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Running a small business can be incredibly rewarding, but it’s not without its challenges. On one hand, you're knee-deep in daily operations; on the other, you're thinking about opportunities and strategies that ensure long-term success.
To build a profitable business, it’s essential to keep a close eye on your sales performance. Think of sales KPIs (key performance indicators) as your way to keep your finger on the pulse of your business's health, empowering you to make informed decisions that lead to sustainable growth.
Read on to learn more about the 25 essential sales KPIs that every business owner should be tracking.
KPIs are quantifiable sales performance metrics that serve as compasses for successful businesses, helping business owners understand how well they’re doing in the areas that matter most.
In other words, they’re more than just acronyms, buzzwords, or numbers on a dashboard. Instead, KPIs provide valuable glimpses into your business health, allowing you to track sales performance, understand customer behavior, and find ways to level up operational efficiency.
For example, if you're looking to boost your e-commerce sales, KPIs can reveal the impact of your digital marketing campaigns or how quickly your customer service team resolves issues. From there, you can allocate your resources more effectively, restructure your pricing strategy, or brainstorm new promotional tactics.
By keeping an eye on sales KPIs, you'll be better equipped to make informed decisions that can lead to business growth.
Here's a rundown of some sales KPI examples that business owners should have on their radars.
The total money generated from sales before expenses. This is one of the most straightforward ways to determine the health of your business and the effectiveness of your sales strategies.
The percentage of your revenue that is pure profit after covering the cost of goods sold. To get this number, use the formula [(sales revenue - cost of goods sold) / sales revenue] x 100. If the percentage is low, it may be time to rethink your pricing strategy.
The percentage of shoppers or site visitors who become customers. A higher rate may indicate that your sales funnel and marketing efforts are effective.
Track it using this formula: (number of conversions / number of visitors) x 100.
The percentage of leads that become paying customers. To calculate it, divide the number of new customers by the number of leads and multiply by 100.
How much it costs your business to acquire a new customer? You can determine your CAC by dividing total sales and marketing expenses by the number of new customers acquired.
The percentage of customers who leave your service over a given period. A high churn rate is a red flag that needs immediate attention — customers may be dissatisfied with the quality of your product or service.
Calculate it using this formula: (number of customers lost / number of customers at the start) x 100.
The total revenue your business expects to earn from a customer throughout their entire relationship with your business. The greater your CLV, the more long-term value a customer brings — this means you should be investing marketing resources in loyalty programs and campaigns that re-engage existing customers.
Determine your CLV by using the formula (average purchase value x purchase frequency) / customer churn rate.
The average value of each customer transaction. Simply divide the total sales revenue by the number of transactions.
The rate at which your sales increase or decrease over a specific period. To figure out your sales growth rate, subtract the last period's sales from this period's, divide by last period's sales, and multiply by 100.
The revenue generated from each sales channel, whether it’s online, in-store, or via third-party platforms. This KPI helps you identify which channels are most effective for your business.
The value of all sales orders booked within a month. It's a good way to check in on your sales team's performance and get a sense of how much revenue is coming down the pipeline. Keeping an eye on monthly trends can also reveal those busy selling seasons so you can plan ahead.
The number of potential deals your sales team is working on. It's a helpful way to assess your future revenue potential and figure out if you need to focus on generating more leads.
The revenue goal you're aiming for within a specific time period. That can be monthly, quarterly, or yearly. The target should be a challenge, but also achievable.
This is the proportion of quotes or proposals that actually result in closed deals. Simply divide the total number of quotes with the number of completed sales. If this number seems low, it might be time to revisit your pricing, sales process, or offerings to make sure they're competitive.
Use this sales KPI to understand if your team is putting in the effort needed to reach your sales goals, and can help you identify any areas where they might need extra support.
The individual performance of each sales representative in terms of revenue they generate. It's a helpful sales KPI for identifying your top performers and identifying if anyone needs additional training or coaching.
The sales performance of individual products or services. Tracking which products are selling well and which are lagging can help you make smart decisions about inventory, product development, and marketing.
The effectiveness of different communication channels (e.g., phone calls, emails, or social media) when it comes to generating sales. Use these findings to allocate resources strategically.
The value and duration of your typical sales deals. Tracking this sales KPI can help you identify trends, assess the complexity of your sales cycle, and forecast future revenue.
This is an especially useful sales KPI for businesses with products or services that require a more hands-on approach to get customers started.
The time it typically takes to close a deal, from the initial contact with a lead to the final sale. A shorter sales cycle means deals are closing faster, which is generally a good sign.
Calculate this sales KPI by dividing the total number of days it took to close all deals in a given period by the number of deals closed.
The time it takes your sales team to respond to new leads. Faster response times often lead to more engaged leads and higher conversion rates.
Are customers satisfied with your products, services, and the overall shopping experience? The happier they are, the more likely they’ll stick around and make repeat purchases. You can gather this data through surveys, feedback forms, or online reviews.
On a scale of 0 to 10, how likely are your customers to recommend your business to others? NPS can be a powerful indicator of long-term growth potential.
The number of additional products or services your sales team successfully sells to existing customers. Increasing upsells and cross-sells can significantly boost revenue and customer lifetime value.
While it would be nice to have a single number to aim for, there's no universal "good" sales growth rate. It varies depending on factors such as your industry, age and size of your company, the overall economic climate, and the competitive landscape.
That said, a growth rate of 5% to 7% is generally considered healthy for established businesses, while 15% to 20% suggests strong growth.1 High-growth companies, especially in emerging markets, might even exceed 25%.1
Here are a few tips on how to improve sales performance:
Now that you understand the value of sales KPIs, it’s time to fine-tune your strategies, optimize your business operations, and set your business on a path to sustainable growth.
Start by pinpointing the KPIs that align with your business goals and industry. Next, set up a reliable tracking system — it can be as simple as a spreadsheet or as complex as a dedicated sales dashboard.
With your tracking system in place, take the time to gather initial data to establish a baseline of your current performance. Use this as your starting point as you start measuring progress and celebrating those future wins.
In partnership with three expert business owners, the PayPal Bootcamp includes practical checklists and a short video loaded with tips to help take your business to the next level.
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