Are you struggling to keep track of your revenue month after month? You may need to evaluate your business sales strategies to save your business from incurring losses. But getting the data to gain valuable insights for your business can be challenging.
Here’s the good news.
You can use your sales performance metrics to help identify performance issues and optimize sales activities. These performance metrics can also help to track your business’ conversion rate, customer acquisition cost, and average deal size.
Assessing these sales metrics will help create a robust sales dashboard based on factual knowledge.
Want to learn how to measure sales performance to scale your ecommerce business?
Then keep reading to discover:
- The basics of sales performance metrics
- What are the KPIs of ecommerce sales?
- Final thoughts: 9 sales performance metrics to track business growth
The basics of sales performance metrics
A sales performance metric is a measurement you can use to monitor the activities of your business. These data points help determine the effectiveness of an individual, team, or business as a whole.
Sales managers use these key performance metrics to measure sales performance and determine whether the business meets its sales goals. Setting objectives is crucial to keep everyone motivated and accountable. It will help you manage your sales activities and processes and spot potential bottlenecks.
Whether you’re selling offline or online, SaaS or physical goods, tracking your business sales performance metrics will:
- Improve sales performance
- Inform important decision-making processes
- Increase business profitability
- Create a more efficient sales team
- Increase customer satisfaction
What are ecommerce metrics and KPIs?
Like running any business, a successful store relies on monitoring and managing three areas of ecommerce KPIs:
- Overall business health
Unfortunately, your team can only stretch so far. How do you keep a “watchful eye” on everything going on in your business, especially as you scale? This is where ecommerce metrics and key performance indicators (KPIs) come in.
By identifying metrics and KPIs that directly “move the needle” or influence the health of your business, you and your team can shut out all the noise and focus on the handful of numbers that really matter. Essentially, choosing the right KPIs streamlines your business operations.
Since ecommerce businesses typically dwell in the realm of products (and not services), sales metrics become the most important – and we’ll cover them in more detail in the next section.
What are the KPIs of ecommerce sales?
- Average deal size
- Percentage of salespeople meeting targets
- Cost per acquisition
- Net promoter score
- Churn rate
- Customer lifetime value
- Average lead response time
- Win rate
- Conversion rate
Are you wondering what the most important metrics for the performance of your product are?
Here are nine top ecommerce metrics for sales:
1. Average deal size
Evaluating this metric monthly lets you know if your contacts are growing or decreasing. If your deals decline, something could be wrong with the sales team or their lead generation efforts.
To calculate your average deal size, divide the total deals by the total value of those deals.
Average deal size = total deals / total value of deals
2. Percent of salespeople meeting targets
The percentage of your sales team meeting their sales quota can indicate whether your quotas are realistic or not. For example, if only 40 percent of your team achieves the expected close rate, you must determine why they may be underperforming.
Quota attainment above 90 percent means you might need to increase individual sales targets. Tracking this metric helps sales leaders identify who meets their quotas and those that don't meet the business revenue target.
3. Cost per acquisition
This performance metric factors all the costs associated with gaining a new customer, including sales and marketing. Always minimize costs by targeting the right customers to increase your average profit margin.
To calculate CAC, divide the money you spend to acquire a customer by the number of acquired customers.
Cost per acquisition = Total money spent to acquire new customer / number of acquired customers
4. Net promoter score
This data reveals how likely it is — on a one to ten scale — for your existing customers to recommend your products or services.
Sales leaders can use this metric to gauge customer satisfaction levels and loyalty to their business. A high net promoter score will significantly increase your sales opportunities and grow your market share.
5. Churn rate
The churn rate is the percentage of customers who are leaving your business. You need to determine why your customer churn rate is high to maintain a good customer base.
Some reasons why your customers may leave include pricing and customer service. Knowing that will help improve customer retention strategies and increase average revenue.
To calculate your customer churn rate, divide your total number of customers at the beginning of the month by the number of customers that left.
Churn rate = total number of customers at the beginning of a period / total number that left
6. Customer lifetime value
Customer lifetime value (CLV) is the total revenue your business generates from a customer over time in their lifetime as a loyal customer. That lets you identify which customer segment is the most profitable and worth your focus.
