# Sales Metrics 101: The Ultimate Guide to Understand What to Track, How to Track, & Why

Discover what sales metrics are, why they're so important to your business's success, and which metrics you should be tracking.

Written by: Aja Frost

## FREE SALES METRICS CALCULATOR

Use this Excel template to calculate cost of goods sold, average deal size, win-loss rate, churn rate, and more.

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Data is the key to making informed decisions and achieving success in today's fast-paced business world. And when it comes to sales, having a clear understanding of your sales metrics is highly essential. Without analyzing these indicators, it can be challenging to identify areas for improvement.

That's why successful companies focus on measuring every aspect of their go-to-market model, sales strategy, and sales team. But with so many sales metrics, it can be overwhelming to determine which numbers are truly relevant.

To help you find the numbers that you should be paying attention to, we've compiled this ultimate guide to sales metrics.

## Chapters

What are sales metrics? Let's dive in.

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Now, you might wonder how many sales metrics there are and which ones you should track.

To effectively measure the performance of your sales efforts, tracking the right metrics throughout each stage of the sales process is essential. Below is the list of key sales metrics your organization should be tracking.

### Free Sales Metrics Calculator

A free, interactive template to calculate your sales KPIs.

• Average Deal Size
• Customer Acquisition Cost (CAC)
• And more!

All fields are required.

### You're all set!

Click this link to access this resource at any time.

Featured Resource

## Free Sales Metrics Calculator

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## Key sales metrics to track

### 1. Total Revenue

Total revenue, also known as gross sales or turnover, is a crucial metric in evaluating your business's financial health and success. It is the entire income generated from all operational and sales activities across all products and services.

Calculate total revenue using:

Total revenue = Quantity of products and services sold x Price of the product or service

Suppose your company sells 100 units of its product for \$10 per unit. Your total revenue would be \$1000.

Why track it: Your business's total revenue objectively measures your ability to generate income. It helps monitor your progress and make informed decisions about enhancing profitability and optimizing sales operations.

### 2. Revenue by Product or Service

It is the income generated per product or service. This metric is vital for understanding the financial performance of different products and services.

Why track it: Tracking revenue by product or service lets you identify your most and least profitable offerings and optimize product mix to drive growth.

### 3. Market Penetration

Market penetration is your total customer base compared with the total market potential.

Calculate the market penetration rate using the following:

Market Penetration Rate= (Number of customers/Total Target Market Size) X 100

If your company sells its product to 500 customers with a target market of 1000 customers, your market penetration rate is 50%.

The higher the market penetration rate, the greater the opportunity for growth and revenue.

Why track it: This metric provides valuable insights into the market potential and helps you develop strategies to increase your market share.

### 4. Percentage of Revenue From New Business

The percentage of revenue from new business is the monthly or quarterly revenue generated by new customers.

Calculate the percentage of revenue from a new business using this formula.

Percentage of revenue from new business = (Revenue from new customers / Total revenue) X 100

If your company generates \$20,000 in revenue from new business and has total revenue of \$100,000, it generates 20% of its revenue from new business.

Why track it: It provides an important measure of your company's growth and success in acquiring new customers and its ability to generate income from these new relationships.

### 5. Percentage of Revenue From Existing Customers

It is the income generated from cross-selling and upselling current customers, as well as from repeat orders and expanded contracts.

Calculate the percentage of revenue from existing customers with this formula.

Percentage of revenue from existing customers = (Revenue from existing customers / Total revenue) * 100

If your company has total revenue of \$100,000 and generated \$20,000 in revenue from new business, it generated 80% of its total revenue from existing customers.

Why track it: This metric provides insight into the success of your company's efforts to retain and grow its existing customer base, which is often more cost-effective than acquiring new customers.

### 6. Year-Over-Year Growth

Year-over-year (YoY) growth is the metric that compares revenue generated from year to year.

Calculate YoY Growth using:

YoY Growth = ((Current Year Metric - Previous Year Metric) / Previous Year Metric) * 100

For example, if your company had revenue of \$100,000 in 2021 and \$120,000 in 2022, it had 20% YoY growth in revenue from 2021 to 2022.

