Data is power in the SaaS sales world. It’s really that simple.
“High performing sales teams (the top 24% of more than 2,900 sales professionals surveyed) are 1.5x more likely to base forecasts on data-driven insights,” explains Tiffani Bova of Salesforce. On the other hand, low performing sales teams are 1.7x more likely to base their decisions on intuition.
To extract your SaaS sales team’s full potential and truly fire on all cylinders, you’ll want to be meticulous about tracking their performance. Here are the most essential KPIs to pay attention to.
I think one of the most overlooked, yet vitally important metrics, is average lead response time.
78% of customers buy from the first SaaS company that reaches out to them.
It’s not rocket science. The first vendor that initiates contact is the first company a lead seriously considers. They learn about the brand’s products, offerings, UVP, and so on, giving the company a chance to create valuable trust and rapport with the lead before anyone else does.
Look at how lead conversion rates increase with the less amount of time that elapses before the first outreach attempt.
Calling within an hour improves conversions by 36%, which is okay.
But look what happens when you call within 30 minutes. It jumps to 62%. Call within 3 minutes, it climbs to 98%. Call within 2 minutes, and it’s 160%.
And here’s the kicker. Call within 1 minute, and it’s a face melting 391%!
This straight up shows the importance of A) knowing your sales team’s average lead response time and B) doing everything you can to increase it. For advice on how to do this, check out this previous post I wrote on how you can easily beat 55% of your competitors by improving your lead response time.
The SaaS customer journey can be broken down into two main phases. There’s the visitor to lead phase, which your marketing team is primarily responsible for. And there’s the lead to customer phase, which falls into the hands of your sales team.
It’s the latter that we’re interested in here. One of the absolute most important metrics is what percentage of leads your SaaS sales team converts into customers.
This is a reflection of:
To calculate lead to customer conversion rate, divide your number of conversions by your total number of leads and multiply that number by 100. If, for example, you had 100 leads and 5 ended up buying, your lead to customer conversion rate would be 5%.
By the way, if you’re wondering, the typical SaaS conversion rate for most companies ranges from 3-5%, while top performing teams reach around 8%.
Next, there’s how long it takes your SaaS sales team to close a deal. Needless to say, the quicker they’re able to move someone from being a lead to a paying customer, the better. Not only does this positively impact overall revenue, it means your reps can move onto other leads, and in turn, make ever more sales.
So, you’ll want to monitor how long it takes, on average, for someone to go from being a lead to buying your product — a KPI known as average sales cycle length.
Note that the average sales cycle length gets longer with the pricier a SaaS product is. According to SaaS Metrics, benchmarks break down like this:
At first glance, monthly recurring revenue (MRR) may not seem all that relevant to a SaaS sales team’s performance. After all, MRR doesn’t kick in until after customers hang around a while.
But it’s an extremely vital metric for the simple fact that it shows what your sales team’s long-term progress looks like. If there’s a noticeable increase in your MRR, for example, it shows your reps are nailing it and reaching or exceeding their quotas. Otherwise, if your MRR flatlines or declines, it’s tangible proof that adjustments need to be made.
In terms of factors that contribute to MRR, some of the biggest are your number of new customers and how adept your reps are at upselling and cross-selling. Along with that, it can provide insight on how strong their relationship-building skills are because the churn rate and number of referrals contribute to MRR as well.
And this metric is super easy to calculate. Just multiply your total number of active customers by the average amount billed.
Note that most experts consider 10% month-over-month MRR to be strong. But if you can hit 15-20% for six months or longer, then you can pretty much bet that you’ve got a winning sales process on your hands.
Like I said earlier, top tier SaaS sales teams rely on data-driven insights to continually improve and refine their strategies. Low performing sales teams rely on a hunch.
With a wealth of data available, it’s possible to track virtually every aspect of your team’s performance. The specific KPIs I suggest focusing on are:
This should give you a bird’s eye view of what their current performance is like and help you identify precise areas for improvement so everyone can collectively level up.
Looking to recruit the best of the best SaaS salespeople in your industry? Learn how HireDNA can help you build a stronger sales team using a verified network of sales recruitment experts, along with science-based assessments and intelligent matching.
Get the posts in your email