Key sales performance indicators | Sidely

The 7 key sales performance indicators

Alexis Lecomte
April 10, 2020 - 6 min reading
Updated January 23, 2024

Measuring the effectiveness of your sales force is crucial to the success of your sales strategy. This article explores seven essential sales performance indicators that will help you assess the effectiveness of your teams and quickly identify areas for improvement.

Indicator 1: Sales & gross profit

Sales and gross profit are central to the assessment of overall sales performance. While sales represent the volume of sales, gross profit measures their value.

These two indicators, when analyzed together, provide a comprehensive overview of value creation within your company. Gross profit provides a quick assessment of overall business performance. It complements sales. ‍

The gross profit allows you to quickly understand if your sales team is becoming too generous with customers.

Why track sales and gross profit when you're a brand?

Sales directly reflect a brand's ability to generate sales in a competitive environment, such as that of supermarkets. High sales mean strong market share and consumer acceptance.

In addition, sales help to assess the brand's growth in the market. This can indicate the effectiveness of marketing campaigns, distribution expansion, or the effect of new product introductions.

Gross profit gives an overview of the profitability of each product sold. This is crucial in supermarkets, where sales volumes are high but margins can be slim. By analyzing gross profit, brands can identify production or distribution costs that could be reduced.

Indicator 2: Sales Labor Efficiency Ratio

Sales Labor Efficiency is a financial ratio measuring the efficiency of a company's sales force. This second indicator measures the ratio between sales department expenses and sales department turnover.

It is calculated by comparing the sales revenue generated by the sales team with the costs of that same team (salaries, commissions, sales-related expenses, etc.). In other words, it evaluates how much revenue is generated for each monetary unit spent on sales labor.

It allows you to assess work productivity and identify the right time to adjust your team - whether to increase, decrease or replace staff.

A good ratio, considered to be around 8, indicates that the sales team is highly productive in relation to its cost.

Why follow Sales Labor Efficiency as a brand?

It can be used to measure sales productivity, as it gives a clear idea of how effectively human resources (sales teams) are being used to generate sales.

And so, by understanding the effectiveness of their sales force, brands can better manage their budgets. If the ratio is low, this may indicate a need for restructuring, training or sales process optimization.

Indicator 3. Quantity and value of opportunities in the pipeline

The number of opportunities in your sales pipeline and their monetary value are separate but equally important indicators. They must therefore be measured separately.

They enable you to forecast income and judge whether your targets are achievable. The ratio of the two values also gives you the forecast average basket.

Incorporating success percentages for each deal can refine this approach, encouraging sales reps to be more committed to their sales.

Why track these two indicators?

The number of opportunities in your pipeline gives an immediate indication of sales activity. A large number of opportunities generally indicates strong sales activity and growth potential.

Value, on the other hand, helps predict future revenues, and thus enables companies to plan more accurately in terms of budget, production and logistics.

By understanding both the quantity and value of opportunities, sales teams can better prioritize their efforts, **** and focus on higher value-added deals.

Indicator 4. Conversion ratio

The conversion ratio is a metric used to assess how effectively a company or marketing campaign turns prospects into customers.

It is calculated by dividing the number of conversions (such as sales or desired actions) by the total number of visitors or prospects, then multiplying the result by 100 to obtain a percentage.

Calculated at each stage of the sales process, the conversion ratio helps to understand at which stage(s) sales teams have difficulty convincing customers.

It should not be confused with the closing ratio, which is the number of qualified appointments or quotes divided by the number of sales.

Why track conversion ratios as a supermarket brand?

The conversion ratio helps brands understand whether they are transforming customer interactions (merchandising, POS, sales animation, promotion...) into actual sales. In other words, they can identify which marketing strategies are working well and which need adjustment.

This also enablessales people and resources to be allocated to the best-performing stores and products.

Finally, analyzing conversion ratios provides insights into customer preferences and buying behavior, which is crucial for adjusting product offers and sales approaches.

Indicator 5. Average basket

The average basket represents the average amount spent by a customer on a purchase. It can be calculated using checkout data.

Knowing the average basket helps salespeople to better target their prospecting efforts (80/20). This indicator is also crucial for estimating forecast sales and adjusting sales strategies accordingly.

Why is it worth analyzing this sales performance indicator?

It helps to understand which product ranges are most attractive to consumers.

It helps to assess the effectiveness of the current pricing strategy. If the average basket is below expectations, this may indicate a need to review pricing or offer structure.

Understanding the average basket can influence the development of new products or the creation of promotions. If the average basket is high, this could indicate a preference for high-end products, or the effectiveness of bundled offers.

Indicator 6. Number of weekly visits

"Trust does not exclude control."

Tracking the number of weekly meetings, calls and e-mails gives you an overview of sales force activity. It enables you to quickly identify any demotivation in your teams or any new obstacles.

This is one of the key indicators of the sales team's commitment and activity. Indeed, a variation in the number of visits can reveal problems (such as a drop in motivation or external obstacles) or opportunities (such as the identification of more responsive markets or customer segments).

Indicator 7. Attrition rate

The attrition rate, also known as the churn rate, measures the ratio of lost sales (customers who stop buying) to total sales, over a given period.

It is calculated by dividing the number of customers lost during the period by the total number of customers at the start of the period, then multiplying the result by 100 to obtain a percentage.

It helps to understand the sales effort required to offset losses, and highlights the importance of implementing effective loyalty strategies.‍

These seven key indicators are powerful tools for measuring and improving your sales performance. By integrating them into your sales strategy, you'll not only gain greater visibility of your sales operations, but also be better equipped to make informed strategic decisions.

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