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What is Sales Performance?
Sales performance describes the overall success of a company’s sales team.
It is tracked over a pre-specified period of time (i.e., monthly, quarterly, and annually). Then, it is measured and interpreted in terms of how well they meet their sales targets and goals.
There are six main components of sales performance:
- Account segmentation: Identifying high-value accounts and developing profiles for them.
- Compensation and incentives: Optimizing payment structure to motivate reps.
- Pipeline management: Reviewing deals in progress across sales pipelines and ensuring that resources are allocated appropriately.
- Quota management: Setting profitable yet achievable sales targets for each rep and monitoring progress.
- Forecasting: A critical function of sales and finance teams, forecasting helps anticipate trends and inform the business’s pricing, budgeting, and planning decisions.
- Territory planning: Structuring sales territories to ensure optimal coverage and leverage each rep’s strengths.
When these pieces come together effectively, sales performance metrics accurately indicate how well individual sales reps, their managers, and the entire organization are doing regarding sales activities and results.
- Sales metrics: The metrics (or KPIs) used to gauge how well a sales team is performing in the context of their revenue goals.
- Sales performance management (SPM): The organizational role dedicated to measuring and improving the operational efficiency and effectiveness of a company’s sales team.
The Importance of Sales Performance Management
Because sales data is so critical to the bottom-line success of a company, sales performance management significantly impacts numerous departments and how they operate.
Of course, the sales team itself is the most immediately impacted by sales performance metrics—it’s the department responsible for the data in the first place.
Since these metrics measure team performance, the ultimate goal of individual sellers and the team as a whole is to meet or exceed their goals.
Sales target achievement can tell sales leaders and executives a lot about the inner workings of their teams.
- At the individual level, sellers who continuously meet their goals demonstrate their ability to close deals and ensure long-term revenue generation for the company. Ideally, every salesperson meets their quota—if only a few sellers exceed their goals and they carry the team to meet its targets, growth could topple if one high biller leaves.
- For teams and individual organizations, sales KPIs show leadership how well their sales strategies are working. It also serves as a way to identify areas of improvement, develop training programs for reps who need extra support, and ensure that everyone is on track toward meeting the team’s collective goals.
- In the context of territory management, sales executives can identify the most profitable areas to sell in and double down on those regions while shifting resources away from less lucrative ones.
- Executive leadership (i.e., VP Sales, SVP Sales, Chief Revenue Officer), which often relies on sales performance data to make decisions, also benefits from SPM. It’s the job of executive leadership to ensure that the company is achieving its short- and long-term business goals, most of which are directly tied to sales team performance.
The primary goal of the sales operations (Sales Ops) team is to handle administrative and technical tasks that sellers would otherwise have to take care of. These include:
- Training and onboarding sales reps
- Setting up a CRM to track customer data
- Managing sales resources such as emails, calendars, reports, and content libraries
- Organizing sales collateral and pricing
- Developing sales strategies for boosting morale and overall performance
- Analyzing past data to understand how the team is performing and make sales projections
- Manage compensation plans for sales reps
For sales ops to do its job effectively, it must also optimize the sales process, evaluate its performance over time, monitor sales goals and objectives, and forecast future performance.
These tasks all involve tracking consistent data points that must be monitored in real-time, such as hitting a specific revenue goal or closing a certain number of deals within an allotted time.
Marketing and Product Teams
According to data compiled by ZoomInfo, companies that achieve sales and marketing alignment enjoy the following:
- 36% higher customer retention rates
- 38% higher win rates for sales professionals
- 209% greater revenue growth from marketing activities
When marketing and sales teams share performance data, they can build off each other, develop consistent omnichannel messaging, and gain better insights into customer behavior.
Product teams also benefit from sales performance management data, as they can determine what features customers use most and which ones they’re not interested in. This helps them prioritize new feature development that improves their users’ experience with their products.
Human Resources (HR)
On the surface, it might not look like sales performance management is directly related to HR operations.
HR teams can use sales performance data to help managers gauge job satisfaction, identify areas of improvement in employee training, and ensure that everyone is meeting their goals.
