bad thing if the deals won are of high value. The green columns in the graph above represent the calculation of profit earned vs. profit potential.

Just like count percentage, it simplifies matters to log deals in the month they are closed.

Why do both of these KPIs matter for sales? Together, they can help you compare the successes of different reps, territories, segments, and more. Furthermore, this report could help to deter “sandbagging”–that is, closing a high amount of low-value deals to look good on paper. If you are a sales rep yourself, you can use these sales KPI to understand your performance on a deeper level.

How to Calculate Opportunity Win Rate

Count Percentage = Deals Won in a Month / Deals Closed in a Month

Value Percentage = Value of Deals Won in a Month / Value of Deals Closed in a Month

Example:

Jane closed four deals, one win, and three losses. Ariel closed ten deals with six wins. Jane’s count percentage is 25%, and Ariel’s is 60%. Based on this, you may be inclined to think that Ariel is the more successful salesperson.

Together, the four deals Jane closed had a potential value of $1 million, and the deal she won was worth $800,000. The ten deals Ariel closed had a potential value of $1 million, and the sales she won were worth $600,000 in total. Jane’s value percentage is 80%, and Ariel’s win percentage is 60%. Based on this, we see that although Jane is successful fewer times, the deal she closed is a much bigger win.

KPIs to measure growth

If you want your business to make more money, you have three options:

Sell for more (increase your prices)
Sell more (more items, services, etc. to your existing customers)
Sell to more (get more customers without overpaying to acquire them)

Each of these methods corresponds with an essential KPI that your sales team should be monitoring like a hawk.

Sell for More: Average Purchase Value (or Average Order Value)

Want to make more money? Get customers to spend more.

Of course, as business people, we know it’s not that easy. But it is that simple.

Knowing this essential sale KPI is imperative for calculating how much a customer is worth to your business and understanding how to increase your profits (which we will get to later on).

When calculating your Average Purchase Value, you are specifically looking at how much the average customer spends each time they check out (or complete a transaction with you). While calculating the Average Purchase Value across your entire business may not be super helpful on the ground, it can go much further when it comes to segmentation or upselling.

For example, if you know the Average Purchase Value for customers, one segment is $2,000, but a customer there is only spending $500, you know you have a substantial opportunity to upsell. This works across all sectors–territories, customer types, business sizes, etc.

Additionally, you may find that different sales techniques lead to increased Average Purchase Value. By tracking your interactions (following up, product recommendations, meeting in-person, phone calls, etc.), you can see what makes the most significant difference in your ROI.

Source: LiveChat

How to Calculate the Average Purchase Value

Average Purchase Value = Total Cost of All Purchases / Total Amount of Customers

Example:

You are a manufacturer selling electronic components to businesses focused on making consumer goods in tech. Across your fifteen clients who create drones, you make $55,000.

Average Purchase Value = $55,000 / 15 = $3,667

However, one of your long-term clients only spends about $1,000 per order. So, you approach them with an upsell. Because you understand similar clients, this client feels like you have anticipated their needs and happily accept your offer.

Sell More: Customer Lifetime Value (CLV)

How much is a single customer worth to your business from your first transaction to your last?

Customer Lifetime Value (some people just call it Lifetime Value, or LTV) is the projected revenue you will earn from a client throughout your relationship. If your goal is to sell more, this is the number you want to drive up.

There is a positive correlation between CLV and retention–the longer you can keep a customer coming back and satisfied, the more valuable they are to your business.

Source: Retently

So, how is CLV calculated? It’s more complicated than just adding up sales and averaging. Neil Patel identifies numerous variables to take into consideration, like:

s: Average Customer Expenditures per Interaction: How much do customers spend at a time on average?

c: Average Number of Visits per Unit of Time: How many times does the average customer buy from your business over a certain period

a: Average Customer Value per Purchase Cycle: How much money does the average customer spend over a set amount of time?

t: Average Customer Lifespan: How long do your customers usually stay customers?

r: Customer Retention Rate: What percentage of customers buy again at all?

p: Profit Margin: What’s your average profit margin per customer?

i: Rate of Discount: What percentage of interest do you need to earn to keep up with inflation, etc.?

m: Average Gross Margin per Customer Lifespan: How much profit do you make per customer?

