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How to Measure Sales Performance

Data-driven decisions and strategy are the most important factors for sales success in the contemporary marketplace.

According to McKinsey, sales organizations that invest in measuring and centralizing critical sales metrics are more likely to outperform their competitors. But with ballooning tech stacks that allow us to measure anything and everything, which metrics really matter for measuring sales performance?

Our approach to measuring sales performance is two-fold:

First, take your company’s unique context into account—don’t just rely on your competition’s benchmarks and metrics.

Second, prevent Sales Ops overwhelm by focusing on the metrics that matter—the numbers that help you make smart decisions that ultimately lead to revenue growth.

Our goal is to teach you which KPIs are critical to sales success and how to measure them so you can feel confident you’re on track.

What Are Sales Metrics and Why Do They Matter?

A sales metric is any data point sales teams use to measure progress toward goals. Performance metrics track a sales rep’s tasks and activities over days, weeks, quarters, and years.

What sales metrics reveal about sales performance

  • Performance of an individual rep
  • Performance of a sales team (or organization as a whole)
  • Weaknesses or bottlenecks in the sales process that need to be improved
  • Whether or not a rep qualifies for bonuses and other incentives
  • How to prepare for market changes, slow periods, or company growth

“If you can’t measure it, you can’t manage it” might be a truism, but it’s all too accurate when it comes to measuring sales performance.

We know tracking performance metrics has become a sore subject in the Sales Operations world. Hop on LinkedIn, and you’ll find droves of thought leaders bashing an overemphasis on metrics like call volume.

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Regardless, sales success still lives and dies by numbers. And if your team isn’t unified by executing on data-driven insights, they won’t hit their targets.

Alignment is critical because reps can become overly focused on the KPIs that maximize their commissions, while managers are more interested in the insights from forecasts that lead to revenue predictability and growth over short-term payout.

The Benefits of Measuring Sales Performance Metrics

1. Build a quality pipeline

Pipeline metrics give you a visual overview of how close opportunities are to closing. You’ll see which sales activities yield the best results and where deals are stalling.

2. Improves sales forecasting

When your pipeline is up to date, you can accurately forecast sales, whether your team will hit their targets, and how much revenue growth you can expect.

The best sales leaders have one thing in common: They excel at data-driven sales performance management. #sales #spm Click To Tweet

3. Reduce turnover by providing better incentives

Metrics allow you to easily gauge rep performance and reward them properly. Incentivizing sales reps with performance bonuses is key to loyalty and engagement.

4. Provides better visibility into sales performance

When you can see how far a rep is from quota attainment, you can intervene and course correct or encourage them to keep the momentum up.

5. Makes incentive compensation more efficient and effective

With accurate historical metrics, you can design, execute, and optimize the best variable compensation plan possible.

Outperformers make data and analytics a strategic asset and invest heavily in building foundational skills. The results: 72 percent of the fastest-growing B2Bs say their analytics are effective in helping them with sales planning, compared to 50 percent of the slowest-growers.

McKinsey & Company

Focusing on Metrics That Directly Drive Sales Performance

With ballooning B2B tech stacks, it seems like there are more stats than ever to measure. While the list below is by no means exhaustive, it’s a good place to start if your goal is to start driving revenue by improving an underperforming team.

Five critical sales performance KPIs your sales team should be focusing on

1. Sales Productivity

ales productivity metrics ensure that reps are “keeping the first thing first” and focusing on activities that close deals.

Some of the most critical sales productivity metrics:

  • Meetings held / demos booked
  • Sales cycle duration
  • Time to productivity

With two-thirds (64.8%) of reps’ time spent on non-revenue-generating activities and only 35.2% spent selling (Forbes), monitoring productivity metrics is critical.

2. Lead Response Time

Lead response time measures how long your leads wait to hear from your company after inquiring. Response time is critical because quick communication increases the likelihood of that lead converting into a paying customer.

According to Chili Piper, it takes the average B2B sales team 42 hours to respond to a new lead, and 38% of those leads never respond.

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3. Average Deal Size

The average deal size reveals how much revenue comes from each deal.

If too many deals are coming in below your average deal size, it could mean that your reps are opting for smaller, quicker wins or discounting just to close the deal.

Average deal size reveals where you need to adjust your sales goals and compensation plan. It will also show you when it’s time to double down on lead generation efforts.

4. Win Rate

Win rate, also known as the opportunity-to-win ratio, measures how many deals close versus how many entered your pipeline. Win rate reveals how effectively your reps are moving deals from negotiation to close and where they can improve.

Some of the contributing factors that affect the win rate are:  

  • Pricing
  • Competition
  • Lead volume
  • Seasonality (Timing)

5. Quota Attainment

Quota attainment gauges whether a rep has met their goal within a set period. Measuring quota attainment allows you to evaluate your team’s success.

If only 40% of your team attained the quota, it could indicate issues beyond the individual sales rep’s performance.

