Here are the Top KPIs and Metrics for Sales Success in 2020
The sales department is by far the most critical unit in any enterprise. In this department, decisions and actions of selling products and services occur. The main goal for any organization is to secure a profitable place in its industry. The organization can only achieve more sales by knowing where it stands and setting goals that are better than the prior outcome. However, how does the organization know that it is making the right steps in attaining those sales goals? The organization needs to put attention on major sales KPIs and metrics. If you are wondering what they, here are some of which you need to attend to in 2020.
Several steps lead to the making of a sale. When you succeed in making someone to buy something from you, then you have closed a sale, which leads us to this category of KPIs called KPIs for Closing.
1. Lead Response Time
Take this KPI seriously because it can make or break your business. Usually, customers save up to buy some things. For some, it takes a lot of sacrifice to part with their money. When they arrive at your store, they need to get what they want, and if they do not, you should not keep them waiting for so long. A study by Inside Sales reveals that 30 to 50 percent of sales will always go to a promptly responding vendor.
The lead response time KPI is how long it takes your business to respond to a customer inquiry about the desired product. You need to close a sale when the customer is still hot and burning. If you tell them to wait for 48 hours for something they saved up to buy for six months, you will lose them. There is no special formula for arriving at the lead response time (LRT). All you need to is to calculate the time a lead contacted you versus the time your sales persons contacted them back. What follows is to keep a record of the LRTs because there is a high chance that your result will have an effect on other important sales KPIs like the Opportunity Win Rate. The secret is increasing your response speed. Have people on standby if you can to respond to inquiries almost immediately. The result is that you will realize more conversions.
2. Opportunity Win Rate
Opportunity Win Rate relies on your response time. If you cannot close sales, then there is no point in making an effort to look at these metrics. There are two ways you can view this data point. One is the count percentage. This rate is for leads that became sales in a month. To avoid confusions, if a lead becomes a sale after months of communicating with the customer, then count it as either a gain or loss on your report. The other way to look at the opportunity win rate is the value percentage. It is almost as similar as the count percentage, but the difference is the value of the sale. Record the sales the month they were closed. The importance of this item is that you will avoid doing low-value deals just to make it appear the performance is good. You could also use it to evaluate yourself and the team's sales capabilities.
You will calculate opportunity rates for these metrics separately.
For the count percentage, you will divide deals won in the month with the number of deals closed in that month and multiply the outcome by hundred. If you had five deals closed in which you won two and lost three, the conversion rate will be 60 percent. For the value percentage, let us say the value of the deals was about $100, 000 and what you won with the two deals was worth $70,000 then you value percentage is at 70 percent. This means you closed lesser deals but made more for the company.
The goal of any business is not just to make more but also to grow over time. If you had three employees, you need to be able to get to a level where you can pay seven or more comfortably while making even more income. You need to have a branch of your business somewhere else. You need to bring in more investors if that was the plan. Just saying. To grow sales that lead to these anticipated heights, there are paths you could take. You may decide to increase the price of your products, maybe increase your product or service range, or acquire more customers without spending a lot. These three approaches lead to important Growth KPIs for sales, namely average purchase value, customer lifetime value, and customer acquisition value, respectively.
1. Average Purchase Value
Here you have the choice of making your customers spend more on your products. This choice may appear as a difficult option considering your customer is used to your previous price. However, it is something you could consider. Besides, it can tell you the worth of a customer to your enterprise. To arrive at the Average Purchase Value, focus on how much this customer averagely spends on your products every time they buy from you. Whereas this KPI is not entirely important on the surface, it could help a lot to upsell and segment. For example, if you have a segment whose value is $1500 and the customer spends just $ 600, there is a chance they could spend more. You may want to revisit your sales methods. You could do follow-ups, meet the client in person, make a phone call or make a product recommendation.
So how do you calculate your Average Purchase Value? You just divide the overall cost of purchase with the number of customers involved.