To calculate the CLV of a customer, multiply the amount of annual profit you’ve earned from a customer by the average lifespan of a customer, then subtract the customer’s acquisition cost.
CLV = (Annual profit from a customer × average lifespan) — customer’s acquisition cost
7. Average lead response time
Lead response time is the average time sales reps take to contact leads interested in your products. It tells you whether your marketers respond urgently to prospects so they don’t slip away.
The average response time should not exceed five minutes because the likelihood of conversions drops by 80 percent after the five-minute mark. Ensure your team responds within this time frame to avoid losing customers on the sales pipeline and promote sales revenue.
To calculate lead response time, subtract the time or date of follow-up from the time or date of initial contact.
Lead response time = Time or date of initial contact — time or date of follow-up
8. Win rate
Win rate indicates the number of leads that end up becoming active customers. That is an excellent way to determine whether your sales reps are succeeding and the effectiveness of your sales strategies.
If the average win rate is going up, it means sales performance is improving. If it isn't, you need to identify where a deal slipped out in the sales funnel and perhaps take a corrective approach.
You can calculate the win rate by dividing the number of deals won by the number of deals created in a sales cycle.
Win rate = Number of deals won / number of deals created
9. Conversion rate
Your business’ conversion rate is the percentage of visitors performing an action that could lead them to become customers. These actions include account creation, email subscription, and product purchases.
It helps you identify which techniques are working best and which aren’t. A high conversion rate means additional revenue for your business.
To calculate your business conversion rate, divide the number of conversions by your website’s total number of visitors.
Conversion rate = Total conversions / number of visitors
These nine metrics are important but only begin to scratch the surface of the numbers you can track in your ecommerce businesses. Visit the Nexcess ecommerce metrics glossary to learn more.
How often should I check my ecommerce metrics?
Once you establish KPIs across your business, it can be easy to get lost in constantly checking them. You want your business to succeed and, at first, you’ll want to know about any slight uptick in the numbers.
How often you check your ecommerce metrics will ultimately depend on your business goals. With that said, it’s a general rule of thumb that you check particular metrics daily, weekly, monthly, and quarterly.
The numbers you should check daily are your website performance metrics. You’ll want to closely monitor your website to ensure everything runs smoothly. Monitor things like web traffic, bounce rate, conversion rate, and clear any more immediate issues that may come up.
Sales and marketing should be reviewed every week. Review sales data to spot bottlenecks, identify any agents needing support, or assess if you need to overhaul any processes completely. Marketing campaign metrics like cost-per-click, ad spend, and conversion rates should also be in your weekly queue.
You should review your customer-focused ecommerce performance metrics on a monthly cadence. This includes numbers like your cost per acquisition, churn, and retention rate. This is also a good time to analyze customer feedback or behavior trends and identify opportunities to improve your store.
Quarterly assessments are for ecommerce performance metrics around big-picture planning. The metrics and performance areas you view here should focus on overall ecommerce success. You should look at your strategy, goals, target audience, and budget. It also may help to run a competitor analysis, learn what others are doing, and bridge any gaps between the two strategies.
How to measure ecommerce success
Depending on whom you talk to, the amount and type of key ecommerce metrics can vary greatly. Every industry leader may have a different take on the true ecommerce success metrics.
Generally, when you get to the heart of what makes an ecommerce storefront tick, there are two primary numbers that matter. Smart ecommerce owners should be watching their conversion rate and average order size. If both are increasing, they’re two healthy signs of a strong, growing store.
Final thoughts: 9 sales performance metrics to track business growth
Improving sales performance metrics is crucial, but it can be a complicated process. It’s a good idea to have the right tools to help sales performance evaluation.
In addition to tools like Glew or Metorik, Nexcess Sales Performance Monitor can help. It’s included in all managed WooCommerce plans from Nexcess, and allows you to measure your sales against a predictive model based on your store's historical performance.
Our intelligence engine will send you alerts on your sales trends, giving you much-needed visibility and allowing you to get back on track if store sales are slowing down.
Isn't it time to work with experts who can do more than just host your website?
Access top-notch, real-time sales intelligence with our fully managed WooCommerce hosting packages today.
This blog was originally published in September 2021. It has since been updated for accuracy and comprehensiveness.