On average, the sales turnover rate is three times higher than average employee turnover across all departments. In B2B tech sales, it’s nearly triple the average sales turnover rate across all industries.
By tracking sales performance data over time, HR teams can detect behavior patterns among employees and make decisions that result in better morale, more efficient sales onboarding, and stronger results for the entire team.
Finance teams need to understand sales performance data to make accurate revenue forecasts, evaluate the company’s financial health, and relay that information to the C-suite.
Sales performance management data can provide insight into how well the company meets its revenue goals, where new growth opportunities may lie, and what changes can be made to boost sales efficiency.
Armed with this data, finance teams are better prepared to make informed decisions that will result in profitable outcomes for the business.
How to Measure Sales Performance
KPIs such as revenue, customer satisfaction, and churn rate, may be included in the mix to get a comprehensive view of the performance.
Depending on who uses these data, they can be interpreted differently.
- SDRs use sales perfornmance to benchmark their individual success, figure out what works and what doesn’t, and show how their efforts translate into results.
- Sales managers use the same data to gain insights into their team’s performance and identify areas of improvement. They also report sales data to executive leadership.
- For executives, sales performance reports provide an overview of how the company is achieving its objectives. They make sales forecasts based on performance and gauge the effectiveness of sales management.
- Investors depend on sales performance data to understand a company’s financial health.
Although each department interprets sales performance data differently, they use the same metrics to make sense of it.
Here are ten essential metrics that benchmark sales performance:
1. Sales Revenue
Sales revenue is the total money earned from selling a product or service. It is usually broken up into different revenue streams, such as one-time sales, subscriptions, and recurring services such as retainer contracts.
New revenue generated from sales efforts is the most straightforward way to measure sales performance. When a sales organization generates more revenue than it spends, it is considered profitable.
2. Customer Churn Rate
Customer churn answers the question, “How many customers are leaving your product or service?”
It is usually expressed as a percentage and reflects on the quality of customer service, product features, customer satisfaction, and sales operations.
A low churn rate indicates that customers are satisfied with their purchase and are likely to return for future business.
High customer churn tells sales leaders their reps aren’t selling to the right customers, customer service needs improvement, or their product isn’t meeting customer expectations.
3. Revenue From New vs. Existing Customers
Growth or sustenance in revenue from existing customers is a sign of satisfaction and loyalty among a company’s customer base.
High revenue from new customers indicates that sales reps are doing an excellent job prospecting, qualifying leads, and closing deals.
The distinction between revenue from new and existing customers becomes critical when looking at future growth and sustainability.
Companies without predictable revenue are considered unsustainable, while sales teams that are constantly chasing new customers tend to run out of steam quickly.
4. Average Order Value (AOV)
Average order value (or average deal size) is a relative metric that reflects the average dollar amount spent per purchase.
It helps sales teams understand how much money they are making from each customer, what products and services people are most interested in, and which sales strategies result in larger orders.
5. Close Rate
A sales team’s close rate describes the amount of sales opportunities that turn into closed deals (won or not), with those that actually turn into new contracts.
It is typically reported as a percentage of total opportunities and reflects the effectiveness of the sales process, from lead generation to closing deals.
Sales leaders use close rate data to determine what part of the sales cycle needs improvement and which reps need additional training or support to move prospects through the pipeline.
6. Monthly Recurring Revenue (MRR)
Monthly recurring revenue (MRR) is revenue an organization receives each month from long-term contracts and subscriptions.
MRR is usually reported as a total figure over a certain period of time, such as a month or quarter.
It is an important metric for sales teams because it provides insight into the health of their customer base and reaffirms loyalty among customers.
Closely related to customer retention, churn, and revenue from new vs. existing customers, businesses prioritize MRR over ad hoc sales for its reliability and scalability.
7. Customer Satisfaction Score (CSAT)
Customer satisfaction is an ambiguous metric that measures customer perception of a company’s products or services.
It is usually expressed as a percentage and reflects a customer’s overall experience with the business, from initial purchase all the way to post-purchase support.
CSAT is calculated by surveying customers, asking them to gauge their sentiment toward certain elements of the product or service.
