We’ve all managed that guy. We’re familiar with the one whose bursts of motivation lead to admittedly impressive performance but generally burn out in no time.
His inconsistent performance is frustrating, but his periods of intense productivity keep him squarely in the ‘average’ range of sales reps, so you keep him around, hoping he straightens up one day.
Let’s be honest. Most sales leaders don’t have that guy on their team. The unfortunate truth is their entire team is composed of those guys. Disengaged and under-productive workers cost U.S companies between $450-550 billion every year.
To address the resource-draining problem of productivity, businesses must do something, but what?
The first step for concerned companies should be a review of which sales rep performance metrics they use to track performance. Identifying and tracking the right sales productivity metrics for your team is a key strategy for consistent growth and profitability.
What Are Sales Productivity Metrics?
Sales productivity is the essence of sales forces’ and businesses’ success. The definition of sales productivity boils down to input vs. output. What is the return on your vital resources?
Measuring sales productivity changes from company to company but diligently investigating a range of sales force productivity metrics can help companies discover the relevant metrics for driving industry-leading productivity from their sales teams.
How Can Sales Metrics Increase Sales Performance?
Modern sales managers can’t rely on their observations and intuition to accurately measure sales performance. In an increasingly data- and tech-driven sales marketplace, companies that want to maintain a leg-up on the competition need deeper insight into the productivity and performance of their sales teams.
Tracking sales rep productivity and performance metrics helps companies critically analyze every step of their sales process to identify winning strategies and areas that need improvement.
If your company struggles to find a adequate, modern solution to improving sales rep productivity, sales data metrics may very well be the answer.
“Identifying and tracking the right sales productivity metrics for your team is a key strategy for consistent growth and profitability.”
15 Sales Productivity Metrics Every Sales Team Manager Should Track
You likely already analyze your sales productivity across a variety of dimensions. However, it is useful to think about these within overlapping categories. Sales activity metrics include reps’ sales tasks and KPIs. Pipeline metrics such as win rate, conversion rate, sales length, and contract values indicate pipeline health.
Not every metric may apply to your company. However, choosing the right sales data metrics to act on contributes to a shift in sales rep productivity and performance.
1. Win Rate
Win rate is the percentage of deals that close compared to total deals, including those that are open, lost, slipped, or in another pipeline phase.
You can analyze your sales team’s efficacy in closing deals by calculating win rate.
Win Rate Formula: [Number of Closed Deals] / [Total Opportunities]
The average win rate ratio is one to three. Knowing the win rate of individual sales reps compared to this control ratio and their colleagues can provide valuable insight into individual productivity.
Company strength, product value/relevance, and sales team performance contribute to winning rate, and promptness and personalization in client communications can improve this area.
2. Conversion Rate
Conversion rate is another standard sales rep productivity metric that provides a general audit of sales process adequacy. For example, how many leads and opportunities go into producing a single sale? How well is each sales funnel stage functioning?
Individually, the SQL (Sales Qualified Lead)-to-Customer Conversion Rate signifies how persuasive individual sales reps are, so you can establish who the top performers are and whose sales skills need more work.
Talented sales reps may still suffer poor conversion rates due to motivational struggles and other productivity issues.
3. Selling Tasks
It is easier than ever to automatically track sales productivity metrics via the quality and quantity of sales tasks and the amount of time reps spend on them.
Scrutinize calls, emails, conversations, social media engagement, meetings, presentations, referral requests, and proposals to evaluate sales rep productivity without micromanaging.
By revealing which tasks take the most time away from selling, sales leaders can implement productivity-boosting adjustments to their sales process.
Organize activities in the CRM and automate processes like data entry to help sales reps prioritize selling tasks, such as meeting and speaking with qualified prospects.
In 2017, Microsoft underwent a massive overhaul that affected over 20,000 salespeople in 100 countries. One of their primary mechanisms to improve their sales operations was “people analytics.”
Microsoft used machine learning to process behavioral data that predicts customer satisfaction, potential improvements to communication and collaboration channels, methods to grow customer networks, and strategies to develop simple, actionable, and effective productivity recommendations.
PerceptionPredict’s Performance Fingerprints take a similar approach to improving productivity through data engineering talent.
We use predictive analytics to assess salespeople’s sales behaviors and attributes and incorporate your company’s data to understand the potential individual performers bring to the table like units sold, revenue generated, and appointments booked.
“By revealing which tasks take the most time away from selling, sales leaders can implement productivity-boosting adjustments to their sales process.”
4. Sales Length
The average time between opening and closing an opportunity is your sales length. Figure out the length of your average sale to gauge customer behavior and cater sales processes and strategies accordingly.
For example, if a lead takes more time to convert into a sale, it is more resource-intensive and less efficient. Conversely, a sales rep’s high performance can result in shorter sales cycle lengths and greater revenue.
5. Deal Size
Another sales rep productivity metric that quantifies the value sales reps bring to the table is average deal size.
Deal Size Formula: [Total Value of Deals Won] / [Total Number of Deals Won]
Determine average deal size by dividing the value of deals won by the total number of deals closed. Smaller deals can be easier to close and might attract disproportionate attention from less ambitious reps.