Why track it: YoY growth provides a valuable way to evaluate a company's overall performance and success in growing its business and meeting its goals.

### 7. Average Customer Lifetime Value (CLV)

The average customer lifetime value is a metric that measures the total revenue your business can anticipate generating from a single customer over the course of its relationship with your company.

CLV considers various factors such as customer behavior, purchase frequency, and average order value, providing valuable insights into each customer's value to the business.

Why track it: By understanding CLV, businesses can make informed decisions about customer acquisition and retention strategies, helping to maximize long-term profits and sustainable growth.

### 8. Net Promoter Score (NPS)

Net Promoter Score is a customer satisfaction and loyalty metric that measures how likely customers are to recommend your business to others.

Why track it: It enables you to better understand your customers' experiences and take action to improve customer satisfaction. This, in turn, helps build strong and lasting relationships with your customers, increase customer retention, and drive long-term business growth.

### 9. Number of Deals Lost to Competition

It is the total number of sales opportunities you failed to win due to competition from other companies offering similar products or services.

Why track it: As companies risk losing up to 30% of their sales opportunities to competitors, it's vital to assess where your business lags and take action to enhance sales processes, marketing techniques, or product offerings. This will help you stay ahead of the competition.

### 10. Cost of Selling

Cost of selling, also referred to as selling expenses, refers to the expenses incurred by your company in the process of selling your products or services. This metric is most useful when measured as a percentage of the revenue generated.

Why track it: This metric provides valuable insights into the efficiency of the sales process and helps companies understand the cost of acquiring new customers, driving revenue growth, and improving profit margins.

### Free Sales Metrics Calculator

A free, interactive template to calculate your sales KPIs.

• Average Deal Size
• Customer Acquisition Cost (CAC)
• And more!

All fields are required.

### You're all set!

Click this link to access this resource at any time.

### 11. Average Length of Sales Cycle

The average sales cycle length refers to the time it takes for potential customers (leads) to go through the various stages of the sales process until they become a successfully closed deal.

Why track it: Tracking the average length of the sales cycle improves forecasting accuracy and enables more effective resource allocation and planning.

### 12. Weighted Value of Pipeline

The weighted value of the pipeline metric shows the estimated value of deals as they move through the sales pipeline.

Calculate the weighted value of the pipeline rate using the following:

Weighted value of pipeline = Probability of the deal closing x Deal value

Here, the probability depends on the stage of the pipeline. For example, the probability in the negotiation stage can be considered as 50%.

Why track it: A weighted pipeline provides accurate revenue projections and cash flow forecasting. It also highlights which stages of sales require the most attention.

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### 13. Annual Contract Value (ACV)

Annual contract value refers to the amount of revenue a contract generates per year.

Calculate Annual contract value using:

Annual contract value = Total contract value / The number of years in the contract

If your company signs a five-year contract for \$50,000, the Annual Contract Value is \$10,000.

Why track it: The ACV enables you to identify which accounts generate the most revenue so that you can provide better service and retain these clients.

### 14. Win Rate

Win rate refers to the proportion of successful deals out of the total number of opportunities. It can be evaluated at the team and individual levels, providing valuable insights into performance and effectiveness.

Calculate the win rate using this formula.

Win rate = (Number of won opportunities / Total number of opportunities) X 100

If your sales team had 100 sales opportunities for a particular product and closed 50 of them, the win rate is 50%.

Why track it: By tracking win rates based on product, market, target audience, and other factors, you can pinpoint the chances of success for each opportunity. This will enable you to strategically direct your resources toward those with the highest conversion potential.

### 15. Conversion Rate by Sales Funnel Stage

Conversion rate by sales funnel stage refers to the number of converting leads at every sales funnel stage.

### 16. Frequency/Volume of New Opportunities Added to the Pipeline

This metric refers to the rate and number of new sales leads or potential customers added to your sales pipeline.

Why track it: These metrics help you gain valuable insights into the overall health of your sales pipeline and the effectiveness of your sales and marketing strategies. Any changes in this metric can highlight areas for improvement and help you take action to improve it.