Each answer choice is assigned a number from 1 to 5—the customers who averaged 4 and 5 are then added up, divided by the total, and multiplied by 100 to represent a percentage of the whole.
Sales teams use customer satisfaction (CSAT) data to identify trends, find the best selling points for their products, and further refine their ideal customer profile (ICP).
8. Customer Lifetime Value (CLV)
Customer lifetime value helps sales managers and executive leadership set targets for their SDRs and account executives.
It tells them how many sales each member needs to close to achieve sustainable growth and what the value of each should be, making it a critical metric for quota management.
If a sales team is having trouble with quota attainment, they can evaluate their CLV, refine their sales plans, and create more realistic goals for their reps.
9. Net Promoter Score (NPS)
NPS quantifies the amount of satisfied customers a business has, and is calculated by asking customers “how likely would you be to recommend our product/service to a friend or colleague?”
The responses are measured on a scale of 0 to 10, with higher scores indicating greater customer loyalty.
Sales teams use NPS data to understand how they can improve their products and services, increase customer responsiveness, and turn more customers into advocates of the company.
10. Sales Win Rate
The sales win rate is different from the close rate, which measures won deals against total opportunities closed.
It’s an important metric for sales teams because it reflects the strength of their sales process—what works and what doesn’t.
The win rate tells them how efficient they are at targeting the right prospects, generating proposals that meet customer needs, and negotiating deals that generate results.
Sales teams use this data to measure performance and make necessary improvements.
How to Improve Sales Performance
There are dozens of ways to improve sales performance. Most can be broken into three main categories: training, process improvement, and technology.
- Training: Employing the right sales methodologies, implementing a sales playbook, and improving ramp time can help sales teams close more deals faster. As an added benefit, it will also help retain top sales talent. Investing in comprehensive onboarding and continued education programs for reps is essential to ensure they understand customer needs and know how to handle objections properly.
- Process Improvement: Streamlining processes and optimizing for sales efficiency will help reps close deals faster and more consistently. This includes improving sales enablement, creating detailed customer profiles, constructing buying personas, and automating lead qualification. It could also include sales incentives, such as performance benefits and contests.
- Technology: Process automation is the secret to sales productivity. A more productive and efficient sales force—that is, one that doesn’t need to worry about mundane tasks—will have more energy to focus on sales. Technologies such as CRM and automation tools can help them do just that.
Software for Tracking Sales Performance
Every sales performance management strategy requires the right software to track performance, deliver sales funnel visibility, and optimize processes.
Sales Performance Dashboard
A dashboard is central to any sales performance management software. Most CRM and sales automation tools offer this capability, making it easy to communicate KPIs to non-sales stakeholders, track campaigns and trends, identify opportunities, forecast revenue, and look at the average revenue for each sales rep.
AI For Sales Performance
AI is helpful for sales planning. Two valuable AI-enabled sources of sales performance insights are natural language processing (NLP) and predictive analytics.
Companies can use predictive analytics to optimize conversion rates, predict sales activity outcomes, and recommend improvement strategies.
They use NLP to streamline the sales cycle (by automating initial contact and touchpoints). Then, they quantify customer sentiment using AI- insights.
The more data they have, the better their understanding of customer needs and buying patterns will be—which leads to improved sales performance.
Integrations: CRM and CPQ
CRM and CPQ are integral to the sales process. Each one provides different insights and capabilities that are essential for sales teams to operate at peak efficiency.
- CRM is the backbone of any sales tech stack. It helps sales teams organize customer data, automate repetitive administrative tasks, and manage their pipeline.
- CPQ software streamlines the quoting process and eliminates manual errors in product configuration, pricing, and discounting.
In both instances, integrations with other systems are essential to drive sales performance. CRM integrations help capture and centralize data, while CPQ helps teams quickly access customer-specific pricing and discounting information.
People Also Ask
What is the difference between sales metrics and sales KPIs?
The main difference between sales metrics and sales KPIs is that sales metrics describe activities, such as the number of calls made or the amount of time spent on research. Sales KPIs focus on performance and measure how successful sales teams are at achieving specific revenue and productivity goals.
What are the components of sales performance?
Among others, there are six primary components of sales performance:
Sales funnel management
Forecasting future performance