Revamping your lead generation strategy can improve substandard average deal sizes, but productivity and motivation at the sales rep level also play a significant role in growing deal size.
High-performing and highly productive sales reps consistently close more valuable deals, bringing in more revenue as they mature in their roles. This can create a lucrative snowball effect, incentivizing other members of your sales team to pursue more lucrative leads.
6. Lifetime Value (LTV)
Contrary to misconceptions about supporting the growth and profitability of a business, retaining customers is more valuable than securing new business.
Businesses can calculate customers’ lifetime value by multiplying average annual contract values by retention periods and aiming for at least 60% customer retention.
Lifetime Value Formula: [Average ACV (annual contract value) x Retention Period]
Sales reps should consistently take advantage of the opportunities for growth presented by existing contracts. Existing clients are 14x more likely to buy than new customers, so sales reps that struggle to grow and sustain contracts may be suffering from poor productivity.
7. Pipeline Coverage
Pipeline coverage is a valuable sales rep productivity metric that divides targeted quotas by existing sales opportunities in your pipeline.
Pipeline Coverage Formula: [Opportunities in Pipeline over Period of Time / Quota for Period of Time]
If a rep is struggling to meet quotas, it might be necessary to reevaluate the sales pipeline. Observe sales reps’ prospecting, reasons for deal loss, qualified lead production, lead response times, customer acquisition cost, and conversion rates to get an idea of their pipeline coverage.
Lower rates of pipeline coverage may indicate a lack of urgency on the part of sales reps or a need to revisit how you structure parts of the sales pipeline such as customer qualification requirements.
8. Quota Attainment
Reliably making or exceeding quotas is the primary responsibility of all sales reps. Market downturns, seasonal swings, and other factors may result in sales reps occasionally falling short of targeted goals. But consistent failure to attain quotas reflects poor sales productivity.
Tracking quota attainment allows executives and managers to build a historical model of sales rep productivity and performance. This informs crucial management decisions, such as training topics and personnel decisions like promotions and terminations.
9. Deal Slippage
Deal slippage is a metric for tracking the number of deals that fail to close during the projected window. While a degree of deal slippage is expected, businesses that track deal slippage at the sales rep level can reveal sources of low performance.
Sales reps with consistently higher rates of deal slippage than their colleagues might be displaying poor productivity. Regardless of the root of their slippage rate, this metric focuses managers’ training and supervisory attention on the team members that need it.
10. Churn Rate
Churn rate refers to the number of customers who cancel their product or service or abstain from renewing contracts.
While churn is common in some industries, like subscription-based businesses, churn can help locate bottlenecks and costly leaks in your post-sale onboarding process. A variety of factors influence this metric, but poor customer service and attention are consistent contributors to customers jumping ship.
11. Sales Linearity
Sales linearity is a metric that tracks sales reps’ progress rate towards quotas. This is extremely useful for measuring sales rep productivity because it applies a simple standard of success to implement.
Failing to achieve steady linearity in sales can force companies to take counter-productive measures to reach revenue targets, like heavy discounts at the end of each quarter. Sales linearity also provides crucial data to predict cash flow and optimize client onboarding.
The standard sales linearity formula is simple. Expect productive sales reps to attain 20% of their quota 30 days after the beginning of a new quarter, 50% of targeted sales by the end of month two, and finally, 100% quota attainment by the end of the quarter.
12. Year-Over-Year Growth
Tracking growth over various time frames works best, but year-over-year growth is an illuminating metric for analyzing long-term productivity.
Spikes in productivity can significantly skew short-term metrics, so sales reps must apply continuous high effort and performance to secure a consistent growth rate over the entire fiscal year.
13. Average Profit Margin
An essential facet of sales productivity is pursuing clients and contracts that bring revenue and profits. Unfortunately, unscrupulous sales reps may focus on pushing lower-value products or services to create an illusion of high productivity.
Companies that calculate the average profit margin of each rep can make a fair comparison of productivity and performance. Calculate average profit margin by dividing net income by net sales.
14. Retention Rates
Retaining existing customers while securing new business requires a commitment to nimble sales execution and exhaustive efforts. Though new sales reps focus energy on new contracts, veteran salespeople know that increasing customer retention and growing contracts with long-term clients yield productive sales quarters.
It can cost as much as five times more to attract a new customer than to retain an existing one. Even more shocking is retention rates’ outsized effect on profits. Companies that successfully improved their retention rate by 5% enjoyed profit increases ranging from 25% to a staggering 95%.
15. Total Revenue
Finally, total revenue is the ultimate business metric for success, which extends to measuring sales performance and productivity. Measure total revenue on monthly, quarterly, and annual time-frames to flag downswings in revenue that warn of faltering productivity.
Improve Sales Productivity with PerceptionPredict
PerceptionPredict offers advanced predictive analytics tools to measure ongoing employee performance to ensure maximum productivity.
Our Performance Fingerprints use artificial intelligence and predictive analytics to create a data-driven model of a salesperson’s ‘sales DNA.’ Sales DNA is a composite of the research-validated behaviors and human attributes consistent with success at your unique business.
Don’t wait for a lackluster sales cycle to begin harnessing your sales organization’s productivity potential.