How to Measure Sales Productivity: Seven Metrics You Should Be Using
Sales productivity derives from complex interactions between many different factors around deals, conversion rates, and lifetime value.
Sales productivity should be measured - and measured accurately.
Here we look at the most important metrics you should use to measure your team's sales productivity.
Sales Productivity Defined
The definition of sales productivity boils down most simply to input vs. output. What is the return on a given quantity of resources (like time and cost)? Sales productivity is the essence of sales forces’ and businesses’ success. Measuring sales productivity “changes from company to company,” but diligently investigating a range of sales force productivity metrics helps reveal the most pertinent ones for you to focus on.
The Top Seven Sales Productivity Metrics
You likely already analyze your sales productivity across a variety of dimensions. However, it is useful to think about these within a couple of overlapping categories. Sales activity metrics include reps’ sales tasks and KPIs. Additionally, 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, internalize the ones that you think contribute to sales productivity.
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 identify the win rate, your team’s efficacy in closing deals by calculating [Number of Closed Deals] / [Total Opportunities].
The average win rate ratio is one in three and knowing the win rate of individual sales reps and the whole team is key. 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 method” 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.
3. Selling Tasks
It is easier than ever to automatically track sales productivity metrics via quality and quantity of sales activities/tasks and the number of time reps spend on them. Scrutinize calls, emails, conversations, social media engagement, meetings, presentations, referral requests, and proposals, but use them to evaluate productivity without micromanaging. Find out what takes time away from actually selling, organize activities in your CRM, and perhaps automate processes like data entry to help reps prioritize selling tasks such as meeting and speaking with qualified prospects. Above all, “relationship investments correlate with customer satisfaction.”
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. They used machine learning to follow behavioral data, predict and replicate customer satisfaction, improve communication and collaboration, grow customer networks, and develop “simple, actionable, and effective” productivity recommendations.
PerceptionPredict’s Performance Fingerprints similarly work by “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 brings to the table like units sold, revenue generated, and appointments booked.
4. Sales Length
“The average time between opening and closing an opportunity” is your sales length. Figure out your average sales length 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 force productivity metric that aids in quantifying how much value salespeople bring to the table is average deal size. You can determine this by working out [Total Value of Deals Won] / [Total Number of Deals Won]. Smaller deals can be easier to close and might attract disproportionate attention from less ambitious reps. Revamping lead generation might increase your team’s average deal size. Sales reps should get bigger, more valuable deals and more revenue as they progress, incentivizing your team to go after those more lucrative leads.
6. Customer Retention and Lifetime Value (LTV)
The lifetime value of a customer is [Average ACV (annual contract value)] x [Retention Period]. A “healthy business” aims for at least 60% customer retention to maximize LTV and profit. Measuring net promoter score, customer satisfaction, and loyalty over time can manage and grow LTV.
7. Quota Attainment and Pipeline Coverage
Pipeline coverage is [Opportunities in Pipeline for Period] / [Quota for Period]. If a rep is struggling to meet quotas, it might be necessary to reevaluate the sales pipeline. Take a look at “what a rep started with (to know if they have enough of the right activity while prospecting), what they move through as ‘qualified’ in the pipeline (so I know if they are spending time in the right places), and then of those qualified, how many came to closure … if they are working the right opportunities or if there are other issues, such as lack of urgency or poor messaging.”
Are your salespeople generating enough leads? Are those leads a good match? Do you need to restructure customer qualification requirements to qualify more of the right prospects? Review “deal loss reason, average lead response time, closing ratio, and customer acquisition cost” to course-correct and stay on track.
The value of having good sales measurements is amplified when you use that data to then understand exactly which sort of person will perform best in the selling role for your company.
Improve Sales Productivity with PerceptionPredict
PerceptionPredict offers proven tools to guarantee ideal hires and measure ongoing employee performance for maximum productivity. Our Performance Fingerprints use predictive analytics to formulate a salesperson’s ‘sales DNA,’ a composite of the research-validated behaviors and human attributes that are consistent with success at your unique business. It takes 20 minutes or less to collect participant data and report predicted KPIs that designate a candidate’s compatibility with your customized sales role.
Don’t hesitate to harness your sales organization’s productivity potential. Book a demo now to find out how PerceptionPredict can help.