### 17. Average Lead Response Time

An average lead response time refers to how long it takes for your company to respond to a new sales lead. The faster your company responds to a lead, the more likely it is to turn that lead into a customer.

Why track it: Tracking this information can reduce response time and increase lead conversion. About 50% of B2B sales go to the vendor who responds to a customer first; this highlights the importance of timely and efficient lead response.

### 18. Percentage of Leads Followed Up With

The percentage of leads followed up refers to the ratio of the number of leads actively pursued and contacted by your sales representatives to the total number of leads generated.

Why track it: It is a metric used to measure your sales team's effectiveness in reaching out to potential customers and converting leads into paying customers.

### 19. Percentage of Leads Dropped

The percentage of leads dropped refers to the ratio of the number of leads not pursued or contacted by your sales representatives to the total number of leads generated.

Why track this: This metric is crucial for understanding the quality of your leads. If you see a high drop-off rate, your leads are low-quality, and you need to change your marketing approach.

### 20. Percentage of Qualified Leads

The percentage of qualified leads refers to the ratio of the number of leads that meet specific criteria and are deemed ready for the sales process to the total number of leads generated.

The higher the percentage of qualified leads, the more likely your sales team is to close deals and achieve their sales targets.

Why track it: This metric offers insights into the efficiency of your company's sales and marketing efforts in attracting and nurturing leads. It enables your sales team to measure their success and identify areas for improvement to generate higher-quality leads.

Featured Resource: Sales Metrics Calculator

### 21. Email Open Rate

Email open rate refers to the percentage of recipients who opened an email campaign out of the total number of emails sent.

Calculate email open rate using:

Email Open Rate = (Number of Unique Email Opens / (Number of Emails Sent - Number of Bounces)) X 100

For example, if you sent 1,000 emails, 200 were opened, and 200 got bounced, your email open rate would be 25%.

Why track it: This metric gives you a clear picture of your email marketing campaigns' performance and helps you improve future campaigns. Considering the average email open rate for businesses is only 19.7%, it's essential to continually track and optimize your email campaigns to get better results.

### 22. Email Response Rate

Email response rate refers to the percentage of recipients who respond to an email campaign.

Calculate email response rate using:

Email Response Rate = (Number of Responses / Number of Emails Sent) X 100

For example, if you sent out 100 emails and received 10 responses, your email response rate would be 10%.

Why track it: You can use the response rate to make data-driven decisions about future email campaigns, such as changing the email content, subject line, or sending time to improve response rates.

### Free Sales Metrics Calculator

A free, interactive template to calculate your sales KPIs.

• Average Deal Size
• Customer Acquisition Cost (CAC)
• And more!

All fields are required.

### You're all set!

Click this link to access this resource at any time.

### 23. Email Engagement Rate

Email engagement rate is a metric that measures the level of interaction between recipients and an email. Unlike response rate, email engagement rate takes into account a range of actions that recipients may take with an email, such as opening it, link clicks, video plays, and so on.

Calculate email response rate using:

Email Engagement Rate = (Total Number of Engagements / Number of Emails Sent) X 100

For example, if you sent 100 emails and received a total of 200 engagements (e.g., 100 opens and 100 clicks), your email engagement rate would be 200%.

Why track it: Email engagement rate is a valuable metric for understanding how recipients interact with your emails and how you can improve your email campaigns going forward.

### 24. Total Revenue From Partner Deals

Total revenue from partner deals refers to the total amount of money your company earns from partnerships or collaborations with other companies.

This type of revenue is generated when your company enters into an agreement with another company to offer your products, services, or solutions to its customers. The partner company earns a commission or a percentage of the total sales generated through channel sales.

Why track it: Knowing the total revenue generated from partner deals helps you to plan your finances more effectively. You can use this information to set budget goals, allocate resources, and make informed decisions about pursuing more partnerships or expanding existing partnerships.

