Understanding and Setting Sales KPIs

Jon CunninghamSales

Understanding and Setting Sales KPIs

Let’s start with the obvious: the value of revenue generated each day, week or month is critical to all businesses – whether from rolling contracts, existing customers or new sales.

However, the value of new and existing customer revenue is not the only metric to focus on – beyond this number there are a host of KPIs* that contribute to the bottom line – and monitoring these numbers can help you to identify potential issues early – and make the right decisions to help you to stay on track.

(*Short for ‘Key Performance Indicator’, a KPI is a metric that helps you monitor your success or progress in a specific area.)

Deciding what KPIs to monitor

When deciding which KPIs to monitor, keep things focused: choose the most important KPIs to you; the ones that you feel will make the biggest impact on your decision making and subsequent success. Run with that, but be prepared to tweak the numbers monitored if they’re not giving you what you need.

The things you choose to measure will depend on your offering, your lead time, your sales process and where your leads come from – the sales role you perform will also dictate what KPIs matter most to you.

Let’s look at some of these considerations…

What’s your offering?

If you are offering high value consultancy services your approach to monitoring Sales KPIs may be very different than a beach-side business that sells souvenir fridge magnets, tea towels and flags to holidaymakers.

The former will most likely need a greater level of monitoring of KPIs throughout the sales process to ensure that they stay on track; this need is dictated by a few things: sales values, the lead time from initial interest through to signing contracts, the complexity of the sales process and the steps a prospect goes through prior to buying.

The shop selling souvenirs probably has no sales KPI that’s worth checking pre-sale – the daily or weekly sales will speak for themselves. In this example, their sales value is relatively low, it’s easy to choose and buy, with no complex sales process – budgets do not need to be sought (except from mum or dad perhaps) and – although my 6-year old might disagree – it’s a relatively whimsical decision.

Their KPIs are probably more retrospective, looking at what is selling well and what sells less well in order to guide ordering – if footfall reduces they may need to look at marketing, promotions, or store presentation to drive customers through the door – or maybe it’s just the British weather again…

What’s your average sales value?

Arguably, the higher your sales value the greater need there is to track KPIs – the stakes are higher – and most likely the lead time will be longer with a more involved decision making process.

How long are your lead times – and what’s your sales process?

Looking at your sales journey and lead time – and assessing what contributes to the ultimate sales figure will be essential in deciding what to measure.

Often, the more complex the sales process, the longer the lead time – and understanding what contributes to a successful sale, and monitoring it, can help you to understand today what your sales may look like further down the road; if your average lead time from initial enquiry to sale is three months, today’s enquiries should give you a good picture of your likely sales in three months time – all other things remaining equal.

Where does new business come from?

Do you have a highly developed field sales team, a superb referral engine, an excellent online marketing strategy or a huge volume of passing trade?

The source of your leads will dictate the KPIs you elect to monitor; if your business is driven by a field sales team, monitoring their results will be essential – how many people do they call, meet, demo and quote to? How does the team in the ‘South West’ region compare with the team responsible for the ‘North East’ patch?

If you are fed leads from online marketing activity; what’s the lead volume like? What percentage of enquiries pass the credit pre-qualification? When do the leads tend to come in? How quickly are your team able to follow up? What percentage convert from initial enquiry to demo or quote?

The figures matter, they tell the story of your current sales activity and can help you understand the likely state of future sales.
An example

If you generate leads from inbound online enquiries that then get followed by a telephone team to book appointments for reps to visit and sell your service there are some clear metrics to look at:

  1. Number of inbound leads
  2. Number of inbound leads that qualify as customers against pre-agreed metrics
  3. Number of qualified leads set to calls
  4. Number of qualified leads successfully contacted by telephone
  5. Number of appointments booked
  6. Number of appointments attended
  7. Number of signed contracts

Starting at the number of inbound leads, any increase or decrease in each stage will have a direct impact on the next stage – and therefore the final figure of signed contracts and revenue generated, so you may choose to keep an eye on 1, 5 and 7 – only delving into the others if things start to slide.

