The continual rise of remote work has presented new challenges and allowed sales teams to gain valuable insights. 25% of the workforce will continue to be remote through the end of 2022, while last year in 2021, 1 in 4 (26%) Americans worked remote. Key performance indicators (KPIs) remain the top way to monitor sales productivity and track success for remote teams.
What are KPIs?
Sales KPIs measure how effective a specific activity is for reaching your goals. There are lots of different KPIs to choose from based on your business goals. Focusing on the wrong metrics can misguide your team and will result in failures if not done correctly.
78% of buyers look for salespeople that act as trusted advisors. It is important for a sales rep to connect with a prospect because it will be a “make or break” for a deal. Tracking sales KPIs such as conversational intelligence and customer retention rate can inform whether reps are creating these relationships effectively. To determine the ideal KPIs for your sales process, focus on the models that are currently in place within your company.
Here are eight important KPIs for sales teams to use in 2022:
#1 Conversational Intelligence
Conversational intelligence is important to gain trust and loyalty with your customers so you can measure the quality of the conversations. To track this, you will need access to all customer touchpoints. These insights can come from phone calls, emails, conferences, or other digital forms of communication. Genuinely listening to your customers about what they have to say will provide you with the best insights to reach your sales goals.
To measure your emotional relationships with your customers, use conversational intelligence to track your sales KPIs. This is the best way to review your processes to see if they meet your customers' standards.
#2 Sales Opportunities
Opportunities allow sales teams to determine which prospects are valuable to pursue and which are not. The KPIs related to sales opportunities organize prospects and determine the probability of a deal closing based on historical data from other won opportunities. Each prospect's estimated purchase value helps the sales team prioritize their efforts. The prospects can be ranked based on this value to give sales a clear understanding of their pipeline.
#3 Sales Conversion Rate
Marketing and sales teams should work together to gather qualified leads and turn them into paying customers. Sales conversion rates track how often contacts are converted to customers so teams can better understand how effective their processes are. Sales KPIs help analyze the ability of your sales team to convert your leads into customers.
The two most common equations for calculating sales conversion rates are:
- Conversion rate = (total number of sales / number of qualified leads) X 100
- Conversion rate = (total number of sales / unique clicks) X 100
#4 Trials
Free trials have KPIs with applications for both sales and marketing teams. The marketing side is responsible for getting trials started, and the sales side is responsible for closing them out into purchases. The trial conversion rate measures the percentage of users that have converted to a paying account from a trial. The trial conversion rate formula is:
Count (Trial-to-Paid Users) / Count (Trial Users)
#5 Sales Qualified Leads
The direct results of trials are referred to as Sales Qualified Leads (SQLs). SQL customers have moved through the sales pipeline to where sales teams can convert them into a paying customer.
Before a lead is considered a SQL, it is first identified as a Marketing Qualified Lead (MQL). The more MQLs in your pipeline, the more opportunities you have for closing sales. Tracking the conversion rate percentage of MQLs to SQLs is also useful for determining strengths and weaknesses of your marketing and sales processes.
#6 Customer Retention Rate
The number of recurring customers over a specific amount of time is known as the customer retention rate. To determine your customer retention rate, you should first find out the number of customers you obtain at the beginning of a period, the number of customers at the end of a period, and how many new customers were gained within that period.
Once you have that information, you can calculate your customer retention rate by using this formula:
Customer Retention Rate = [(E-N)/S] x 100
- E = the number of customers at the end of the period
- N = the number of new customers during the timeframe
- S = the number of customers at the start of the period
#7 Customer Lifetime Value
Customer Lifetime Value (CLV) is a prediction of the net profit you can expect from the whole relationship with a specific customer. The CLV metric is to help your sales teams understand which buyer personas are most valuable and how you can tailor your sales strategies to these customers.
To find out your CLV, use this equation:
CLV = (average customer retention rate) X (average number of purchases) X (average deal total)
#8 Sales Bookings
Sales bookings are great for calculating the value of a committed or signed contract within a specific period. SaaS (Software-as-a-Service) sales teams use monthly bookings to record and track the value of their wins. This is very beneficial for developing strategies for sales teams to focus on goals.
Use this formula to calculate your monthly sales bookings:
Monthly Sales Bookings = Total new bookings sales dollar of the month - (average cost per transaction X total number of bookings)
Final Thoughts
Keep track of your sales team’s productivity to effectively manage KPIs. These metrics are great ways to evaluate and set goals to successfully track and improve workflows. To learn more about how to optimize your sales revenues, contact us at sales@techadv.com or visit our website.