The Subtle Art of Tracking KPIs in Sales: A primer

 

sales

Because this is a primer, I’d like to start with what might seem like ridiculous question…

What is a business?

People’s complicated answers would baffle you and yet the answer is simple. To have a business you need to make something and you have to sell it. It’s obvious right?

As for metrics, it goes without saying that you should track how much you sell right from the start. Here on the other, we want you to focus on how effective you are at selling. Are you tracking everything you can to make the best of sales?

You’re not a serious business until you measure and refine your sales method. This aspect is easier said than done.

Building a culture that’s data-driven requires discipline and a good method. The right tools will help you reduce the mind-numbing time spent making sense of sales KPIs.

We’re sure you’ve heard this acronym before: KPI, it stands for Key Performance Indicator. It’s a sales team’s best friend. Whether they make up numbers or charts, they’ll help you understand metrics at glance.

If you’re not using a CRM, you might use spreadsheets to track sales. What matters is that you’re inputting data. This data makes up your KPIs. You should communicate your goals with your sales team and share which KPIs you’ll be focusing on. The right combination of KPIs will help you have enough information to be effective. What you do not want is to have too many vanity KPIs that’ll throw your efforts of course.

Because you want your life to be easy, you want real-time access to your visual KPIs. Tools like datapine makes data visualization easy to manage. Just as important, datapine lets you create and share business dashboards.

With a dashboard tool you can track the 4 core metrics below, it’ll give you a good idea of your sales efforts. It’ll also let you create reports so you’ll know the revenue that’s coming in your business.

Here it is, the 4 Sales KPIs you must track

  1. Lead conversion

Lead conversion is most often displayed as a percentage. It lets you know at which ratio your turn leads into paying customers. This lets you have a baseline to improve, and an idea of how many leads you need to hit your goal.

  1. Sales cycle

What is the cycle of your sales, in other words, how many days does it take to close a lead? Measure this from the moment there’s a first contact. This again provides you with a baseline, and now it’s up to you to reduce the amount of time it takes to close leads.

  1. Average Revenue per Unit and Lifetime Value

Yes, you are correct that’s two metrics in one, and I suppose that makes me a lazy blogger. Yet, these two metrics go hand in hand. Average Revenue per Unit (ARPU) is the average price of what you sell, you want this to move upstream. It excites investor and it also forces you to reassess your pricing strategy so you make more. Likewise, the longer your customers pay, the better. That’s why we recommend you track the Lifetime Value (LTV). If you’re customer churn more often, your LTV will decrease. Make sure these two are always increasing.

  1. Actual revenue vs. Forecasted revenue 

We kept the most important last, since this is the one metric the head of the company will want to see often. We hope you have your sales goals sorted, because this KPI is to see where you stack up with your goals.

Lastly, you want your insights visualized and you want to track them often. You want to make sure your team can at a glance understand where the team is heading

Posted in: Business