A simple guide to sales analytics (+ key sales metrics to watch)
Sales analytics doesn’t have to be complicated. Get the lowdown on what it means, how to do it right, and why it benefits your team.
Last updated July 25, 2022
Imagine you’re in high school and trying to prepare for an AP calculus test, but your teacher never gave you homework, a study guide, or a practice test. You likely have no idea what information to study or how you’ll perform on the AP exam—not an ideal situation.
The same is true when trying to build a sales team and a sales strategy without sales analytics. Just like understanding benchmarks and working through practice tests will help you tackle an AP exam, using sales analytics and analytics tools will help you boost sales numbers. Without sales analytics, you’re missing out on key strategic insights and revenue for your business.
What is sales analytics?
Sales analytics refers to the technology and processes used to gather sales data and gauge sales performance. Sales leaders use these metrics to set goals, improve internal processes, and forecast future sales and revenue more accurately.
The goal of sales analytics is always to simplify the information available to you. It should help you clearly understand your team’s performance, sales trends, and opportunities.
Generally, sales analytics is divided into four categories:
- Descriptive: What happened? Descriptive analytics entails tracking historical sales data—revenue, number of users, etc.—so you can make comparisons and better understand what’s currently happening.
- Diagnostic: Why did it happen? Diagnostic analytics is examining and drilling down into the data to determine exactly why something occurred.
- Predictive: What’s going to happen? Predictive analytics is taking what you’ve learned about past sales and using it to gauge patterns and trends. This allows you to make educated predictions.
- Prescriptive: What’s the best solution or action? Prescriptive analytics involves assessing all the data and recommending the best plan of action.
Benefits of sales analytics
Sales analytics is your sales team’s hidden superpower. It can enable your agents to spot key trends, dive deep, predict outcomes, and increase productivity. Accurate analysis also gives your team the ability to tailor their efforts and prioritize high-value prospects. Plus, it may even help spotlight new opportunities for your business to pursue.
Sales analytics allows you to better gauge team performance and uncover areas for improvement, too. Understanding those strengths and weaknesses leads to better training, more attainable goals, and a cohesive team.
9 sales metrics to watch
Data is at the heart of your analytics. Before you can dive into any sales analysis, you need to understand the metrics and key performance indicators (KPIs) you’re looking at and why you’re measuring them. Your team can track and analyze a variety of sales metrics, including:
Sales growth shows how much your revenue increases (or decreases) over a specific period of time. This metric provides a bird’s-eye view of sales and how your team is performing.
To determine sales growth, take the sales total for the current period and subtract the sales total from the previous period. Divide that result by sales from the previous period, then multiply by 100 to get your growth percentage.
For example, say you’re looking to track sales growth quarter over quarter. You had $100,000 in sales last quarter and $120,000 in sales this quarter. That means you experienced 20-percent growth in sales.
This an important metric because growth closely aligns with overall profitability. No company wants to stagnate, so it’s critical to track whether or not you’re experiencing healthy growth. Plus, understanding your team’s performance allows for more accurate sales forecasting and more effective sales strategies.
Sales target evaluates current sales and compares them to your bigger, long-term goals.
To track this metric, you first have to determine your target. Sales targets are often based on past growth rates and revenue needed to stay in business and remain competitive. Sales targets should strike a good balance between ambitious and achievable.
Now, depending on your company and what you want to measure, your sales target can be an actual monetary value, the number of sales made, or the number of accounts opened. You can also look at various sales periods—weekly, monthly, quarterly, or yearly—to obtain the value that’s most useful to you.
Once you know your sales target, it’s easy to calculate the percentage. Simply divide the number of sales from the current period by the sales target, then multiply the result by 100. That number will tell you how close you are to reaching your overall target or goal.
Let’s look at how this would play out. Say your company is shooting for $1 million in sales for the year. That’s your sales target. Currently, you have $720,000 in sales so far for the year. That means you’ve reached 72 percent of your sales target, with 28 percent left to go by the end of the year.