How to Calculate CLV

There are many different ways to use some (or all) of these numbers to calculate CLV because, in the end, it’s a projection. This is why large successful companies often work with the average of multiple computations.

Here are formulas identified by Neil Patel in his blog:

Simple Equation:

CLV1 = a * t

Custom Equation:

CLV2 = t (s * c * p)

Traditional Equation:

CLV3 = m (r / 1 + i – r)

Average CLV Equation:

Average CLV = (CLV1 + CLV2 + CLV3) / 3

Example:

To borrow Neil’s example once again, let’s look at Starbucks. Here is their data:

s: Average Customer Expenditures per Interaction: $5.90

c: Average Number of Visits per Year: 218.4

a: Average Customer Value per Year: $1,288.56

t: Average Customer Lifespan in Years: 20 years

r: Customer Retention Rate: 75%

p: Profit Margin: 21.3%

i: Rate of Discount: 10%

m: Average Gross Margin per Customer Lifespan: $5,382.94

(Note that since Starbucks’ average customer lifespan is in years, I chose to calculate “c” and “a” by year. But you can easily convert these numbers to weeks or months if it’s more helpful for your business–the only thing that matters is making sure all your values are using the same unit of time.)

CLV1 = $1,288.56 * 20 = $25,771

CLV2 = 20 ($5.90 * 218.4 * 0.213) = $5,489

CLV3 = $5,382.94 (.75 / 1 + .1 – 1) = $11,535

Starbucks’ Average CLV = ($25,771 + $5,489 + $11,535) / 3 = $14,099

Sell to More: Customer Acquisition Cost (CAC)

It’s easy to get millions of eyes on whatever you’re selling. You could purchase a billboard on the interstate, snatch up a Super Bowl commercial spot, or pay somebody to fly a blimp over New York City with your company’s logo on the side of it.

The only catch? It’s going to cost you — a lot.

Customer Acquisition Cost (CAC) looks at how much money it takes for your business to get a customer over the finish line on average. CAC directly compares how much you’re pumping into marketing (including promotions!) with how many new customers you’ve acquired over a set period, giving you a set dollar amount per customer.

It’s essential to understand your CAC because, without it, you have no way to gauge a marketing campaign’s success. You may think your blimp was a hit when 20 new customers come rushing through the door. But if that blimp cost you $20,000, you need to ask yourself–are these customers are worth $1,000 each?

Maybe. Maybe not.

What counts as “good” varies from industry to industry and is entirely dependent on how much money an average customer will generate for your business and other factors like your operation costs.

Source: For Entrepreneurs

It’s important to note that “good” doesn’t necessarily depend on the first deal. According to BIA Kelsey, 66% of small and medium-sized businesses report that more than half of their revenue comes from repeat customers. To drive this point home, many companies have even found long-term success by taking a hit during their first transaction. They offer an enormous discount at a loss and then, over the customer’s lifetime (CLV), earn more than enough to make up for it.

How to Calculate CAC

Customer Acquisition Cost = Costs Spent Acquiring Customers / New Customers

Example:

Imagine you run an ad for your auto shop in the paper promoting your amazing oil changes. It cost you $500 to run the ad, and during the time it ran, you acquired 15 new customers.

CAC = $500 / 15 = $33.33

If your cost per oil change is $55, then you’re making $21.67 per customer.

Of course, the formula is deceptively straightforward. To get it to work, you’ll need to have a way to track whether or not the marketing campaign is responsible for the new customers. If you’re running ads online (like through Facebook or Google), you’ll track the customers’ paths automatically.

