5 Important Key Performance Indicators To Be Monitored in Sales Management

Sales managers have very important responsibilities today. Since the survival of businesses is directly proportional to the sustainable growth, the performance of the sales team is very important nowadays. Today’s sales executives sometimes forget about the scientific direction of sales because of the focus in effort to teach the art direction of sales to their sales team with their past experience in the field. For the individual success in sales, the association with the art direction of sales is of course very important but it is not sustainable. Continuous development is only possible with a scientific approach. For this purpose, I would suggest the following 5 key performance indicators that sales executives can follow. This ranking is very variable according many other key performance indicators that can be monitored.

1.    Win Ratio

Recommended Calculation Methods

  • Total number of proposal given / number of opportunity won at a given date range
  • In a given date range, the total proposal amount given / the opportunity amount won

Goal

“Win Ratio ” is a measure of how our sales teams work efficiently. With this ratio, It is also possible to monitor how much of the total sales opportunities produced and still open are going to be sold.

2.    Conversion Rate

Recommended Calculation Method

  • In a given date range, a specific list of leads / number of converted leads

Goal

With ” Conversion Rate”, it is possible to measure the total performance starting from marketing activities to the end of the sales period. With average conversion rate information, it is possible to predict how much sales the company can make from the pool of existing leads.

3.    Pipeline Growth Ratio

Recommended Calculation Methods

  • Number of open opportunities at the end of a given date range  / number of open opportunities at the beginning of a given date range
  • Total amout of open opportunities at the end of a given date range  / Total amount of open opportunities at the beginning of a given date range

Goal

With Pipeline Growth Ratio, the change of opportunity size produced by sales team can be followed. With this view, the sales team’s performance in bringing new business opportunities is observed.

4.    Average Duration of Sales Cycle

Recommended Calculation Methods

  • Average closing duration for opportunities at a given date range
  • Opportunity duration averages over the sales funnel at a certain date range

Goal

With Average Duration of Sales Cycle, within the sales operation carried out by the sales team, the closing or progress times of the opportunities are monitored. It is a very important display in terms of monitoring the costs and the capacity planning of sales activities.

5.    Average Deal Size

Recommended Calculation Method

  • Average amount of opportunities that are closed at a given date range

Goal

With Average Deal Size, it is possible to calculate the return of the sales team’s operation for each opportunity.

It is important to evaluate the Key Success Indicators exemplified above for analysis by correlating them together. For example, it is scientifically possible to estimate how much revenue an existing “Pipeline” will generate and the needs of salespeople for this revenue with “Average Deal Size”, “Average Duration” and “Win Ratio”. Of course, duplicating these tables and calculating them using different methods can differ in the customer, sector and product context.

How to monitor all these Key Performance Indicators is also a very important issue. Spending too much time and resources to follow this data is often unsustainable and makes the truth of the data vulnerable to debate. Therefore, it is recommended to monitor the entire process through a system. The goal is to be as proactive as instant. The use of artificial intelligence is also one of the primary factors that make a difference.

Author: Sinan Erkiner

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