Every year we’re presented a blank slate. We create New Year’s Resolutions with the hopes of improving ourselves in some way. For sales organizations, the new year creates new opportunities to develop new sales strategies. As we welcome 2020, many sales teams are going back to the drawing board to map out the sales strategies and metrics they are tracking to reach their goals.
The right sales metrics will enable your sales organization to set concrete criteria to increase sales revenue. While the proliferation of marketing and sales tools has increased the amount of data available to sales and marketing professionals, goals should always be specific, measurable, attainable, relevant and timely. Nowadays, nearly all sales activities can be measured or recorded. As such, it can be challenging to discern what to keep track of. Here are the top sales metrics you should be measuring in 2020.
Sales growth is a metric that tracks sales organizations’ ability to build revenue over a specific time period. Out of all the sales metrics, growth is the most vital because the health of any business is dependent upon its ability to grow and win out against the competition. Executives and board of directors use sales growth for mapping business trajectories and creating and executing strategies. Sales executives should be focused on high-level growth indicators, but directors and managers should prioritize their attention on continuously improving sales reps performance.
Sales targets are KPIs that track campaign performance versus overarching business objectives. The number of units sold, the amount of revenue generated, or the number of active accounts are examples of sales targets. The entire team should rally behind a sales target and know what they can do to ensure the target is met.
Revenue is the amount of money a business earned from the sale of their products or services. It is calculated by multiplying sales by the number of products sold. The formula is: Units sold x sales price = sales revenue. You can further break down your revenue numbers to understand:
- The percentage of new business within a given time period
- The cross-sell and up-sell percentage
- Contract renewal percentage
Leads are often confused opportunities. Not every lead is an opportunity. A sales opportunity is a verified prospect who has been qualified by marketing and sales. You’ve likely spoken to these contacts and determined they are a good fit for your products are services. In time you’ll begin to notice similar characteristics that distinguish leads from opportunities.
Sales to Date
Sales to date are the total sales from the past year. To calculate, simply add all sales from the past year. From there, you can compare yearly sales to previous years and map out historical trends.
Monthly sales are the total sales from the past month. By recording your monthly sales numbers throughout the year, you’ll identify sales growth, stagnation, or declines. Monthly sales metrics can be compared to your sales forecasting numbers to ensure accuracy. Additionally, any updates to sales processes should be reflected in your monthly sales metrics. If a particular month’s sales are higher than another, ask yourself, ‘what changes did we make to reflect this change?’
If your team sells multiple products, it’s important to record sales for every product line. Calculating product performance metrics allows teams to identify products that are performing well. Conversely, you’ll uncover products that aren’t resonating with your audience. While tracking product performance, it’s vital to consider the environmental circumstances that affect sales of a particular product over another. For instance, a viral marketing campaign may cause a temporary boost in one product over another.
Lead Conversion Rate
Lead conversion is the amount of leads that convert to sales opportunities. It’s calculated by dividing the number of converted leads to opportunities by the total number of leads generated during that time period. Lead conversion rate align sales and marketing teams throughout the customer journey. From there, teams can use conversion analytics to optimize the customer experience.
Sell Through Rate
If you’re selling physical products, it’s critical to monitor sales against your entire inventory. This is important to instruct your supply chain and aid in sales forecasting.
When companies sell multiple products, one product can often outsell or adversely impact sales for another product. By tracking product cannibalization, your sales department will be better armed to manage the customer experience.
Average Purchase Value
The average purchase value is measured by calculating the average value of each customer purchase. It is often compared with the average number of units sold per customer transaction. The average purchase value varies greatly determined by the types of products or services a business sells. If the average purchase value of every sale increases, the total sales revenue will also increase.
Sales By Region
Every business will have regional variations in sales and profits. By tracking sales by region, you’ll be able to determine which regions are the most profitable for specific products or services. You’ll also be to increase or decrease marketing and sales budget to regions that are more or less profitable.
Record These Sales Metrics to Gain a Holistic View of Sales Processes
While quotas and revenue are important sales metrics, sales executives and managers should focus beyond these metrics to track overall team performance. Recording and optimizing processes against the 12 sales metrics in this article will help your team recognize any gaps in your sales strategy. You’ll also be better equipped to make adjustments if any issues are prohibiting your path to success.