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Top 8 Sales KPIs Your Small Business Should Be Tracking

Top 8 Sales KPIs Your Small Business Should Be Tracking

Digital marketing generates tons of data daily, but does your data help drive business decisions?

Sales KPIs are an excellent way to gather actionable insights about your company's performance.

The right metrics improve your sales and marketing strategies and focus your resources on the most profitable activities. So here are 8 of the best critical key performance indicators for small businesses today.

Section link8 Best Sales KPIs for Small Businesses

Section link1) Sales Qualified Leads (SQLs) 

A sales qualified lead (SQL) is a prospect with a high likelihood of conversion based on qualifying criteria.

For example, an SQL needs your product or service, or has demonstrated interest in your business and can afford the purchase.

An SQL is not a sale guarantee but has higher odds of becoming a paying customer. This differs from a marketing-qualified lead or MQL at the beginning of the sales pipeline. An MQL may be aware of your business but not interested in purchasing. A good sales strategy can convert an MQL into an SQL and increase the chances of closing the deal.

Let's say you're a software company that offers enterprise cyber security. In this case, you can score the SLQ on a 10-point scale, e.g.:

  • An IT manager (10 points) who lives and works close to your business (10 points)
  • Likes and comments on your social media pages (10 points)
  • Subscribes for your product demo (10 points)

You can target your marketing content for leads that score 20 points or above to improve your conversion rate.\

Sales qualified lead as a kpi for small businesses

Section link2) Lead Velocity Rate (LVR) 

Lead velocity rate (LVR) refers to the percentage of qualified leads over time. This is one of the few marketing KPIs that monitor your sales pipeline in real-time.

Let's say you had ten sales-qualified leads last month and five qualified leads this month. Your lead velocity rate is:

LVR = [(Current month's leads - Last month's leads) / Last month's leads] x 100

e.g. LVR = [(5 - 10)/10] X 100 = -50%

This means that you've lost half your leads month over month. A negative value indicates that you should improve your sales pitch and marketing materials. A positive value shows that your conversion strategy works, so aim to maintain or increase your sales momentum.

Section link3) Sales Cycle Length

Sales cycle length is one of the best sales KPIs to understand your team's performance. This metric shows you the ideal time between acquiring a lead and closing the sale to develop a repeatable sales process. Calculate your sales cycle length as follows:

Sales cycle length = Number of days to close a sale / total number of leads.

For example, if it takes 100 days to close five leads, your sales cycle length is 20 days. The ideal sales cycle length produces the most closed deals in the shortest possible time.

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Section link4) Win Rate

Win rate is a valuable metric to have on your KPI dashboard. It measures your successful sales versus prospects over a given period. Calculate the win rate as follows:

Win rate = (Total sales / Total prospects) x 100

For example, if you made 20 sales out of a potential 100 qualified leads, your win rate is 20%. These sales KPIs examples can help improve your marketing strategy. A high win rate also allows you to find investors since it shows you can deliver a healthy ROI.

Note: Utilize a KPI tool like Metrics Watch to consolidate all your sales KPIs & metrics on one platform. This solution compiles your top 5 best sales KPIs and generates automated reports to share with your team, stakeholders, and clients.

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Section link5) Annual Contract Value (ACV) 

Suppose your company deals with multi-year subscription-based products. In that case, the annual contract value (ACV) is a helpful sample KPI for the sales manager. This metric shows the revenue per year from each subscription after one-time fees. Calculate your ACV as follow:

ACV = Total contract value (TCV) / contract duration

Let's say that your SaaS company sells software licenses in different tiers. An enterprise-level customer buys a 5-year license at $500. The total contract value is $500. The ACV is, therefore, $100 (500/5).

Your ACV gives an accurate view of your recurring revenue per subscription.

Annual contract values as a small business kpi

Section link6) Customer Lifetime Value (CLTV) 

One of the most important sales KPIs for long-term performance is the customer lifetime value (CLTV). This metric demonstrates how valuable your customers are to your company. Let's say that you run an online grocery store, and you want to compare new versus repeat customers. Calculate your LTV with the formula below:

LTV = Average purchase per customer x retention time

If a customer orders $50 worth of groceries through your app once a week for six months, the LTV is $300. You can then calculate how much it costs to retain this customer through discounts, promotions, and digital ads.

Section link7) Churn Rate

Since every business is bound to lose customers, churn rate is one of the most important sales KPIs to track. This metric shows how much you need to spend to recover lost customers, such as one-time buyers or unrenewed subscriptions. Calculate the churn rate or attrition rate as follows:

Churn rate = (Number of lost customers / Total number of customers) x 100

Let's say that at the start of the year, your company's Facebook page had 1,000 followers, but by mid-year, 50 users had unsubscribed. In this case, your churn rate is 5% (50/1,000 x 100).

Note: While churn rate is a simple formula, you can use it alongside other sales KPIs like sales cycle length, CAC, and LTV to understand your business performance. For example, it can highlight products, sales pitches, or marketing problems if your team closes in record time but customers opt-out.

Churn rate as a small business kpi

Section link8) Customer Acquisition Cost (CAC) 

The customer acquisition cost (CAC) shows how your marketing budget translates into new customers. Your CAC is one of the sales KPIs that declines over time as your business grows. Calculate CAC with the formula below:

CAC = Sales and marketing cost/number of new customers

Your sales and marketing costs include all your digital channels, from pay-per-click (PPC) ads to search engine optimization (SEO) and social media campaigns. Use your KPI dashboard to track your lead sources. Let's say that your small business sells custom jewelry. If you spend $500 on Instagram ads and gain two new customers, your CAC is $250. But if that $500 ad spend brings in $3,000 in sales, it's a good ROI for your marketing budget.

Section linkChoose the Right Sales KPIs To Transform Your Small Business 

Sales KPIs are the only way to monitor and improve your small business.

These eight metrics provide invaluable insights into your company's performance and reveal opportunities for growth and improvement.

Validate your sales and marketing efforts with these KPIs and watch your business thrive.

Start building better reports today!

And that's it!

This has been our list of the top sales KPIs that small businesses should be tracking. If you enjoyed this post, then be sure to check out these other articles:

These additional resources have even more tips and tricks to help you build better reports and reach your business goals faster!

Author Bio:

Sasi Dharan

Sasi Dharan, Marketing Manager,

In his current role, he leads the Digital Marketing Team. He has a decade of experience in Project management, Operation Excellence Consulting, and Digital Marketing.

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