Sales KPIs are actionable metrics that give you insight into your sales team’s performance. They help you optimize your sales process by allowing you to track progress and measure results against your goals.

Properly tracking your team’s sales KPIs can also help grow your business. You can use KPIs to gauge your business’s health and track your sales team’s performance.

But which KPIs should you track? Here’s an overview of the essential metrics for measuring your company’s sales performance.

Why are Sales KPIs Important?

An understanding of why sales KPIs are important can help you select the right metrics before implementing a set of KPIs in your organization

Keep team members aligned

Keeping your team aligned is one of the most important things you can do as a leader. A misaligned team is less inclined to stay motivated, makes more mistakes, and doesn’t perform well. 

Setting clear goals everyone understands and agrees upon is the best way to keep your team aligned. 

Measure growth and progress

Sales KPIs are important because they help you measure your growth and progress over time. They can show you how well you’re moving towards your goals, help identify trends, and indicate which adjustments are necessary.

They also help you set up a framework for discussing what is and isn’t working with your team and customers.

Serve as benchmarks

Sales KPIs are important because they serve as internal and external benchmarks. They allow you to measure your progress over time to see how much you’ve improved or let you compare your performance against other companies in the same industry. 

These comparisons help you identify where to improve your sales strategy. 

7 Essential Sales KPIs to Track

Of all the available sales KPIs, there are seven that are essential for startups to track.

1. Customer Lifetime Value

Customer Lifetime Value is the amount of money a company makes from a customer throughout their relationship with the company. It’s also known as customer equity and CLTV. 

It’s essential to sales because it helps you understand how much sales and profit you create from each customer, which indicates where to focus your marketing efforts and how much to spend on those efforts.

2. Conversion Rate

Conversion rate is the percentage of visitors who complete a specific action on your site, such as purchasing a product or signing up for a free trial. 

This metric tells you how many visitors convert into customers. It also gives you an idea of where your process is breaking down. For example, are too many people abandoning their shopping carts? Coupled with A-B testing, the conversion rate can also help you improve your website’s design and user experience to ensure more people convert into customers.

3. Customer Retention 

Customer retention is the percentage of your customers that you keep over time. It’s important because it measures how well you keep your customers happy. A high customer retention rate means that your customers are satisfied with the experience they have with your company.

Conversely, a low customer retention rate indicates you’re not doing enough to keep customers happy and coming back for more. It can be due to various reasons, and discovering those reasons is crucial for improving customer retention.

4. Lead Response

The lead response is the percentage of contacted leads that reply to your outreach. It’s important because it shows how well you communicate with potential customers and get them to engage them with your brand. 

Good lead response indicates a clear message and that resonates with your target audience.

5. Monthly Sales Growth

Monthly Sales Growth is a KPI that tracks your sales growth over time. Many businesses and teams set specific targets for how quickly they need to grow to achieve profitabilityBy following monthly sales growth, you can ensure that your team is doing its job and helping your company grow profitably.

6. Customer Acquisition Cost

CAC is the amount of money it takes to get a customer, it complements Customer Lifetime Value (CLTV) well.

This metric is essential for sales because it shows how much it costs to bring a new customer on board, allowing your team to assess whether that cost is worth it. A high CAC requires a higher LTV.

7. New and Expansion Monthly Recurring Revenue

New and Expansion Monthly Recurring Revenue is a crucial metric that salespeople should track. This metric is important because it shows how much new recurring revenue you bring in from customers you’ve added in the past month. 

Tracking Expansion Monthly Recurring Revenue (MRR) will help you see if your sales team is doing a good job selling new products. In some ways, it’s another growth metric, letting you know how much money is coming into your company on an ongoing basis. Information from this metric can improve your cost planning.

Sales KPIs

Need Help Tracking Sales KPIs?

As a founder or CEO, you’re a valuable ally for the sales team, even if you’re no longer directly running company sales. Tracking sales KPIs is vital to your company’s success and will allow you to build an effective sales team. 

Investing in the right tools and services for your business is key to managing your numbers and making intelligent decisions. The experts at Founders CPA can help you set up systems and methods to track your sales KPIs and drive company growth. Contact us today!

Curt Mastio
Post by Curt Mastio
May 30, 2024 10:33:11 AM
Curt Mastio started Founder’s CPA in 2017 and currently serves as the Managing Partner of the firm. After obtaining both his Bachelor’s and Master’s degrees in accounting from the University of Illinois in Urbana-Champaign Curt started his career in Big Four public accounting. Shortly thereafter Curt served as the Chief Financial Officer of Storage Squad began his stint as an Adjunct Instructor at Northwestern University’s Farley Center for Entrepreneurship and has been teaching Accounting & Finance to undergraduate students for 6+ years. In his current role Curt oversees strategy, operations, and business development at Founder’s CPA. Further, Curt has experience working directly with 200+ startups and small businesses providing accounting, tax, and outsourced CFO services. His industry expertise lies in the SaaS, Blockchain, Marketplace, and Fintech industries. He has served as a key advisor working directly with startups that range from pre-revenue to companies generating over $30 million dollars a year in revenue. Lastly, he serves a key role working directly with the firm’s clients that have collectively raised over $200 million in venture capital funding to date. Curt is also an active advisor, mentor, and investor in the startup ecosystem. He has facilitated numerous workshops, webinars, and presentations to incubators and other startup-centric organizations. He is also an active mentor for Techstars in both Chicago and Iowa. Outside of his daily professional duties Curt is actively involved with Beat the Streets Chicago and was a founding member of its Young Professionals Board. His efforts in both leadership and community involvement were recognized when he was awarded the Illinois CPA Society’s Outstanding Young Professional Leadership Award in 2020. He was also a panelist at their annual conference in 2022 where he spoke about his experiences starting and operating a public accounting firm. He maintains an active Certified Public Accountant designation that he obtained in 2014. Outside of work, Curt can be found spending time with his friends & family including his dog Rufus. His hobbies include golf, boating, cooking, reading, and attending sporting events & concerts.