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KPIs that every sales manager should use

Sales Key Performance Indicators and Metrics

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A Sales KPI or metric is a performance measurement that is used by sales teams and by the top management to track the effectiveness of relevant sales activities within a company. These measures help in optimising your sales performance, sales funnel and sales cycle length.

Here is the complete list of the most important sales KPIs and metrics, that we will discuss in this article in every detail:

gauge chart, number charts and line charts displaying the important sales kpi sales growth

Sales Growth

Measure and analyze the growth of your sales metrics

It's a fact that by tracking the growth of your sales, you also track the growth of your company. It goes without saying that it's important to be mindful of this Sales KPI. Follow the performance of your sales reps, their target industry and area. Let's say your team focuses on many verticals and only one of them proves to bring significant returns. This could be a sign to reassess the verticals distribution in your team. You won't leave money on the table and you'll have higher returns. Be flexible and analyze your sales metrics, and you'll bring more sales revenue to your business.

Performance Indicators

A positive sales growth over a specific period of time indicates that you are on track with your sales goals to grow your business.

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column chart displaying the immportant sales metric sales target

Sales Target (Actual Revenue vs Forecasted Revenue)

See whether you are on track regarding your sales targets

One of your top priorities should be to understand if you are on track to reach your planned goals. Is your actual revenue better or worse than your forecasted revenue? When you first planned your goals, what did you base it on, is your baseline included in your charts? This information will help you expect deal activities, results and in case inconsistencies arise you’ll better recognize outliers versus trends. This metric lets you know whether your team is doing what they should, if they need help or if the whole strategy should be changed. It's crucial for forecasting, and it lets you know if other factors can impact your bottom line.

Performance Indicators

In a good assessment of your actual revenue versus your forecasted revenue, the goal should be to outperform your forecasted amount.

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chart which visualises the developement over time for ARPU and aquistition cost


Track your Average Revenue Per User to track progress

ARPU stands for Average Revenue Per Unit, the unit part of the acronym can also stand for user, account or any other paying customer. In short, this sales KPI indicates the average customer’s revenue from all your sales. It's a simple calculation, you take your total monthly revenue and divide it by the total amount of you customers you have in your roster. This might seem obvious to some and it’s worth pointing out that if your ARPU is rising with your acquisition costs, you might run into trouble. Your customer acquisition costs should always be lower, otherwise you’re not making any profits from your revenues.

Performance Indicators

If your ARPU is rising you should be on track. This usually means that you are signing bigger customers, or signing customers with bigger plans.

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bar chart and gauge chart illustrating the customer aquisition costs

Customer Acquisition Cost

Track all costs when it comes to signing up a customer

When we mention Customer Acquisition Cost (CAC), we are referring to all costs incurred in signing up a customer. Different costs are associated depending on your line of business, for instance if you’re an online marketer, you’ll include the costs of all your campaigns. In a traditional SaaS business it might mean everything from all of your staff’s salaries, all marketing and sales costs. It is recommended to recover your CAC in less than one year of your customer’s subscription. If this isn’t the case, you’ll burn through all of your capital before you can depend on your monthly recurring revenue.

Performance Indicators

The goal is to increase customer lifetime value and average revenue per unit or user / account, while cutting CAC, to maintain a profitable business.

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visual representation of average customer life time value

Customer Lifetime Value (CLV)

CLV is the amount of money you’d expect to make from that customer over the lifetime of your relationship

Your customer lifetime value (CLV) is important to track because the longer you keep paying customers, the more you’ll make. To calculate this sales metric you need to distract your CAC from the total amount of revenue which you expect to get from a new customer over the lifetime of the relationship. If your ARPU and CLV is rising, it signals that on average you are getting more revenue from each customer, for longer and that’s exactly what you should be aiming for. CLV enables you to understand how much you can allow for your CAC to still be profitable, a healthy ratio is key.

Performance Indicators

As long as customer lifetime value and average revenue per unit are growing, you’re in the green.

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data visualization of the sales kpi sales cycle length

Average Sales Cycle Length

Understand and work to shorten your Average Sales Cycle Length

If it's realistic to shorten your sales cycle in your industry, you first need to understand how you can optimize your current sales cycle. We recommend you analyze the cycles for individual reps at the different stages of the cycle. A quick comparison can show how effective a rep is in comparison to others in your company. The shorter the time each lead spends in each stage of the funnel, the better. This can also serve as a way to track an individual rep’s progress over time. This KPI can alert you on when your staff could need extra training and goal setting.

Performance Indicators

Once you have a sales cycle length baseline, the goal should be to decrease that number, resulting in more sales in a shorter period of time.

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gauge chart illustrating lead to opportunity ratio

Lead-to-Opportunity Ratio

Measure the number of unqualified leads compared to the number of qualified leads to create predictable revenue

For the most part, every new lead is an unqualified lead at the beginning. Conversely, a qualified lead refers to a lead that meets qualification requirements. Although this varies from sales organization, a qualified lead is most often an opportunity. A common tactic sales managers use to determine if leads are qualified is the BANT method. It stands for a leads with a Budget, Authority, Need and Timeline requirements. The goal of this process is to measure if your lead can become a customer. The lead-to-opportunity ratio, let's you understand the amount of leads you need to stay on track with your revenue goals. Once you’ve established a baseline ratio, you’ll know how many leads you need to create your target growth, and you’ll have revenue that is predictable.

Performance Indicators

Your lead-to-opportunity ratio is the first part of the sales funnel to be examined. By looking at what is working and what isn’t you have a better idea of where quality leads are sourced from, and can guide the marketing and sales team better.

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visualization of the sales kpi opportunity to win ratio

Opportunity-to-Win Ratio

Monitor how many qualified leads result in closing a new account.

This sales KPI tells us either how effective a sales team or sales manager closes accounts. Whereas tracking leads to opportunities gives you an idea of how interests turn into discussion, this metric measures how discussions turn into money in your business. Sales reps will refer to this as a win, hence opportunity to win. Some reps are amazing at sparking a discussion but might lack the right skills and motivation to close accounts. Sales metrics like these can help you identify and train them to close more deals. Looking at each rep’s opportunity-to-win ratio can enable you to identify areas of improvement.

Performance Indicators

The closer the ratio of opportunity-to-win, the more effective your sales people are at the later stage of the pipeline. If you're team isn't closing a minimum of 15% of your qualified leads, you might need to rethink your qualifications process.

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funnel of lead conversion ratio

Lead Conversion Ratio

Track your overall conversion ratio from unqualified leads to wins to determine how many leads your team will need to generate to stay on track

Last but not least lead conversion ratio, which is definitely one of the most important sales KPIs. This is a magic number, lead conversion ratio is ostensibly the amount of interested people that turn into paying customers. Some businesses have a 1 percent conversion rate and others might even reach 10 percent, and either could be succeeding in their field. Once you have a baseline, you’ll know how many leads you need to convert your current rate of customers. When you understand the ratio of your conversions and your average sales cycle, you'll know how many leads you need to keep your team running full steam. You'll also know how many reps you need at any given point.

Performance Indicators

If your lead conversion rate is on target, you know that your sales pipeline is in good shape. A low lead conversions rate alerts you to weaknesses in your sales pipeline. Find benchmarks for your specific industry and use them as a target.

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