5 Essential Sales Metrics for Small Businesses



Small business owners are always in a hurry to grow sales. They try out various sales and marketing strategies to propagate sales as fast as possible. However, it is equally important to measure the effectiveness of your activities and the efficiency of your sales process. Because without immediate and measurable feedback, it will not be possible to understand what’s working and what’s not.

Developing sales metrics and monitoring them regularly is crucial for managing and improving your sales funnel. Overlooking and failing to track the essential sales metrics can prevent small business owners from taking their businesses to the next level. On the other hand, if you are seeking funding, monitoring the sales metrics will enable you to make realistic sales projections and ensure that the business planning process is efficient.

Below are 5 key sales metrics that you must track and improve on a regular basis:

Average Purchase Value

Tracking average revenue per sale will enable you to quantify the value of each lead and thus you can assign the marketing efforts accordingly. This metric will help you to make sales forecasts and look for factors that contribute to increase in deal size. By analyzing the type of customer and type of product or service, you can also gain a clear idea of customer behavior.

Sales Cycle Time

Measuring the length of the sales process is extremely critical. You need to know the average time it takes to close a sale. Cycle time can be measured as an average or as an interval based on the maximum and minimum process length. You can also classify sales cycle time by deal size volume.

If you find out that certain sales processes are taking more than usual time, you can find ways to shorten them. Examining the sales process will enable salespeople to deliver better value to their customers and move the sales process forward without any hindrance. This will also ensure that the sales team focus on prospects who are more likely to close and get away from opportunities that are not willing to buy.

Conversion Rate

It is essential to know how well your sales funnel is working. Scrutinizing the number of closed deals compared to the number of opportunities at various stages will enable you to determine how big your pipeline needs to be for you to generate more business. For instance- if you find out that the ratio of leads to sale is 15:1 and ratio of qualified prospects to sale is 7:1, you can work backwards to build a growth plan as you know how many more leads you need to convert to prospects and how many high-quality leads you need to do this.

Funnel Leakage

Sales funnel leakage is inversely proportional to the conversion rate. You need to know why certain opportunities are eliminated from the sales funnel at various stages. By examining this, you will easily be able to make corrections to reduce the leakage. Especially if you are a B2B organization, reducing sales leakage is important as its effect is reflected later on the business volume due to longer sales cycle times.

New vs Returning Customers

It is extremely essential to scan what percentage of your sales is coming from existing customers and new customers. For a small business which is in growing phase, a healthy mix of both is preferable. Addition of new customers indicates that your marketing efforts are working and returning customers shows that your product or service is in line with your customers’ needs and requirements and they are able to get value out of it.

Create a sales dashboard to track these metrics and share it with your team members. Analyze it on a regular basis to understand how you are progressing toward the sales targets. Based on the results, you can add or remove certain metrics as per your business requirements.