Sales KPI is a one of the important key performance indicators to improve business performance. To monitor each activity individually in an effective way perfect KPI identification is very essential. Sales KPIs is help to monitor and improve performance of each activity. In general way business growth is directly proportional to product sales growth. Now a day’s in a very competitive environment maintaining and improving sales growth is very important. On the day to day basis taking feedback from customer is very important to satisfy customer needs and expectations.

Sales KPIs are categorized into two parts, operational sales KPIs and Financial sales KPIs.

Operational Sales KPIs

Sales accuracy ratio

Sales ratio is basically comparison of targeted sales as per forecasting and actual sales performance of product. As per organizational requirement sales ratio is calculated product volume wise or amount wise. Organization is focused to improve sales ratio on day to day basis. This ratio is also measure accuracy of target define and actual performance of sales. To measure this sales ratio in a very effective way ensure your sales target is continuously improved as per past performance.

Sales Ratio = (Actual sales / Targeted sales)
Sales Ratio = (Amount of total sales / Targeted amount of sales)

Sales Growth

Sales growth is a one of the very important parameters to measure overall sales outcomes. This KPI is measure monthly, yearly or quarterly basis. Sales growth is also measure with the compare past month performance or past quarter performance.

Quote-to-win Ratio

Quote-to-win ratio is basically representing performance of sales and estimation department. It derived based on numbers of quoted sales deal versus numbers of win sales deal. The main goal to measure this KPIs is to identify percentage of how customers are fully convinced with industries products and its requirements.

Percentage of Quote-to-win Ratio = (Numbers of win deal / Numbers of quote deal) * 100

Customer churn rate

Customer churn rate is measure based on how many customers are stop doing business with the organization. In another simple word customer choose different service provider rather than current organizations. The goal of organization is to maintain and improve sales performance, reduce the customer churn rate.

Percentage of Customer churn rate = (numbers of lose customers / numbers of total customers) * 100

When performance measurement purpose acceptable range of customer churn rate is 5 to 7% range annually but, focused to reduce churn rate. For improving this rate organization is to plan in a such a way to collect list of reason to stop doing business and start working on that.

Customer retention rate

Customer retention rate is measure based on how many customers are stay with the current organization and doing business. The goal of organization is to improve customer retention rate. If customer satisfaction is too high with product and services to be provided by organization, automatically it replicates on customer retention rate. Review below attached formula to calculate.

Percentage of Customer retention rate: – (numbers of customer stay with organization / total numbers of customers) * 100

Average sales cycle length

Average sales cycle length is a very important parameters and it includes 4 parameters as per below mention and its varies on industry to industry. Organization is to monitor overall sales performance timeline on the average sales cycle and focused to minimize as possible.

• Opportunity identification.
• Proposal submission and response.
• Communication & negotiation.
• Closing.

Generally average sales cycle is measure on numbers of days & formula is mention as per below.

Sales cycle length = Opportunity identification days + proposal days + negotiation days + closing days.

Above formula mention is for one entities, if we calculate on monthly basis there are several deal discuss with different customers.

Average sales cycle length = Total sales cycle length / numbers of customers.

Lead to opportunity ratio

Lead to opportunity is ratio is a one of the important KPIs for sales. Majority organization is focused to convert majority leads to opportunity for product or services and increase percentage of lead to opportunity ratio. Before proceed further let understand lead & opportunity.

Lead: – lead is basically a customer link found for customer reference or with the help of marketing & advertising.

Opportunity: – opportunity is basically customer are shown interest to product & services. In a simple word just one step ahead to lead for sales & marketing.

Percentage of Lead to opportunity ratio = (numbers of leads are transfer to opportunity / total numbers of lead) * 100

Opportunity to win ratio

Opportunity to win ratio is basically how many opportunities are convert into closing deal with different customers. Organization is focused to improve percentage of opportunity to win ratio.

Percentage of opportunity to win ratio = (numbers of opportunity are transfer to closing deal with customer / total numbers of opportunity) * 100

Lead to conversion ratio

To measure lead conversion ratio is how many leads are transfer to the customer payable. When sales and marketing team putting efforts for lead generation via customers contact and advertising, organization want is to generate lead. Lead to conversion ratio helps to identify accuracy of qualified lead rather than unqualified leads.

Percentage of Lead to conversion ratio = (numbers of lead are transfer to customer’s payable / total numbers of lead generated) * 100

Product margin & sales performance

Product margin & sales performance is basically measured with the individual profit margin per product versus its sales certain period of time. Organization is generally more focused on sell the marginal product because its directly impact on revenue generation cycle.

Sales per representative

Sales per representative shown contribution of sales individually as well as team. This KPI is help to monitor individual performance of sales.

Financial KPIs

Average profit margin

Monitor average profit margin is also very important for getting more profitable deals rather than taking more sales order with less profitable margin. To calculate average profit margin in terms of sales review below attached formula.

Percentage of average profit margin = (net profit or income / net sales) * 100

Average cost per lead

Average cost per lead is basically ratio of total cost incurred for lead generation to total numbers of lead generation. Organization is spending certain amount for marketing product & services and generate lead and opportunities for product or service selling.

Average cost per lead = (total cost for lead generation / total numbers of lead generated)

Customer acquisition cost

Customer acquisition cost is measured with the ratio of total cost of sales and marketing versus total customer acquired certain period of time. Organization focused to minimize total cost for acquiring customers.

Customer acquisition cost = (total cost of sales & marketing / total customer acquired)

Monthly revenue accuracy

Monthly revenue accuracy is basically measured with the comparison of monthly expected revenue versus actual revenue generating from sales performance. After product or service sales, responsibility of customers to timely providing amount of product or services as per terms and conditions. Review formula for calculating monthly revenue accuracy

Monthly revenue accuracy = (Expected revenue / Actual revenue) * 100

Marketing ROI

Marketing ROI is a very important parameter for review generation of revenue against marketing spend. Organization must monitor the impact of marketing in terms of product and services sales growth. Review below attached formula for calculating marketing ROI.

Marketing ROI = ((Sales growth – marketing investment) / Sales growth)

Conclusion

In concluding part as per above mention several sales & marketing KPIs is very important. For your organizational better practice, identify selected KPIs from above list as per your organizational monitoring system and practically monitor and improve operational performance. Not necessary to each organization required each KPIs to be monitor & you can also define new Key performance indicators as per your individual process basis.