Five Meaningful Sales Metrics

Targeting the right customers and measuring activities in customers' terms can help to increase sales performance.

In any successful business, the most important metric for measuring the success of the sales team is, naturally, sales. How much money did we exchange product for? Whether it's measured daily, weekly, quarterly, or annually, top-line revenue growth is the single most important measure of organizational health.

There are, however, five additional metrics that are worth tracking, as well. These are signposts that indicate how you and your team are doing. They can be early warning signs that something needs to change or can measure other aspects of your company's life.

Tread carefully. Complexity is the enemy of efficiency. For every new metric you introduce, you and your team will spend significant time tracking, reporting, and considering the meaning of what was measured. Before you adopt any of these or other measurements, estimate the investment and be willing to spend double. Then go forward and reap the benefits.

  1. Touches: Touches are successful contacts made or conversations had with a customer or prospect. They're not just calls made and emails sent, which are more a measure of speed dialing and spamming. How many times did each salesperson contact each prospect and each customer? For simplicity sake, I'm combining sales hunters (new customers) and sales gatherers (repeat customers) in the sales group. Same with inside and outside sales.There are several reasons to count touches. You can figure out the optimum number of touches per customer type, so you don't waste time chasing deals unlikely to close. Hubspot has done great work quantifying this. Without counting touches, the squeaky customer wheel will absolutely get the grease, no matter how unprofitable they are. Counting touches is also a great way to compare salespeople. Missing a revenue target is more understandable if the number of touches is high-bad streaks happen to everyone, but there is no excuse for low touches. You must have effective and cost-efficient systems in place to measure phone, email, and in-person touches before putting this metric on your team.
  2. Time-to-close: Otherwise known as speed or sales-cycle time, this metric measures the various days/weeks/months that it takes a salesperson to close each deal. The importance of this metric is easy to see, although the desired result is company-specific. In some companies, a salesperson who closes a $200K deal every month is preferred over someone who takes twelve months to close a $2.4M contract, but not if each sale requires custom development and significant deployment effort.No matter which your company prefers,
    time-to-close can be a helpful measure for sales to track. As with number of touches, you can use time-to-close as a way to eliminate trash from the sales funnel. If the opportunity is more than a year old, it's unlikely to close. For your company, a month may be all it takes before the opportunity becomes too old. As with touches, time-to-close is another good measure to compare salespeople.
  3. Time-to-respond: This metric is tougher to measure reliably, because it's more granular, but it can be very effective at predicting customer success. Recent research by Jon Miller in his presentation entitled, "Secret Sauce for Demand Generation," claims that prospects were much more likely to buy from a company's website if they received a contact within five minutes of visiting. Similarly, after the salesperson has established interest, quick response time to a prospect's questions, objections, and proposals can mean the difference. It's easy to see why: In the mind of the buyer, fast response in the sales process signals an eagerness to support the partnership in the long term.
  4. Customer response: Many companies track calls made or emails sent, and in most cases, moving prospects down in the pipeline (and therefore assigning them a higher likelihood to buy) is tied to a salesperson's activity. For example, you've sent the prospect a proposal; now you can move them from a 10 percent to a 25 percent likely-to-close. That approach is senseless in a number of ways, but the most obvious one is this: sending the proposal doesn't matter. The customer accepting the proposal, reading the proposal, marking up the proposal, and returning the proposal now those are the things that matter. Stop measuring pipeline stages as activities of a sales team, and start measuring them as activities of our prospects and customers.
  5. Time-to-cash: All other things being equal, the customer who pays fastest is best. This metric combines a salesperson's ability to negotiate quick payment terms, and their skill in choosing customers to pursue and close. In some companies, where prices and discount schedules are fixed, how fast the customer pays is second only to volume for influencing the salesperson's compensation.

It's worth mentioning that although these metrics are usually tied in to compensation, they don't need to be. It's tough to know how accurately you'll be able to measure these, and even tougher to know what the desired numbers should be. People tend to pay attention to what is tracked, whether or not it figures into their paycheck; often public recognition and shared goals are more powerful motivators than compensation anyway. And tying a bundle of sales metrics together increases the opportunity for taking advantage of the system, which does nothing more than waste people's time and talent.

But even if it's not tied to compensation, or there aren't explicit goals in the first year or two of the program, introducing one or more of these sales metrics (and eliminating ones that are driving unproductive or deceitful behavior) can generate numerous benefits for your company.