8 Universal Sales Metrics Sales Leaders Should Think About in 2022

Sales metrics are the key performance indicators, or KPIs, that empower a salesperson, team or organization to assess performance against goals and objectives, monitor progress and make necessary adjustments for continued sales success. Consistent success is achieved through balancing the high, medium and low performing sales. Sales metrics help you as a leader to monitor your team progress and it can help make all the difference you need to move higher up the success ladder. Here are some sales metrics for sales leaders to look out for in 2022.

New sales metrics for sales leaders

Although the above sales metrics are universally applicable, there are however some new metrics for sales that only Sales leaders should be concerned with to make their work easy and more accurate. These include:

• Recurring revenue like subscriptions. The formular takes different forms for different models but it’s generally accepted as [Recurring revenue = Active accounts in a period X Cost of good/service].
• Customer lifetime value looks at all that a customer is likely to purchase from a single company considering previous purchases. The formular widely used, though varies with different products, is [Customer lifetime value = Average order amount X Average purchases/year X Average retention time in years]
• Customer retention/churn which calculates the percentage of customer who for life, remain active buyers. The accepted formular is [Customer churn = (Customer total at end of churn period – Customer total at start of churn period) / Customer total at the start of the churn period X 100)]. The retention rate can then be calculated as [Customer retention = 100 – Customer churn].
• Early warning signs which consider the changes in a customer’s buying of your product which point to reducing interest in your provision.
• Employee retention/churn which is generally the employee tenure in your company. It’s measured using the formular [Employee churn = (Employee total at end of churn period — Employee total at start of churn period) / Employee total at the start of the churn period X 100)]. From this, the employee retention is calculated as [Employee retention = 100 – Employee churn].

8 Types of Sales Metrics That You Should Know and Use

Besides the new entries, below are the usual sales metrics that should help you in understanding your sales forecasting report.

Average Annual Return.

This sales metric for sales leaders (average annual return) is simply the stated net of a fund’s operating expense ratio. Additionally, it does not include sales charges, if applicable, or portfolio transaction brokerage commissions. In its simplest terms, the average annual return (AAR) measures the money made or lost by a mutual fund over a given period. Investors considering a mutual fund investment will often review the AAR and compare it with other similar mutual funds as part of their mutual fund investment strategy.

Average Revenue Per Account/Product/Customer

The average revenue brought in by a single product, service, account, or customer helps leaders and managers to understand where they ought to focus their attention and direct their resources. It is equally also important for you as a sales leader to know when your business is heavily weighted and dependent on a few key accounts, which will be evident by a higher ARPA. This sales metric for sales leaders is designed to help them track sales for each line separately.

The Average Deal Size

The average deal size refers to the average dollar amount of each closed deal. This means, if a company closes three deals in a quarter, at $60,000, $60,000, and $75,000, the average selling price for that quarter would be $65,000 for that quarter. The average deal size sales metric demonstrates your income groups’ capacity to rise in the market and close bigger deals.

Annual Recurring Revenue

Annual Recurring Revenue is a key metric used by SaaS or subscription businesses with term subscription agreements, meaning a defined contract length. It is the total amount of contracted revenue your company brings in each year. It’s a particularly crucial key performance indicator (KPI) to follow for any especially subscription-based business. This is because it tells you how much money you can expect to receive from customers in a given fiscal year.

Quota Attainment

Quota attainment is exactly what it sounds like: the percentage of deals (either by number or by revenue) a sales leader has closed in relation to their set quota for a given period. It can be measured per month, quarter or year, depending on your sales cycle. This is an important sales forecasting metric to monitor to keep track of how deals have closed against targets, as well as to identify reps who might benefit from more coaching or guidance. Tracked over time, sales leader’s quota attainment percentages might even signal the need for team structure changes.

CRM Score

The CRM Score is one of many predictive analytics sales analytics tools that can help revenue teams identify the likelihood that a deal will close based on previous deals with similar behaviors. It can also help sales leaders identify if an agreement is at risk and where reps should spend their time. A deal with a high CRM Score may require less attention than a low one. It’s a critical input for pipeline management. Lead scoring assigns points to people in your CRM based on attributes that make them better leaders

Market Penetration

Understanding your market share is important because it measures where your business is compared to the expected growth outlined in your business plan. Usually, you will find businesses measuring this against their total addressable market (TAM), which is an estimation of how big a given market is for a product or service.

Average Profit Margin

The average profit margin ratio. It calculates the average profit generated from the sale of a given service, service category, or product. If you’re one of the many companies that sell a wide selection of services or products, this KPI will turn out to be quite useful. That’s because each service/product usually generates distinct profit margins. It pays off to determine what is most efficient of them, to know what to focus on in the foreseeable future.

Other sales metrics to learn more about include:

• Win rate.
• Conversion rate.
• Pipeline coverage.
• Sales linearity.
• Churn rate.
• New retention rate.
• Deal slippage.
• Annual selling price, etc.

Importance of sales metrics for sales leaders

Sales leaders guide the business in understanding the sales or revenue prediction over a given period of time. Being a sales leader without setting sales metrics made it impossible to know what the business projects as its revenue for any future period. As such, it’s imperative to have sales metrics in place and ensure all your sales reps and senior managers are aware of the projections and metrics set by you.

• Improves employee performance.
• Helps identify difficulties and loopholes.
• Improves focus.
• Helps maintain a united front.
• Provides leaders with coaching opportunities.
• Offers visibility and insights into the sales process.

In this new digital era endowed with ever-changing and fast-paced technology, customers’ needs are also matching up to new trends. As a sales leader, you need to ensure that the above metrics are used for better results and to also increase your ROI. To make this successful, secure the top talents and recurring revenue modes employed. Gauge your success using the right metrics to stay at the top of the game. New tools and skills are what will aid you to climb higher up the success ladder. Think about how to combine these metrics with the talents and resources that you can access. Use dashboards that will help you see and visualize the picture of success. Craft strategies using these dashboards as well. They will help you grow sales as a leader.