But print ads can be a bit trickier, which is a large part of why print ads so often include a discount code or coupon.

To return to the auto shop example, let’s say that instead of just promoting your brand, the ad you ran offered $5 off your first oil change. Twenty-five new customers come in the door with the coupon. Now you know exactly how effective your ad was, but you will need to figure in the discount as well.

CAC = ($500 / 25) + 5 = $25

Now, you’re making $30 per customer.

Other expenses could be calculated in, as well. Did you pay someone to write your ad copy or design the ad layout? How about the labor cost for the employee who coordinated with the paper to run the ad? Keep it simple by only factoring in the costs that are unique to your marketing campaign.

Free Resources for Measuring KPIs

While you can use our formulas above to calculate the KPIs, there are free resources available online to help you calculate your information and put it in a spreadsheet or dashboard.

Tipsographic offers a free KPI dashboard template for excel to help leaders look at various KPIs. The dashboard lets you compare quarters, sales periods, and sales reps to see what is going well and what needs work.

Excel Dashboard School also offers a free download sales tracker template. They offer a breakdown of region, sales reps, and products for a better understanding of your company.

Smartsheet also offers an in-depth Sales Management Dashboard template. Not only can leadership compare sales reps, products, and regions, but it also allows them to see progress over time.

Software for advanced KPI tracking

These Excel templates make it easy to understand your team’s KPIs visually for more insights. They are helpful for starting out and trying to figure out how best to measure the metrics that matter most for your team and company. However, they are limited in how much information and insight that they can offer.

Once leadership is ready to get serious about tracking key metrics for better sales, sales enablement software is critical. It can better track activity and create more accurate metrics. Also, it can automatically monitor as opposed to manually inputting and calculating through Excel.

Use the free templates to get a grasp of KPIs and understand how they work best. Once you get used to metrics, through, consider investing in software.

Smart Goals for Sales Teams

If you’re ready to lock down deals or maximize profit, let these five KPIs be your roadmap. A little math will get you a long way and give you the boost you need to help your team dominate in sales.

Want to learn how Map My Customers can help you set KPIs for sales? Contact us to get a demo or jump straight into a free trial to explore it yourself!

You can’t improve what you can’t measure and any successful business should always be looking to improve.

When you’re looking to maximize sales in any business, certain Key Performance Indicators (KPIs) for sales will be your guiding light. We have compiled the most essential and insightful sales metrics to help you fully understand exactly what is happening in your business. This will allow you to close more deals and generate more profit–without getting bogged down with the nitty-gritty.

Read on to discover what exactly sales KPIs are, what the essential sales KPIs are and what they mean, how to measure KPI, and how to put them to practical use.

Best Sales Metrics = KPIs

When you are wondering “what are sales metrics I should really be looking at?”, the first place your attention should go is to some of the most essential KPIs that we’ll cover below. These are going to be some of the best metrics to measure sales performance.

But first, to get a full understanding let’s go a little bit more in-depth on exactly what are sales KPIs. A Sales KPI, sometimes also referred to as a sales metric, is a specific performance measurement used to track the effectiveness of the current sales process and sales activities within that process. They gauge things like how many qualified leads result in a deal closed to how much a new customer costs. Just to name a few.

Sales KPIs are most often used by the sales managers within the sales teams themselves. Especially field sales managers who are not always in the field to keep tabs on exactly what is going on. But, they are also used by top management within the company as well. This is because sales KPIs can also help gauge the growth of the company overall. If more deals are closing and the average value of those deals is going up, so are profits. If profits are going up the company can continue to scale up.

KPIs are so important because they can give accurate overall visibility into your sales team’s performance and product performance against your sales and organizational goals. They also help track the relevancy of your sales activities. When you use these kinds of metrics to measure sales performance, you can optimize your sales funnel and sales cycle length.

Let’s take a look at some of the essentials and go over how to measure KPIs.