Where coaching an individual rep to meet their quota is self-explanatory, quota attainment forces you to evaluate the quality of the plan you created. Even the best reps won’t hit an unrealistic or poorly-planned quota, which is why your compensation plan is critical.

3 Main Factors That Affect Sales Performance

Sales Performance Measurement Tools

The goal of measuring sales performance is to hold reps accountable and properly compensate them. Revenue increases when compensation plans keep sellers engaged and performing, create an unparalleled sales culture, and attract top talent.

In an unstable economy and shifting buying landscape, adaptability is key. Your comp plan must be able to adapt to situation-based payouts like splitting credit between two AEs or rolling out a new SPIF for Q2. When your company can use accurate data to assess and pivot quickly, you have the best chance of survival and accelerated growth and performance.

Monitoring the metrics mentioned above once a quarter or year isn’t enough. KPIs must be continually monitored, analyzed, and adjusted. As your company scales, you’ll introduce new plans, products, and team members requiring you to adjust your comp plan accordingly.

Instead of reviewing and reallocating coverage once a year as is typical of many B2Bs, outperformers are 50 percent more likely than slow growers to adjust their accounts monthly (25 percent versus 17 percent, respectively). That continual realignment allows growth leaders to assign resources toward the highest-value opportunities.

McKinsey & Company

So, how do you stay adaptable? Start by centralizing your data, ensuring version control and accuracy. By automating the calculation and reporting of KPIs, you’re free to focus on coaching your team and creative incentives like SPIFs. The key to dynamic compensation planning is using a platform that allows you to view performance in real-time and course-correct faster and more effectively.

Data-tracking action items that your compensation plan platform will automate

  • Gather updates daily
  • Clean data for accuracy
  • Analyze the data
  • Inform the team on how to act on that data

Now that you’ve established which metrics to track, it’s time to choose your measurement tools. Also known as your “sales tech stack,” you should equip your team with tools that help them do their jobs more efficiently and automatically track their results so you can improve upon them.

Tool #1: Customer Relationship Management (CRM) to measure sales activity, performance, and revenue

CRM software has put spreadsheets on the endangered species list. Most B2B sales organizations have the motto, “If it’s not in the CRM, it didn’t happen.” As tech stacks become all the rage, CRM is usually the first tool they implement, serving as your system of record for sales activity, individual performance, and revenue growth. Two of the most popular CRM brands are Salesforce and HubSpot.

What is Partner Relationship Management Software?

Tool #2: Sales engagement software (SEP) to measure sales productivity

Sales engagement platforms allow sales reps to scale prospecting and advance opportunities faster while helping sales managers see how effective key sales activities are. With sales engagement software, you can determine if your cold email subject line led to opens and responses. You can see how many touches it took to get a prospect to respond. With features like conversation intelligence, you can spot the competitors or objections brought up most on sales calls. One of the most popular sales engagement tools is Outreach. For in-depth call analytics, Gong is the leader.

Tool #3: Sales intelligence software to score leads and accounts

In our noisier-than-ever digital landscape and the increasing cost of ads, revenue teams are becoming more strategic about identifying in-market accounts. Sales intelligence tools help sales and marketing get on the same page about when an account is ready to convert to an opportunity.

Sales intelligence uses hard data to score leads and accounts, eliminating human subjectivity that often skews forecast data. 6Sense is one of the industry leaders in this area.

Tool #4: A sales Compensation solution to stress-test your comp plan and accurately budget

Traditional sales compensation software can help automate some aspects of the sales compensation process, but only fixes part of the problem. In the long term, their restrictive and static nature inhibit improvement and bog down Sales Ops teams with needless taskwork.

Forma.ai’s unique sales compensation software helps you develop your sales strategy without nerve-wracking guesswork or cumbersome spreadsheets and formula-building.

Instead, simply feed the software your business goals (in plain English) and the platform will recommend individualized quotas, adjust incentive structures at scale, and suggest partner network payouts—all based on your strategic business outcomes.

Sales compensation technology like Forma.ai frees up time and resources and gives you the most accurate prediction of incentive outcomes. When you can forecast comp spending, you can maximize every dollar spent. Forma.ai is the leading automated compensation management platform.

The Bottom Line on Measuring Sales Performance

Measuring sales metrics is key to maintaining and improving sales performance. Sales metrics and KPIs allow you to understand rep and team performance, identify areas for improvement, and properly reward and incentivize your team.

Tracking metrics accurately is key to building a quality pipeline, accurately calling your number, and creating a dynamic compensation plan. Focusing on metrics like sales productivity, average deal size, and win rate can help your team source more opportunities and hold reps accountable for closing more deals.

By setting up systems to consistently monitor and adjust metrics, you’ll be able to easily adjust your compensation plan to adapt to new product releases, territory changes, new markets, and headcount. To centralize your data ensuring version control and accuracy, use tools like CRM, sales intelligence software, and a sales compensation platform.

Book a demo here to learn how Forma.ai makes sales compensation more valuable to your business.

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