### 25. Revenue by Partner

Revenue by partner refers to the amount of money your company earns from each partnership or collaboration. It provides a detailed view of the revenue generated from each partner, allowing you to understand which partnerships are the most profitable and valuable.

Why track it: By calculating revenue by partner, you can gain valuable insights into the performance of individual partnerships and make informed decisions about which partnerships to continue or discontinue.

### 26. Margin by Partner

Margin by partner refers to your company's profit from each partnership or collaboration.

Why track it: It provides a detailed view of the profit generated from each partner, allowing you to understand which partnerships are the most profitable and have the highest margin.

### 27. Retention Rate of Partner Customers

The retention rate of partner customers refers to the percentage of customers that continue to do business with your company after their initial transaction through a specific partner.

Why track it: Tracking retention rate measures customer loyalty from your partner customers.

### 28. Average Cross-sell and Upsell Rate of Partner Customers

The average cross-sell and upsell rate of partner customers refers to the average rate at which customers make additional purchases from a company through a specific partner.

Cross-selling refers to selling additional products or services to existing customers. In contrast, upselling encourages customers to purchase a higher-value or premium version of a product or service.

### 29. Average Customer Satisfaction Score of Partner Customers

The average customer satisfaction score of partner customers refers to the average rating or score customers give regarding their experience with a company through a specific partner.

The average customer satisfaction score of partner customers can be calculated by taking the average score from all customers who have transacted through a specific partner.

### 30. Percentage of Time Spent on Selling Activities

The percentage of time spent on selling activities refers to the amount of time your sales representatives spend engaging in activities that directly contribute to generating revenue, such as making sales calls, conducting product demonstrations, and closing deals.

Why track it: This metric tracks your sales team's efficiency, provides insights into your sales team's productivity and identifies areas for improvement.

### 31. Percentage of Time Spent on Manual Data Entry

The percentage of time spent on manual data entry refers to the time that employees or sales representatives spend manually entering data into a company's systems or databases.

This can include inputting customer information, updating sales records, and entering product information.

### 32. Percentage of Marketing Collateral Used by Salespeople

The percentage of marketing collateral used by salespeople refers to how your sales representatives use various marketing materials, such as brochures, flyers, product sheets, presentations, and other promotional items, in their sales activities.

Why track it: This metric provides insight into the effectiveness of your sales team and the quality of the marketing materials produced.

### 33. Average Number of Sales Tools Used Daily

Average sales tool usage refers to how many resources your salespeople use to support their sales activities daily, such as software applications, CRMs, databases, presentations, and specific tools, such as LinkedIn Navigator, Datanyze, or Sales Hub.

### Free Sales Metrics Calculator

A free, interactive template to calculate your sales KPIs.

• Average Deal Size
• Customer Acquisition Cost (CAC)
• And more!

All fields are required.

### You're all set!

Click this link to access this resource at any time.

### 34. Percentage of Sales Management Time Spent Recruiting

The percentage of sales management time spent recruiting refers to the amount of time your sales manager dedicates to finding, interviewing, and hiring new salespeople for their team.

This can include reviewing resumes, conducting interviews, participating in job fairs and networking events, and overseeing the onboarding process for new hires.

Why track it: Calculating the percentage of time spent recruiting can enable you to determine if the sales manager's recruitment efforts are efficient and productive.

### 35. Average Time-to-Hire

Average time-to-hire refers to the average time it takes to fill an open position, from when a job is posted to when a candidate is hired. It is a key metric that measures the efficiency and effectiveness of a company's recruitment process.

Why track it: Effective tracking of the average time-to-hire is critical in sales, where time-sensitive positions require prompt filling. Any delays can obstruct the sales team's success in reaching their targets and achieving their quotas.

Moreover, a delay in the hiring process can result in the loss of top talent, with a staggering 55% of job seekers expecting a job offer within two weeks of the initial interview.

### 36. Percentage of Hires From Various Sources

The percentage of hires from various sources is a metric that measures the proportion of new hires that come from different recruitment channels.

Why track it: By tracking this metric, organizations can determine which channels deliver the best results in attracting high-quality candidates and allocate resources accordingly to optimize recruitment.