2. Customer Lifetime Value (CLV)
It is good to know the value of each customer to your enterprise by paying critical attention to every transaction done with them. From the world lifetime, you already know that CLV is the estimated amount a customer will spend on your business in your entire relationship. CLV is also called the lifetime value or LTV. If your goal is to make more sales, then is probably what you need to work on. This KPI relates directly with the retention metric, which implies that the more you keep the customer coming back because they love your product and service the more value they bring to you. There are multiple options for calculating CLV. The simplest one is to multiply the Average Customer Value in a Purchase Cycle by the Average Customer Lifespan, which is the average period your customers stay loyal to your business. 3. Customer Acquisition Cost (CAC)
The option is to get more customer to buy from you. You need to get the attention of new customers. You could do this by setting up a billboard between state, having a commercial area in a popular event, or pay for an advert on prime time. Well, this is going to come at some crazy costs. Your plan is not to spend a lot on such methods, but if you have to, then you need to know how much it will cost you. CAC will tell you how much you spent in each new customer you acquired.
It could easily tell you the much a customer will contribute to your business. The result may not be as glamorous on the first occasions, but later these customers become repeat clients. That is where the real value comes from. To calculate the Customer Acquisition Cost, you will divide the amount spent on getting customers and divide it by the number of new customers.
An example could be you spend $400 on your marketing and at the end of it made, 25 customers. The CAC will be $16. If the cost for the item sell is $40, then you have made $24 from that customer.
You may also want to know whether indeed these customers came from marketing. If the advert was on Facebook or Google, you could track their paths and find out. There is a chance that you did the ad on print. A tracking tool can be a promo code, maybe with a discount. For instance, you might have given a $6 discount. You will do the same calculation for CAC above but add the $6 to get the actual amount.
Other Sales KPIs and Metrics
1. Sales Volume by Location
There are multiple item things about your business you should know. An example is where your business does best, in this sense, the location that brings in more sales. Your interest should be on the places not performing well. You might want to know why other places do not perform well. For the place performing better, you may want to focus on retaining and even increasing that market even further by offering more product options to their market.
Moreover, you can test various activities for various options. The first one may be you may want to test a marketing effort on the locations. You could apply the marketing on one location and watch the performance as you replicate application for the other. There are multiple ways to spur more sales in a less performing region. An example is to improve its placement in shopping stores (shelf displays). You may also want to do discounts and offer coupons to trigger sales. There are multiple other options you could try that could also do the magic.
2. Competitor Pricing
There are multiple reasons a customer may choose your product. One common reason is that they can manage to pay for it. Such customer behaviour has resulted in an important sales term, competitive pricing. This term simply means that your pricing makes consumers choose your product over that of competitors. What this means is that you cannot place a price on a product without considering how your competitor priced their product. You also may have to consider analyzing multiple competitors if the market has more than one. This aspect brings to focus on competitor pricing.
The idea is not to track your competitor’s every move but to price in a way that you make the most sales and take advantage of available market more than your competitor does. You may also need to track your retail price and test it on the market to see how it performs in the market. Besides using price matching techniques, you may need to train sales teams on pricing objections. Let the sales teams discuss at the same evading the need to discount your product price.
3. Existing Client Engagement
A good relationship between your firm and the customers can add value to your company. Moreover, it offers a promise of long term business status. It is good to have that time to time tete-a-tete with your customers. The outcome of this is that you get to understand customer experience while using a product. This approach builds trust between the two of you. Such could lead to more repeat customers. Encourage sales teams to do follow-ups even after a customer purchases a product just to ensure they are happy with the product. So how do you track this metric?
Have the sales team keep a record of the number of engagements they have had with every customer. You could use the individual number of interactions to compare to the average client relationship periods.
This approach will tell you whether the sales teams are doing their job. Furthermore, whether customers admire the company’s efforts to touch base with them.
4. Employee Satisfaction
Multiple business magnates like Richard Branson talk about how making the employee happy can have a positive effect on employees making your customers happy. If you want to make your sales better, you need to ensure that your sales team is a satisfied team. So how do you do that? Foremost, know whether members of your team in the remote workplaces have chemistry. If they are not confident working with each other, then you need to work on connecting them through team-building efforts. Also, you need to know whether they like the sales methods you employ. If they love them, then it will be easy to practice them on-field. If they do not like them, you may need to know why and make the right steps to steer them to confidence. The results will surprise you.
Remember that these KPIs are not just to help you assess your team but also yourself as a manager. Collect employee feedback and even ask them to rate their job satisfaction. You could also do simple, focused questions to know what they feel in a few words and even ask for actionable recommendations.
