10 KPIs Every VP of Sales Should Track in Salesforce
As a VP of Sales, your role involves leading a sales team to meet and exceed sales goals and analyzing the performance of the sales department so that it can be improved. Most sales leaders set benchmarks for their team by creating and measuring KPIs, or key performance indicators, that align with sales and organizational goals.
Selecting and keeping a close eye on your KPIs is critically important. Failing to track your metrics, or monitoring the wrong ones, is a surefire way of setting the entire team up for failure.
Fortunately, you can monitor and track your KPIs in real-time using Salesforce. Salesforce’s unique and powerful dashboards give you instant access to the metrics that matter the most. But you still have to know which KPIs to track.
What Are KPIs (and Why Do They Matter?)
Key Performance Indicators are measurable metrics that track how well your company (or department) performs against key business objectives and priorities. Knowing and measuring your KPIs help you achieve your results faster and adjust your strategies when you need to. Think of KPIs as the navigational equipment steering your ship.
You might need to course-correct and change your route, but the final destination stays the same. KPIs keep your business objectives front and center so that you don’t waste your efforts on work that doesn’t bring you closer to your end goals. They are the best indicator of your organizational health and growth trajectory, which is why they should be monitored and reviewed regularly.
10 KPIs That You Should Track
There’s virtually no end to the number of KPIs you can track in Salesforce, but it’s important not to track too many at once as it can become a distraction. You can configure your Salesforce dashboards to track the number of important KPIs based on your unique business goals. We’ve compiled a list of the ten most important KPIs that a VP of Sales should track:
1. Lead Response Time
The lead response time refers to the amount of time it takes for a salesperson to follow up with a lead that has contacted the business. Tightening up your sales response times can have a massive impact.
Professor of Strategy Dr. James Oldroyd from MIT, completed a study into lead responses and found that the odds of a lead entering the sales process are 21 times greater if sales staff contact them within five minutes instead of thirty minutes after the lead was submitted. This study is 15 years old, but the findings remain just as relevant today.
How To Calculate Lead Response Time
There are several ways to calculate and track lead response times in Salesforce, and it is an automated feature in Salesforce High-Velocity Sales.
To calculate the lead response time rate manually, you need to take the total amount of time between lead creation and the first response for all leads and divide by the total number of leads that a rep has responded to.
For example, if you had three leads that responded (one in 3 minutes, one in 6 minutes, and one in 1 minute), your calculation would look like this:
(Time to respond Lead 1 + Time to respond Lead 2 + Time to respond Lead 3) ÷ (Total Leads) or (3 + 6 + 1) ÷ 3 = 3.33 minutes average lead response time
To measure this with Salesforce, create a timestamp on your leads that track the first task associated with that lead that counts as a response, and run the calculation that subtracts Lead Created Time from the First Response Time for each lead. Then divide the sum of lead response time for all leads in that period by the number of leads responded to in that time. You can use Sales Rep Scorecards to simplify the process.
2. Follow-Up Contact Rate
This metric measures the number of attempts a salesperson makes to get in touch per lead or contact. This can be correlated against the number of closed deals to determine the optimum number of follow-ups a salesperson should make before giving up and provide a foundation for best practices to implement in the sales team. You can measure emails, calls, and other methods for contacting new leads in your Salesforce dashboard.
How to Calculate
The formula is straightforward: Total (#) of Follow-up Attempts / Total (#) of Leads = Average (#) Follow-up Attempts Per Lead.
You can set automated workflow reminders in Salesforce for reps to make the recommended number of follow-ups before giving up on a lead.
3. Quarterly Performance
As a VP of sales, you will be held responsible for the success of your entire sales team. It’s important to check in on your team’s overall performance every quarter, or even earlier, through a 3-month review of your sales dashboard. This not only provides great insight into your current accomplishments but can help you make projections to see whether or not you’ll hit your annual target. This can serve as an important motivator for your teams as well.
How to Calculate
You can view your quarterly performance against your sales goals at a glance using Lightning Experience. Only opportunities for the current sales quarter that are closed or open with a probability of over 70% will be displayed. You can customize your goal every quarter without impacting your forecast quotas or any other type of goal.
4. Average Contract Value
The average contract value (ACV) is the value of all account contracts and agreements, like one-off fees, recurring revenue, and more. As a VP of Sales, you’ll want to evaluate this metric to measure your team KPIs. Do some team members fall far below the average contract value of your sales team? Are some performing far better than the average? Which of your lead sources has the highest average contract value? Salesforce can provide the answers.
How To Calculate
ACV is calculated by dividing the total contract value by the total years in the contract. For example, a customer that has signed on for $100,000 across five years has an ACV of $20,000.
You can calculate the average contract value of various products or packages and measure this against the production or delivery costs.
5. Average Sales Cycle Length
How long does it take to close a lead? Sales cycles are divided into several stages that track prospects on their journeys to becoming customers. These stages can include prospecting, investigation, proposal, negotiation, and closing.
