Quick Answer
Every sales manager should monitor KPIs covering revenue, pipeline health, conversion, sales activity, customer acquisition, sales-cycle efficiency, and retention. Important metrics include revenue attainment, pipeline value, pipeline coverage, win rate, conversion rate, average deal size, sales-cycle length, customer acquisition cost, quota attainment, and retention. The right KPI mix should measure both current results and the activities that drive future revenue.
Detailed Answer
Sales managers should avoid managing the team using revenue alone. Revenue tells you what happened.
A strong KPI system also helps explain why it happened and what may happen next.
Essential Sales KPIs
KPI What it tells the sales manager Revenue Attainment Whether the team is achieving revenue targets Quota Attainment Individual and team performance against targets Pipeline Value Potential future revenue
Pipeline Coverage Whether enough opportunities exist to support
targets
Win Rate Percentage of opportunities converted
Conversion Rate Effectiveness of moving prospects through the funnel Average Deal Size Typical revenue generated per deal
Sales Cycle Length How long opportunities take to close New Qualified Opportunities Future sales potential
Customer Acquisition Cost Cost of acquiring customers
Customer Retention Ability to maintain customer relationships Forecast Accuracy Reliability of sales forecasts
Leading vs. Lagging KPIs
Lagging KPIs measure outcomes:
- Revenue
- Profit
- Closed deals
- Quota attainment
Leading KPIs measure activities and conditions that influence future results:
- Qualified meetings
- New opportunities
- Follow-ups
- Proposal activity
- Pipeline movement
- Decision-maker engagement Both are important.
Avoid KPI Overload
Sales teams don’t need dozens of metrics. A manager should focus on KPIs that are:
- Relevant
- Measurable
- Actionable
- Consistent
- Connected to business objectives
Example
If revenue is declining but qualified opportunities have also declined for three months, the manager may have a prospecting problem.
If opportunities are strong but win rates are declining, the problem may be qualification, value communication, negotiation, or closing.
KPIs should therefore be used for diagnosis and coaching, not simply reporting.
Expert Perspective
Dr. Arunaagiri Mudaliar: A good sales dashboard tells you what happened. A great sales leader uses the numbers to understand why it happened and what the team should do next.