You can’t manage what you don’t measure.
Sales is, at its core, a numbers game. Yes, there is a human side, but even their effectiveness ultimately boils down to a spreadsheet. You might be good at identifying ideal prospects or even qualifying opportunities, but that’s of little use unless you can also win deals.
That said, numbers aren’t just about performance either. They tell many stories. Not only does a low number show you performed badly, but as you dig deeper, you’ll also see why. Once you learn those reasons and develop strategies to overcome them, your sales KPIs will immediately improve.
The purpose of monitoring sales KPIs isn’t to simply track performance but to also improve it by learning. To that extent, the most important sales KPIs for any sales team are:
Call-to-Connect Ratio
This is the ratio of the number of calls made to the number of conversations held. The average call-to-connect ratio hovers around 15-20%. If you have a ratio higher than that, you are doing great!
Why it’s important: Call-to-connect ratio is an indication of database quality and the sales rep’s ability to get past the gatekeepers.
Reasons for poor performance:
- The most common reason for poor call-to-connect ratios remains the poor quality data. If you have inaccurate/outdated data in your systems, the sales reps will naturally connect with fewer prospects.
- Timing of calls also has a bearing on this KPI.
- Finally, if the SDRs are using HQ numbers or being routed through switchboards, they might not be able to get past the gatekeepers.
How to fix it:
Get a reliable data vendor that can provide accurate contact data. Use this detailed data purchasing guide to help you find the right vendor.
- If you build your database through your own marketing efforts, use an enrichment service.
- Tweak your calling schedule to find specific time slots that are most productive. For example, decision-makers are less likely to entertain sales calls early in the morning than later in the day.
- Get mobile numbers of prospects to bypass gatekeepers. Ever since remote working became the norm, office numbers have lost relevance, and reaching prospects on their mobile numbers is the best way forward.
Lead to Opportunity Ratio
This is the ratio of the number of conversations held to the number of qualified opportunities. While this ratio varies significantly across industries and channels, a Salesforce study puts the average figure at 13%.
Why it’s important: Lead to opportunity ratio is a reflection of lead quality combined with your lead scoring or qualification model.
Reasons for poor performance:
- You will create far fewer opportunities if you are pursuing bad-fit accounts.
Even if you are pursuing the right accounts, targeting the wrong persona will hamper your chances of success. - Finally, sales reps might be struggling to create opportunities because prospects simply do not trust your brand. If you are a new player or have poor brand recognition, it will significantly impact your ability to generate opportunities.
How to fix it:
- Use diverse filters like technographic and intent data for targeted outreach.
- Build separate lists for personas, departments, and levels.
- Invest aggressively in brand-building exercises like events, thought leadership, partnerships, ads, etc.
Closing Rate
This is the ratio of the number of qualified opportunities to the number of deals won. The average closing rate across industries and channels stands at around 6%.
Why it’s important: It is generally a reflection of your revenue potential and the competency of your sales team.
Reasons for poor performance:
- Poor product fit remains the most commonly cited reason for lost opportunities.
- If your industry has high competition, you are more likely to lose deals at this stage.
- Finally, your sales team might just not be competent enough to push deals across the line.
How to fix it:
- Go back to the drawing board to revise offerings, pricing, etc.
Train your sales team on closing techniques.
—
The same sales KPIs can also be monitored for individual sales reps to get better insights into their strengths and weaknesses. For instance, some sales reps might be good at converting leads into opportunities but struggle at closing them. Other reps might be good at closing but not at conversions.
For a sales team to succeed as a unit, it is important that everyone is competent in their role and adds value to the entire sales process. At this point, most sales leaders, depending on their outlook, take one of the two approaches:
1. Segment the sales team with each group working on specific stages of the sales process. Those good at conversions only work at conversions and handoff opportunities to reps who are good at closing.
While this sounds good in theory, there are a few problems with such an approach. It creates glaring communication gaps that hamper the sales process and create a bad experience for the prospect. After all, no matter how good notes you take, it can’t possibly compensate for personal rapport.
2. Help the sales reps develop skills in weak areas so that each salesperson can handle the entire process from start to finish – from prospecting to closing and everything in between.
Though a bit tedious and expensive, such processes often deliver better results in the form of a more robust and fluid sales pipeline. When each rep owns the process from start to finish, they develop a better understanding of the customer’s needs, develop a good rapport, and deliver a better sales experience.
To summarize all that we have discussed, you can improve your sales only if you know where you currently stand and why. This is the reason that constantly monitoring and analyzing sales KPIs should be the primary goal of all sales managers. Depending on how you dissect those numbers, you can get all kinds of insights – from business growth and bottlenecks to possible solutions. Learn to put the numbers in perspective.