### 37. Average Turnover Rate

The Average Turnover Rate is a metric that measures the rate at which employees leave your organization.

Why track it: Tracking the average turnover rate is vital to prevent high employee turnover. It helps you identify turnover trends and root causes, enabling you to take proactive steps for better employee retention and build a stable, effective sales team.

### 38. Average Cost to Replace a Salesperson by Role

The average cost to replace a salesperson by role measures how much it costs to replace a salesperson after they leave. This includes the cost of recruitment, advertising, hiring, training, and lost productivity associated with replacing an employee.

Why track it: By tracking the average cost to replace a salesperson by role, you can identify the financial impact of high turnover and make decisions about employee retention accordingly.

### 39. Sales Ramp

Sales ramp-up time represents the average time a new salesperson takes to become fully productive. You can use it to make hiring and firing decisions, set expectations with new reps, and develop more accurate sales forecasts.

There are multiple ways to calculate it. CRMs often automatically calculate the meantime to 100% quota attainment, which you can use to set the ramp. For instance, if it typically takes a salesperson four months to hit 100% quota, your ramp-up time would be four months.

Although this method is fairly simple, it ignores that new sales reps often take over existing accounts or prospects, giving them a head start. In addition, a salesperson who hits 98% of their quota is likely fully ramped, but this formula wouldn’t count them as such until they hit 100%.

Alternatively, Ideal CEO Somen Mondal has developed a formula that factors in training, the length of your sales cycle, and prior experience.

Ramp-up = amount of time spent in training + average sales cycle length + X

X is based on the salesperson’s experience: The more they have, the smaller this number is.

Here’s an example for a well-seasoned rep, assuming training lasts 20 days and your average sales cycle is six weeks.

Ramp = 20 days + 42 days + 16 days

This salesperson would receive 78 days to reach full productivity.

### 40. Percentage of Reps Following the Sales Process

The percentage of reps following the sales process refers to the proportion of your sales representatives who consistently adhere to the established steps or stages of the sales process. It is a metric used to track the effectiveness and efficiency of your sales team and the sales process itself.

Why track it: Tracking the percentage of reps following the sales process ensures that all reps follow the same method, resulting in a more consistent sales experience for the customer.

### 41. Average Level of Satisfaction With Sales Training

The average level of satisfaction with sales training refers to the degree to which your sales representatives are satisfied with the training they receive.

Why track it: It is a metric used to measure sales training programs' effectiveness and identify areas for improvement. Additionally, tracking this metric can help your organization determine whether its investment is paying off.

Next, let’s take a look at how to make sense of the raw data using leading and lagging indicators.

## Leading and Lagging Indicators in Sales

Leading and lagging indicators are used in sales to predict and look at final results.

A leading indicator predicts your results. In other words, it tells you which direction you're trending while there's still time to change the outcome. While leading indicators can be more challenging to measure than lagging indicators, they're also far easier to influence.

### Lagging Indicators

A lagging indicator reflects your ultimate results.

They're reactive, not proactive. For instance, a lagging indicator might be your team's quota attainment at the end of the month. After seeing the lagging indicators, it's time to develop a sales plan to improve the results.

### Free Sales Metrics Calculator

A free, interactive template to calculate your sales KPIs.

• Average Deal Size
• Customer Acquisition Cost (CAC)
• And more!

All fields are required.

### You're all set!

Click this link to access this resource at any time.

## SaaS Sales Metrics

Software as a service (SaaS) is a software distribution model that provides customers with access to applications on the internet instead of requiring physical media and custom installation.

SaaS and subscription businesses require different metrics. As David Skok, general partner at Matrix Partners, explains:

“SaaS and other recurring revenue businesses are different because the revenue for the service comes over an extended period of time (the customer lifetime). If a customer is happy with the service, they will stick around for a long time, and the profit that can be made from that customer will increase considerably. On the other hand, if a customer is unhappy, they will churn quickly, and the business will likely lose money on the investment that they made to acquire that customer."

Rather than solely focusing on acquiring the customer (the "first sale"), Skok explains you must also focus on keeping them (the "second sale").