What role are you in?

If you are a Sales Executive you’re responsible for hitting your target – so you may choose to monitor your inputs in terms of calls made, meetings booked, demos given, etc. – your Sales Manager may well be interested in similar metrics for you and the rest of the team. A Sales Director or other senior management may be more concerned with things like cashflow and whether the product or service your selling is actually profitable.

Here are some KPIs to consider – this is not an exhaustive list but might help you to think about what KPIs you need to watch…

Possible KPIs to consider

Possible KPIs to consider as a Sales Director/business leader

  • Average order value – how much do people spend?
  • Average profit margin – how much do you make on that sale?
  • Monthly sales – the value of sales made
  • Customer lifetime value – what is each customer worth to you across their life as a customer? You can understand how people feel about your business, and how that may affect retention, using things like Net Promoter Score (NPS)
  • Competitor pricing – are you losing sales based on price?
  • Average lead time > average payment time – to help anticipate cash flow
  • Sales by channel (e.g. Sales Exec initiated, inbound from phone (Marketing initiated), inbound from web (Marketing initiated, etc.)
  • Cost per lead – to allocate funds to the most fruitful activities

If you have multiple locations or Sales Managers you could segment the metrics above to see whether a particular team or manager is more effective than another – or whether a reallocation of staff could net higher sales from a more affluent area, or an area with less competition. You could also look at things like employee satisfaction and product knowledge to see their link to sales.

Possible KPIs to consider as a Sales Manager

  • For each Sales Executive:
    • calls/demos/meetings conducted
    • quotes generated
    • sales value (versus target)
    • (If their results are disappointing or less than others you could also drill down into calls made/emails sent, calls/demos/meetings booked, conversion rate, etc.)
  • Team sales value (versus target)
  • Total monthly sales (versus target)
  • Sales by channel (e.g. Sales Exec initiated, inbound from phone (Marketing initiated), inbound from web (Marketing initiated, etc.)
  • Cost per lead
  • Values of upsells and cross-sells vs. value of NEW sales
  • Average order value

Possible KPIs to consider as a Sales Executive

  • Calls made/emails sent
  • Engagement/Positive discussions (for pipeline)
  • Calls/demos/meetings booked
  • Calls/demos/meetings conducted
  • Quotes generated
  • Sales closed
  • Conversion rate (Quotes : Sales)
  • Value of sales (versus target)
  • Pipeline/diarised follow up
Practical tips
Know your numbers.

Once you have decided which KPIs you are going to measure commit those numbers and what they mean to memory – get your team using the same numbers – then at any given time you should be able to gather these figures e.g. meetings booked, quotes submitted and monthly sales to get a picture of where each of them – and the team as a whole is headed.

But don’t take your numbers at face value….

It’s easy to take the metrics at face value but be mindful that sometimes the numbers do not tell the full story; in the example below, we look at the cost per lead vs. lead quality and conversion rate:

If you’re using multiple channels for sales lead generation, you may choose to keep an eye on the cost per lead across each channel – but is that the right thing to review?

If your average lead cost from an online source is £30/lead and your average lead cost from your telesales team is £120/lead, it may initially seem that your lead costs from the online source are significantly lower.

But whilst your telesales team are contacting a pre-qualified list, your online source may be producing leads with less direct relevance. If only 20% hit your qualification criteria the real cost per lead is £150 (ignoring time spent in the qualification process).

Then there’s the matter of conversion – if one source is converting at a much higher rate than the other this will affect the value of each lead; I would rather pay £120 for a lead with an average 60% conversion rate (£200/sale) than £30 for one with an average 10% conversion rate (£300/sale).


You’re best positioned to make the judgement on which KPIs matter, and if, in time, you find they’re not closely aligned to what you need to measure – switch them up and look at other figures. If you need help in deciding what to measure consult a colleague who’s good with numbers – or give us a shout and we can chat through things.