You can also use this formula on a smaller scale. For example, say you’ve set a sales target for each agent to make 10 sales per month. But one agent made only six sales this month; that means they missed their monthly target by 40 percent.
It’s imperative to set and monitor sales targets because they show whether the sales team is on track to meet its goals. It can also be motivating for sales agents to see how their daily efforts contribute toward larger company goals.
Sales targets can also help you determine whether the goals you’ve set are realistic. One sales agent missing the mark is one thing. But if most agents miss the target on an ongoing basis, then it might be time to reevaluate.
Sales per rep
Sales per rep measures the individual performance of your agents.
For this metric, all you do is track the sales each agent makes during a designated period, such as weekly, monthly, or quarterly. Again, it’s good to look at both the number of deals made as well as the monetary value.
For example, maybe agent A made 10 sales and agent B made six sales. But agent A’s sales totaled $100,000, while agent B’s totaled $110,0000. Agent B likely sold some higher-value items or services.
It’s important to look at this metric critically. Some sales representatives may have more experience or be focused on selling higher-value items, as shown in the above example. Factors like sick time, vacation, and time spent on other job duties can also influence these numbers.
Sales per rep does come in handy when determining ongoing training, professional development opportunities, and rewards. Agents with lower sales numbers may benefit from mentoring or training from the sales manager, more experienced agents, or third-party sources. Sales leaders with high sales per rep may be good candidates for promotions and bonuses.
Sales by region
Sales by region dives into the volume of sales in key geographical areas for your business.
This metric tracks sales in a specific region—territory, state, country, or continent—over a specific period of time. For example, a business that sells across the United States may want to see the annual sales generated by individual states. Maybe this year, you saw $100,000 in sales in California, $50,000 in Wisconsin, and so on.
Meanwhile, a global business may compare sales by continent. Companies that organize their sales team by territories—where rep A is in charge of sales in the northeast region, rep B focuses on the southwest region, etc.—may also want to analyze sales based on those geographic markers.
Examining sales per region can help you determine where your products or services are selling the best, enabling you to focus your sales and marketing efforts accordingly. It also reminds you to take into account certain factors (such as population density and seasonality) when setting your sales goals. For example, California is much larger and more populated than Delaware, so you’d likely aim for higher sales in California.
The sell-through rate assesses how quickly a business can sell its inventory.
To calculate this metric, divide the amount of inventory you sold within a certain time period by the amount of inventory you received within that same time period. Then, multiply the result by 100 to get your sell-through rate percentage.
Say a shoe store has 100 pairs of sneakers when it receives inventory at the beginning of the month. By the end of the month, the store sells 20 pairs of sneakers. That means its sell-through rate is 20 percent.
This is an important metric for retail businesses to look at when monitoring the supply chain and competitors. You want to aim for a high sell-through rate. A low sell-through rate means that your products are sitting on the shelf and not making you a profit. But running out of products isn’t good, either, so ensure you’re adjusting your inventory strategy as needed.
Sales per product
Sales per product, also called product performance, shows the profitability of each product you sell.
For this metric, you track total revenue for individual products over a specified period of time. Depending on your goals, you can also look at the number of units sold rather than the monetary value.
To see this play out, consider a game store that sells video games, board games, and yard games. By tracking sales per product, the store manager can see how each type of game is selling. Video games normally have a higher price point, so the store may sell fewer yet make more off each sale. Board games are generally less expensive, but the store sells a lot of them year-round, so they account for a large portion of the total sales. And lastly, yard games are a big revenue driver in the spring and summer months when the weather is nice.
Overall, this metric showcases which products are selling well and which aren’t. As depicted in the scenario above, it can help you see how high-cost, low-volume products compare to low-cost, high-volume products. You can also examine how seasonality and marketing initiatives impact the sales and revenue of certain products. For instance, perhaps there’s a surge in sales on a specific product after launching a holiday promotion.
Pipeline velocity measures how quickly leads and prospects move through your sales pipeline.
To determine your pipeline velocity, look at the number of sales-qualified leads (SQLs) in your pipeline, the average deal size, and your average win rate. Multiply them together, and then divide that number by the current length of your sales cycle. This will show you how much revenue is flowing through your pipeline at any given moment.