### 1. Customer Acquisition Cost

Customer acquisition cost (CAC) is the average amount of sales and marketing expenses required to acquire one new customer.

Here are some potential components of your CAC:

• Inbound marketing (blogging, SEO, social media)
How to Calculate CAC

To calculate CAC, divide the total amount you spent on sales and marketing in a given period by the number of customers you acquired simultaneously.

For example, if you spent \$1,000 in one month and acquired 50 customers, your CAC would be 20.

This formula is easy to follow. But as HubSpot's former VP of Growth Brian Balfour explains, it can be inaccurate unless your prospects become customers extremely quickly or your marketing and sales expenses are static (which is unlikely).

If you measure CAC by month, but it takes your typical prospect two months to buy after the first marketing touchpoint, your results will be misleading. Perhaps you start a new marketing campaign in January — its impact on CAC won't be visible until February.

To correct these mistakes, Balfour recommends using the following formula:

CAC = (Marketing Expenses (n-60) + 1/2 Sales (n-30) + ½ Sales (n)) / New Customers (n), where n= Current Month

The cost of acquiring new customers for merchants has risen dramatically in recent years, with a 222% increase over the past eight years. To stay ahead of the trend, it's crucial to continuously monitor your Customer Acquisition Costs and implement strategies to minimize them.

### 2. Cost Per Acquisition

Balfour also points out people commonly conflate "Customer Acquisition Cost" with "Cost Per Acquisition" — but the two are different, and this mistake can be expensive.

CPA represents how much money you need to spend to acquire a non-customer, like a lead, a free trial, a registration, or a user.

For example, if you offer a freemium version of your software product, your CPA would measure the cost of acquiring a free user. Your CAC would measure the cost of acquiring a paid user.

Months to Recover CAC

SaaS companies must know how many months it takes to recover CAC and the amount they invested in getting a new customer.

Not only does this metric help you manage cash flow, but it also tells you how long you need to retain a customer to break even.

Let's say your CAC is \$200, and your Average Revenue Per User or Account (ARPU/ARPA) is \$400. Your gross margin is 95%.

Months to recover CAC = CAC divided by (ARPA x GM)

In this example, you'd break even in approximately two weeks.

### 3. Customer Lifetime Value (LTV)

Customer lifetime value (LTV) is the average amount of money your company makes from a buyer for however long they stay a customer (i.e., X months or years).

LTV tells you whether you're spending too much or too little on acquiring customers. The optimal LTV:CAC ratio is 3:1. In other words, if it takes a dollar to get a prospect to buy your product, they'll spend \$3 over their time as a customer.

Segment your customers, then look at the average LTV. The findings will tell you where to focus your energy and/or change your strategy. For example, if Tier X of accounts has a 1.5:1 LTV:CAC ratio, while Tier Y has a 4:1 ratio, you'd probably want to:

• Decrease your marketing and sales expenses for Tier X and increase them for Tier Y.
• Figure out why Tier X customers are less profitable — are they churning earlier, buying less, and/or purchasing fewer add-ons?

### 4. Average Revenue Per User or Account

Average Revenue Per User or Account (ARPU/ARPA) is the mean amount of revenue from a single user or customer. Companies typically calculate it per month or year, depending on their business model.

If you offer monthly contracts, calculate it per month; if most of your contracts are annual, calculate it per year.

### Free Sales Metrics Calculator

A free, interactive template to calculate your sales KPIs.

• Average Deal Size
• Customer Acquisition Cost (CAC)
• And more!

All fields are required.

### You're all set!

Click this link to access this resource at any time.

### 5. Monthly Recurring Revenue (MRR)

Monthly Recurring Revenue (MRR) tracks the total predictable revenue your company expects to make each month. It's one of the most important sales metrics for SaaS businesses, since it reflects growth and helps you forecast future revenue.

#### How to Calculate MRR

There are two ways to calculate MRR.

• Add up the monthly revenue you're bringing in from each customer for the total MRR.
• Multiply ARPA by your number of paying customers.