It’s important to evaluate where leads are sitting in each phase and how to move them through your funnel. Perhaps your team is spending too much time in the negotiation and not enough time filling the funnel by prospecting. Maybe you spend too much time qualifying leads instead of converting them. Do some staff have shorter sales cycles than others? This metric will help direct your team’s time and resources in the most productive direction.
How to Calculate
You can calculate this metric in Salesforce using the age field to determine the age of the opportunity. The formula will look like this:
if Opportunity is closed then, ASCL= Return Close Date - Created Date
Otherwise, ASCL= return Today - Created Date
Alternatively, if you want to measure a specific stage within the sales cycle, you can add a custom Sales Cycle Start field in your Salesforce opportunity layout and adjust the parameters to measure the time between first contact and any other stage, e.g., qualification of leads.
6. Tracking Attributed Closed-Lost Reasons
You can focus on prospecting and generate hundreds of new leads every day, but if you aren’t converting your prospects, it’s to little avail. Failing to close deals is costly, as you’ve already invested the bulk of your time nurturing and negotiating with the client, with nothing to show for your efforts. It’s important to track the number of lost sales and the reasons for failing to close.
Was it related to price? Timing? Failing to properly qualify the lead?
If you know what the objections are from the client, you can train your staff to better overcome them. If too many unqualified leads are slipping through, you should focus on stepping up the qualification process.
How to Calculate
You can set up a field dependency so that a user has to choose a loss reason from a dropdown menu whenever they change the opportunity stage to lost. Add a few common reasons (e.g., Lack of budget or loss to a competitor) and make the field mandatory for completion.
7. Meaningful Conversations
The concept of ’meaningful conversations’ is a fairly new metric for sales teams to track, but it is an important one. It’s easy to track sales activities, but not all sales activities are equally impactful. A 15-minute conversation with a customer will probably have a much bigger impact than a generic email. By measuring meaningful conversations, you ensure that your staff knows they need to spend the time creating value-driven emails and messages, opting for quality and not just quantity. You can also study this number to determine how meaningful conversations impact conversions.
How to Calculate
Salesforce offers Einstein Conversation Insights so that you can see insights and trends surfaced from voice and video calls. Calls are recorded and analyzed for mentions of specific keywords so that you can dive even deeper into these interactions by recording and playing back sales calls for training purposes.
8. Number of Demos
This metric tracks how many demos are scheduled following calls made by a sales representative. It usually takes a few calls to schedule a demo, but it’s a good indication that you are likely to close if you have several demos lined up.
How to Calculate
With Salesforce, you can track website form sign-ups for demos through integration with Google Analytics. You’ll get a good idea of which campaigns and calls are resulting in the most demos booked.
Alternatively, if you want to track individual performance, you can use Tasks and Events in Salesforce to tie back booked demos to Opportunities, Accounts, and Leads. You can then run monthly or quarterly reports for this metric.
9. Lead-to-Opportunity Ratio
You can monitor the quality of your inbound leads using the lead-to-opportunity ratio. This reflects the relationship between your qualified leads and all inbound leads, i.e., how many leads are sales qualified leads and have a chance of converting to a sale. This ratio is usually influenced by your lead qualification strategy. It’s a good idea to use an automated or AI lead scoring model so that your qualification process stays as objective as possible.
How to Calculate
The lead-to-opportunity formula is simple: divide the number of leads converted to opportunities by the number of total leads. You can use Salesforce to run a report of leads created for the period you want to measure, then a report of leads converted to opportunities with a converted date in the period you’re measuring. Then simply divide the two totals.
10. Lead Conversion Ratio
How many leads do you need before converting one to a paying customer? This ratio measures which percentage of all leads (unqualified leads) can be converted into customers. You can use this metric to visualize the impact of changing conversion tactics like improving your lead qualification and your outreach methods.
You can also compare this metric to analyze the performance and approach of your salespeople. The higher the lead conversion rate, the more effective your lead management and quality of incoming leads are.
How to Calculate
You can calculate your lead conversion ratio by dividing the number of paid customers by the total number of leads you’ve received. You can set this up in Salesforce per Lead Owner or Lead Source to view performance by campaign or individual. If you are using Lighting experience, you can set up this report by selecting the Reports Tab/New Report/Lead.
- Select the Leads with converted lead information report type.
- Add an additional field if you need to.
- Switch the subtab to Filters and select your field filters, then set your criteria to “converted equals true.”
- Click Run Report, and you’re done!
Why Is Salesforce the Perfect Tool for Tracking KPIs?
If you are a VP of Sales, Salesforce is an excellent tool for tracking your KPIs. It provides a single source of truth where all your important sales information resides and can be accessed by different members of your executive team. Because information is recorded and automated at the sales rep level, there is no need for re-entry and editing. You can simply add a dashboard component that pulls the data from the relevant source for you (and others) to review at any time.
Dashboards are powerful tools, and it may take some time to configure yours correctly. If you need some assistance or additional insight, get in touch with PhoneIQ. PhoneIQ is a cloud-based contact center platform used by companies on Salesforce that can help you gather insights, analyze customer interactions, and generate analyses that can be used in your KPIs.
Sign up for a free 7-day trial to find out more.