Let’s say you have 25 SQLs in your pipeline, your average deal size is about $20,000, and your average win rate is 50 percent. If your average sales cycle is about 30 days, then your current pipeline velocity is $8,333. In short, that means an estimated $8,333 is flowing through the pipeline each day.
Pipeline velocity is a key metric because you can use it for forecasting and business planning. But it’s also critical to work through what might occur if just one of those factors changed: What would happen if your SQLs were suddenly cut in half for the month? Or your sales cycle doubled? Or you started winning 75 percent of your deals? Any change can have a dramatic effect on your pipeline velocity, which can impact goals and initiatives for your team.
Quote to close
Quote to close determines the percentage of prospects who turn into paying customers.
To determine your quote-to-close rate, take the number of actual deals closed during a specific time period and divide it by the number of quotes sent during that same time period. Then, multiply the result by 100 to get your quote-to-close percentage.
Imagine you sent out 100 quotes to potential customers over the past year. Of those, you closed 60 of them. That means you have a 60 percent quote-to-close rate.
This metric matters because it illustrates how well your team can move prospects through the sales funnel and turn them into customers. If the number is steadily decreasing or relatively low, then you might need to make adjustments to your pricing or your ideal customer profile (ICP). It may also signal more training opportunities for your team.
Average purchase value
Average purchase value, or average sale value, examines the average value of each transaction.
To calculate this metric, take your total sales revenue and divide it by the number of sales you made.
Say a jewelry store made $2 million in sales last year. There were 1,000 purchases. That means the average purchase value was around $2,000.
Average purchase value is helpful when making sales forecasts and projections, as you can quickly estimate how many customers and/or purchases you’d need to reach a lofty revenue goal. You can then use it to plan upsell or marketing strategies.
If you were looking to boost the average purchase value, you could prioritize marketing, selling higher-ticket items, or pushing upsell opportunities. In the case of a jewelry store, that might mean marketing your larger stones or more expensive settings and upselling an extended warranty option.
What to look for in sales analytics tools
There are various sales analytics tools available to help you track these metrics. But not all tools are created equal. There are a few specific features you should look for when choosing a sales analytics solution.
Your sales analytics tool should turn the data into an easy-to-digest format. As they say, a picture is worth a thousand words, so the more visual you can make the data, the better.
Look for visual dashboards that allow your sales teams and company leaders to view sales activities at a glance. You should also find a solution that’s interactive and allows teams to drag, drop, and adjust the data as needed.
A visual and interactive analytics tool helps your sales team tell a story with the numbers and make quick, data-driven decisions. Plus, it keeps the focus on high-value leads and actionable insights without getting lost in the numbers.
Ease of use
You want the tool to have features that reduce friction and make it simple for sales teams to focus on selling rather than create more work.
Features like automatic syncing and real-time updates help save time and keep information current without requiring additional steps for your team. For example, if a customer support agent documents a ticket, it should automatically sync with the customer’s account so the sales team is up-to-speed on any issues. Similarly, sales dashboards should update automatically when new sales are made or goals are met.
Mobile capabilities are handy, too, because sales teams are often remote or out on the road meeting with customers. That way, they can reference account information and make updates to customer data without having to wait until they’re back in the office.
Data comes from a variety of places, so your sales analytics solution should work seamlessly alongside the other tools your team regularly uses.
Look for tools that integrate with existing apps—such as your email marketing platform, calendar, and task management software. This will simplify workflows and save your sales team valuable time.
Of course, every company is different, so seek customization opportunities to meet your specific needs. That may mean pulling specific metrics or building your own application programming interface.
Zendesk Sell can supercharge your sales team
Overwhelmed by the number of solutions available? Zendesk Sell is a sales analytics tool and reporting software that allows you to easily track key sales metrics and take deals all the way to the finish line. It integrates with tools you’re likely already using—from Mailchimp and Calendly to Shopify—and quickly turns customer interactions into valuable, data-driven reports.