The first method takes longer but is also more accurate. If Customer X is paying \$200 per month, and Customer Y is paying \$400 per month, your MRR would be \$600.

The second method is easier. If you have four customers, and your ARPA is \$150, your MRR would be \$600.

Make sure you're not including one-time payments in your MRR, like implementation and/or limited support fees.

Be careful about quarterly, semi-annual, and annual plans as well. Let's say a new customer signs a \$1,200 year-long contract in December.

If you tally up your MRR on a customer-by-customer basis that month, you might incorrectly add \$1,200. But you're not generating \$1,200 from this account each month — you're generating \$100.

To include these subscription values in your MRR, divide them by four, six, or twelve if they're quarterly, semi-annual, or yearly, respectively.

There are different types of monthly recurring revenues you can calculate: new MRR, expansion MRR, and churn MRR.

#### New MRR

New MRR refers to revenue from new customers. Suppose you acquired one customer paying \$50 monthly and a second customer paying \$45 monthly. Your new MRR would equal \$95 per month.

#### Expansion MRR

Expansion MRR is revenue generated from existing customers, including cross-sells (buying complementary products or services), upgrades/upsells (a more expensive plan), and greater volume (buying more seats, usage data, transactions, etc.)

Expansion MRR is considered the "holy grail" of MRR. Why? It's commonly known that retaining an existing customer is 5 to 25 times less expensive than acquiring a new one. Plus, customers are far less likely to churn when they've invested more into your suite over time.

#### Churn MRR

Churn MRR is the revenue you've lost from customers who have downgraded their plans or canceled altogether. It's a leading indicator of next month's MRR. For example, if two customers each paying \$400 canceled in June, your MRR would be \$800 lower in July.

### 6. Annual Recurring Revenue

Annual recurring revenue is your MRR multiplied by 12 or the recurring revenue you'll generate in a calendar year.

It has a significant advantage over MRR. Because salespeople typically sell more during longer months (like March, August, and December) and sell less during shorter months (like February, June, and April), your predicted MRR might be off from month to month.

Since ARR applies to the entire year, monthly variance has no impact.

#### Should You Focus on MRR or ARR?

The short answer is that you should focus on both. While MRR tells you how your business is doing monthly, ARR gives you a yearly picture.

Your priority should depend on your company's maturity and business model. If you're generating more than \$10 million every year, think in terms of ARR. A shorter-term lens is more helpful if you're generating less than that.

### 7. Churn Rate in SaaS

Your churn rate is the percentage of customers who cancel their recurring subscriptions. You can calculate per month, quarter, or year, depending on your most common contract type.

The formula for churn rate is:

(# of customers lost in a given time period) / # total customers at the beginning of a given time period

Imagine the majority of your customers are on semi-annual plans. In January, you have 400 customers. In June, you have 500 customers.

Your churn rate equals: -100 / 500, or -20%. You're gaining more customers than you're losing.

### 8. Revenue Churn

No matter what, churn is bad. However, revenue churn is different from customer churn. Revenue churn is the amount of revenue you've lost (a.k.a. churn MRR), while customer churn is the number of customers you've lost.

From a business standpoint, it's probably preferable to lose three customers, each paying \$40 per month, than one customer paying \$300 per month.

### 9. Negative Churn

Negative churn is a term popularized by Skok that means your expansion MRR exceeds your churn MRR. If you can achieve negative churn, your business will grow exponentially.

## Sales KPIs by Team Type

You can also look at sales KPIs by the type of team you have. Inside sales, field sales, and sales development have different metrics to measure.

### Inside Sales KPIs

Inside sales teams rely on these KPIs (from most frequently used to least):

• Number of deals closed.
• Opportunities by stage.
• Calls.
• Meetings.
• Significant interactions or events (for example, ROI meetings or conversations lasting four-plus minutes).
• Opportunities created.
• Demos.
• Quotes/proposals.
• Emails.
• Meetings scheduled.

### Free Sales Metrics Calculator

A free, interactive template to calculate your sales KPIs.

• Average Deal Size
• Customer Acquisition Cost (CAC)
• And more!

