This is a 3 part series list of the most important key performance indicators (KPIs) that every B2B SaaS revenue team should measure to impact their revenue bottom line. These KPIs are a mix of both lead and lagging metrics.
To understand the difference, lagging indicators are simply indicators about a past performance, such as new sales revenue. While lead indicators are indicators that are actionable and usually determine or have an impact on a lag indicator.
Every revenue department, is typically divided into 3 key areas:
- Customer Success
In the first part of this 3 part series, we went over the KPIs necessary for marketing teams to track. In this article, we will be deep diving into the KPIs that each sales team must track. It’s important to say that these aren’t the only KPIs. However we consider them as our sales actionable metrics compared to vanity metrics, and recommend everyone of our clients to measure them (and even use them ourselves.)
The sales team is in charge of getting the product you’re building into the hands of real paying customers.
For all sales teams, they typically receive 2 different types of leads:
1. Outbound Leads
We refer to outbound leads to the leads who come from outbound strategies, which typically include a more personalized and targeted approach. Across the entire sales team, including Sales Development Reps (SDRs) and Account Executives, they use 3 key channels, which are Email, LinkedIn or phone (calling).
At the same time, both SDRs and Account executives, we must track the same 6 key metrics:
- Activities per rep: How many emails, calls, or LinkedIn messages had to be sent? These are the 3 key activities that need to be tracked. Most outbound tools that automate these “outreach” and activities usually give this number easily. If no automation tool is being used, make sure your sales team is tracking this manually in a spreadsheet or within your CRM.
We typically get asked what an ideal target should be for daily activities. The answer? It depends.
We know it sounds cliche, but trust us… every company and industry is different and the only way of knowing is by testing it for yourself.
For example, let’s say Company A is sending 500 emails per day through an automated tool, and getting a conversion rate of 10 demos which results in 3 sales.
On the other hand, Company B is sending 20 emails per day, but they are doing it manually and not sacrificing heavy personalization. Since those emails are highly targeted and personalized, they get a high conversion rate of 10 demos which results in 3 sales.
You get the idea.
- Number of Conversations & Replies per rep: The number of conversations can be tracked on a daily or weekly basis through all of the 3 channels mentioned above. This typically has a direct correlation with how personalized and targeted your emails are.
The goal of the initial outreach activities should be to start conversations, not demos. If you try to get a demo right of the bat in the first email, most likely you won’t even get a response.
Remember: people don’t know you yet, and if they don’t know you they won’t buy from you.
- Reply Conversion Rate: In addition to the number of conversations and replies per rep, they must track the reply conversion rate. Most CRMs, and email software platforms typically give a reply conversion rate, which is calculated by dividing the number of replies per activity.
- SALs: This is a direct KPI that comes from the SDR team. SALs stands for Sales acceptance leads, meaning the number of leads who replied, showed interest and are qualified for any of the account executives team to take over.
Typically, this indicates that the leads are aware of the problem they have, and have the budget to buy it. At this stage it’s a matter of convincing them that your product or service is the right one to solve that problem for them.
For this reason, we recommend that you clearly establish a qualification criteria and matrix.
- SALs Conversion rate to deals: This conversion rate refers to the number of sales acceptance leads divided that converted into actual opportunities won. This is extremely important to track since it will indicate if your SDR team is qualifying the leads correctly.
- Source/Medium Conversion Rates: Throughout your sales cycle stages, it’s important to track the results and KPIs of each of the 3 channels individually: LinkedIn, phone and email. If this is done properly, you’ll be able to easily determine which are the best for your industry specifically.
2. Inbound Leads
We refer to inbound leads to leads who come from our marketing efforts. “net” method, capturing leads through content marketing. It differs from Outbound strategies, by being more scalable but much less targeted. However, the main difference is that inbound leads are experiencing some type of pain and are actively searching for an educational piece of content or specific solution.
For inbound, we track some of the KPIs mentioned above that apply for outbound strategies, which includes:
- Number of Conversations and Replies.
- Reply conversion rates.
Additionally, we must track 2 key metrics:
- Source/Medium Conversion Rates: Each source/medium will have a specific conversion rate. This is important for inbound KPIs since these types of leads can come from multiple sources such as social, direct, organic or even referrals to name a few.
Once you start tracking this correctly, you’ll be able to see which source/medium is bringing more results.
For example, traffic coming from Google organic search might convert much higher than social traffic.
Additionally, we would highly recommend applying an attribution model, which is a framework that attributes each source/medium respectively per each conversion rate. This is important since it typically requires a prospect around 9-12 different sets of touchpoints before becoming a lead.
- Conversion Rate per Landing Page: Each landing page will convert differently, and it could depend on the conversion goal (your call to action), as well as things like copy, and creatives on each page. It’s important to track these at an individual level.
Aaron Ross, an industry B2B sales leader, repeatedly indicates that both inbound and outbound strategies must be tracked separately. Many companies make the mistake of placing and measuring both under the same bucket. By tracking them separately, you’ll be able to gather better insights on the conversion rates, types and quality of accounts, as well as iterate faster for each.
We strongly believe sales teams can apply a scientific approach on how to execute their daily activities, measure results and iterate on their process respectively. By doing this, they will start living the mantra of:
“What doesn’t get measured, can’t get improved.”
Although many sales gurus and experts will tell you to track an infinite number of KPIs, you will notice that 80-90% are actually vanity metrics, meaning that they will only guarantee a distraction for you and your team.
There’s no need to add complexity. Sales is simple and it only requires knowing the correct inputs and outputs that produce and impact the desired outcomes
All of the KPIs mentioned in this article are crucial for the sales team to track since it will have a direct impact on your bottom line revenue being generated.
Other KPIs that must be tracked to have an impact on your revenue come from both the marketing and Customer Success teams.