These are the 4 most important sales metrics for your SME
If your business is even just starting out, chances are very high that you are already measuring some sales metrics. But how do you know if these are the right ones? And how can you use the measured information to close even more deals?
The most important thing is to identify the sales metrics that have the most impact and that can be used to evaluate the effectiveness of your sales process. You'll find out which sales metrics that are for your SME below.
What are sales metrics?
Before we talk about the most important sales metrics, we'll first explain the definition of sales metrics. Sales metrics, also known as Key Performance Indicators (KPIs), are data points that help you evaluate whether your sales process is working. In other words, they help you evaluate the results of the entire organisation, as well as individual sales people.
Why are sales metrics important?
Measuring sales metrics is without a doubt a pillar of success in sales. All too often, decisions in sales are made based on gut feeling. Keeping the right sales metrics in place enables you to make better decisions - based on data. In addition, sales metrics often highlight areas of improvement in the sales team. If you then also take a critical look at them, you even know how they can be addressed.
Which sales metrics are important for your SME?
The sales metrics you should focus differ for every organisation. It depends on your product or service and the structure of your sales organisation. Still, there are a number of general metrics that everyone can apply to improve sales results and processes. The most important thing is that you have a clear picture of how much sales efforts actually lead to sales, so you need to look at the metrics that make your sales engine run. Below are some KPIs that we often recommend to clients and that have helped improve their sales processes and results.
Number of first meetings
How many first meetings are there? With this KPI you evaluate the number of first meetings for a given period. This sales KPI shows you to what extent your team is making first contacts with potential customers. This gives you an idea of the absolute beginning of your sales funnel. If you notice that your team is experiencing problems in this area, then it is best to tackle the issues as quickly as possible. After all, without first meetings there is no chance of completing the sales funnel!
Number of quotations sent
With this KPI you evaluate the number of quotations your sales team sends out, which usually occurs afetr having had a number of meetings with potential customers. A good balance between the number of proposals you send out and the number of deals won in your funnel indicates an effective and good sales strategy. When you send out a lot of proposals, but only win a few deals, it's best to take a look at your CRM to evaluate where the problem lies.
Euros won (value of won deals)
Sales teams are judged by the number of Euros (or other value) won in a given period. To get an idea of this, you should track this as a KPI. The handy thing about this KPI is that you can look how many euros a rep has won and compare this with other sales reps. Does someone in the team bring in significantly more than the rest? Then look at other KPIs to see what this person does differently than the rest. This way you are immediately able to boost the performance of your entire team.
Average deal value
If you want to predict the value that will be in your pipeline (or sales forecasting) in the future, it is important to know your average deal value. In other words, this is the average amount that customers spend on your product or service. Is this value lower than expected? Then don't just increase your prices, because a price that's too high is a common bottleneck in sales.
Based on the above metrics you can also set up sub-metrics, such as conversion rates. For example, you can measure how many meetings are needed for a proposal or how many proposals need to be sent out to win a deal. If you have a view of such figures, then you know exactly how your sales engine works. This is also the basis for sales projections. Based on your targets and conversion rates, you can then determine how well your sales engine is working and where there are problem areas.
Challenges in measuring sales metrics
In order to properly monitor your sales metrics, it is important to set targets or objectives per KPI. This is not always easy and certainly not if you are a small organisation that has only just started, because you cannot make comparisons to set benchmarks and you still have few data points. Above all, set goals that are not too easy to achieve, because they will not help you move forward. Those kinds of goals do not motivate you to do better every time and do not give you a picture of progress in your sales.
What you also often see in practice is that when you want to report on your sales metrics, you will find that the information in your CRM is not always stored correctly. Most of the time you will try to solve this manually, but that's a time-intensive. That's why we also recommend to place metrics on the accuracy of information that is in the CRM.
Sales metrics are your key to success
Measuring is knowing. Measuring and analysing sales metrics can really be the starting ground to grow your customer base, maintain your network and sell more. But don't feel overwhelmed! Tracking every aspect of your sales process will certainly show you your team's strengths and opportunities for improvement.
So start small. Track a few of the most meaningful metrics for a quarter, or even six months. See what those baseline metrics reveal, and build a plan to track and act on results. Remember, all these metrics have no value if you don't use them to improve processes.