You could create employee satisfaction goals and compare the outcomes with the goal. If employees have worked for a long time and they are justifying underperformance on boredom and burnouts, you may need to tackle those needs early. You could employ various motivations such as reward systems such as holidays and job rotations.
5. Upsell/Cross-Sell Rates
As you focus on getting newer clients, also try to put some efforts into retaining the ones you have. For this reason, have your sales team track their upsells and cross-sells. The data analysis from these two rates can help you to define the response of the various vertical to marketing efforts. You need to work towards ensuring that you keep these existing clients by offering them multiple options to the product you are already providing to them.
6. Net Promoter Score (NPS)
It is a good feeling and indication when your customers can talk, promote and recommend your product to other people. To arrive at an impressive NPS, you need to request several participants to rate the likelihood that they will recommend your product to someone else. This should on a scale of zero to ten.
There are three categories of customers you may arrive at namely detractors, passives and promoters. The promoters will rate themselves to recommend between 9 and 10. These population likes you and may purchase your product or service again. Most of them will recommend you to other customers. Passive will rate themselves to recommend you to customers at 7 to 8. These are usually customers satisfied with your service, nothing much. These are usually normal individuals who think the product is some sort of norm to them. Lastly, we have detractors that will rate themselves to recommend you at zero to six. These customers normally do not like and may discourage others from you, your organization or products. Detractors can easily damage your brand. Do NPS regularly. Do not be quick at sending it to new customers. Let them settle in and experience your products. Do the NPS every three to six months to get the most out of them.
You can calculate NPS by subtracting detractors’ percentage from promoters’ percentage. There are also multiple NPS calculators you could use.
7. System Touches
It is the goal of any sales department to ensure that the individual salespersons close new clients efficiently. Your goal is to ensure that your sales team closes sales with minimal touches to the system. For instance, it may be disturbing that the salesperson had to do multiple emails, phone calls and even video meetings and still not close a customer. As you assess this for each salesperson, you may want to ask the sales team to employ new sales strategies.
The first step to knowing what to do may be to analyze average touchpoints of successful sales personnel. Know the average for each channel they use the email, video calls and the phone calls. You could then ask about their sales techniques and use their results to narrow the team’s unified sales cycle.
8. Sales Cycle Length
As you check the system touches one issue comes to life, the sales cycle. Pay attention to the average period of sales cycles by your team. Check whether other salespersons are closing client way quicker than others. Know the churn rates involved as well. Assess the cycle length that with topmost closed-numbers. Know how further in success those deals go. Some sales personnel may close down clients quicker but later end up with unsatisfied customers. The churn rate is maybe even longer. You may want to use longer sales cycles because they offer healthier business relationships.
As you implement measures to improve this KPI, you need a goal, because your result will always be measured against the goal.
9. Positive Versus Negative Reply Rates
When checking this metric, it is important to understand that the prospect can either be interested or not. It is good to be realistic. No matter how good the deal you offer may sound, there are customers you will never amuse. The measurement of this metric has to occur at the prospect stage. What will matter is the number of targeted clients you reached out to. The value must be in percentage form. For instance, if you made contact with 60 prospects and six responded positively, then the reply rate is 10%. The same method of calculation will apply when arriving at the negative reply rates. You could use the positive responses to arrive at trends. With this metric, you will be directed to show the mistakes and exhibit benefits from the cadence in outreach, prospecting methods and channel preferences.
10. Meeting Acceptance Rates
It is not easy to win a client's time for an appointment when a salesperson can do that, then, they are talented. Being able to get appointments means that the sales guy is good at creating urgency with the prospect. Many customers will wish the salesperson away, but when they get an appointment, it will mean that the clients have given priority to the products and services of your company.
You can arrive at the meeting acceptance rates by divide the overall number of meetings by the total responses from the target clients. This metric is important in getting a perspective of your sales team. An example is, you may want to train them on handling objections by clients.
Increasing your sales is important for your company. You need to take the necessary steps in achieving that. It all starts with setting goals, putting effort to attaining those goals and keeping track to ensure that the efforts add up to something using the above sales KPIs and metrics in 2020. The data you get can be managed on your SQL to guide your sales decision making.