All fields are required.

### You're all set!

Click this link to access this resource at any time.

### Field Sales KPIs

Outside sales teams use many of the same metrics as inside sales teams but prioritize meetings more heavily.

• Meetings
• Number of deals closed
• Opportunities created
• Opportunities by stage
• Quotes/proposals
• Significant interactions or events
• Calls
• Demos
• Emails

### Sales Development Metrics

Companies use these sales development metrics to benchmark their SDR team’s efficiency and ability to grow their pipeline.

• Meetings
• Calls
• Opportunities created
• Significant interactions or events
• Opportunities by stage
• Number of deals closed (by their partner Account Executive)
• Demos
• Emails
• Meetings scheduled

We’ve covered a lot of metrics so far — but luckily, you don’t have to keep track of them manually. You can use a sales metrics dashboard that compiles these insights in an easy-to-scan and presentation-ready format.

Here’s an example of a dashboard:

Image Source

CRMs, like HubSpot, come with the ability to create these dashboards within the system. Some let you choose from pre-set dashboards, while others (such as HubSpot when the CRM is paired with the Reporting Add-On) let you build custom reports to track your most important sales metrics.

Learn how to create custom reports with HubSpot's Reporting Dashboard through a free demo.

Let’s review some metrics you’d track on a dashboard.

### 1. Sales Performance by Rep

Create friendly competition by publicly tracking how each salesperson is performing. Pick your sales metrics based on the behavior you want to promote; for example, if you’re trying to increase your team’s prospecting efforts, you might display the number of total opportunities created in the last month.

To ensure your reps don't chase unqualified leads simply to fill their pipelines, you might also display total sales by rep.

### 2. Sales Activities

Keep your reps focused on the right tasks with an activities dashboard. Visualize how many days in a row they’ve logged into the CRM. This includes how many calls they made in the past week, how many presentations they gave, how many emails they sent, etc.

### 3. Sales Management

Sales managers must know how the team is trending. Track the value of new opportunities compared to the previous month or quarter, the weighted value of your pipeline, total sales versus your target, and/or close rate by the salesperson.

### 4. Funnel Reports

It is important to know how many contacts have been created, how many have been assigned, and how many are still in the sales funnel so that you can make better decisions for the team and set new goals. It can also help you identify and diagnose friction points in the sales funnel.

If you’re not ready to invest in a CRM that offers a sales metrics dashboard, you can use a sales KPI template that can be compiled in a spreadsheet.

## Sales KPI Template

Image Source

A sales metrics calculator gives you an easy way to track your sales metrics in a single place.

This KPI calculator is customizable to your business goals. It includes tabs for different KPIs that you can then track monthly, quarterly, or yearly.

You’ll be able to track the following KPIs:

• Average Deal Size: Your company’s total revenue divided by the number of deals closed in a month, quarter, or year.
• Win Rate: The number of deals won versus the number of deals lost.
• Demo-to-Close Ratio: The number of demos that were carried out divided by the number of deals that were won.
• Quota Setting Calculator. On-target earnings (OTE) multiplied by five.
• Commission Calculator: The total amount you’ll pay out in commissions to your sales reps.
• Customer Acquisition Cost (CAC): The amount spent on sales and marketing efforts, divided by the number of customers acquired.
• Customer Lifetime Value (CLV): Average annual revenue per customer divided by the average lifetime of a customer.
• Revenue by Product: Amount of income generated per product.
• Customer Retention Rate: The percentage of customers who stay with your business.
• Revenue Churn: The amount of revenue that’s lost in a month, quarter, or year.
• Employee Turnover Rate: The percentage of sales reps who leave your team.

## Track Sales Metrics to Increase Efficiency and Grow Better

It's critical to track sales metrics to ensure that your team is heading in the right direction. Carefully picking which ones to prioritize and then course-correcting (or even completely pivoting) will put you ahead of the game. You can analyze your progress, achieve your sales goals, and positively impact your bottom line.

Editor's note: This post was originally published in September 2019 and has been updated for comprehensiveness.

Topics: Sales Metrics

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