Performance metrics are important insights that help businesses evaluate performance and make informed decisions based on their data analysis. For example, if a company's year-on-year growth is decreasing, it should investigate its operations to determine the source of the problem and try to resolve it.

These metrics are used by businesses to determine whether their outcomes are in line with the goals set. If a performance metric falls short of its goal, the organization is probably underperforming or facing obstacles somewhere in its process line. However, if an outcome falls within or above its ideal range, the company is either meeting or exceeding its set objectives.

Tracking and analyzing your performance metrics allow your businesses to assess the viability of the operations involved and make more informed decisions. What the "right" metrics are for you are determined by different factors such as your company structure and priorities of your sales organization, the nature of your industry, and your overall company objectives.

Let's go a little deeper and look at some of the most popular performance metrics used by Sales Professionals worldwide in 2022. We believe that these will be their go-to metric in 2023 as well!

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1. YoY Growth

In the context of sales, year-over-year (YoY) growth is a metric that shows how an organization's sales figures have improved from one year to the next. It is commonly expressed as a percentage.

How to Calculate it‍

To calculate YoY growth, take your revenue for the first 12 months, subtract it from the previous 12 months' revenue, divide the difference by the latter, and multiply by 100.

So, if you had $100,000 in revenue in 2022 and $90,000 in 2021, you would divide the $10,000 difference by $90,000 and multiply that figure by 100, yielding a YoY growth rate of 11.11%.

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Why is it important?

YoY growth provides sales leaders with a broader picture of how their sales organizations are performing. Monthly and quarterly figures are more limited and more susceptible to fluctuations that may not accurately reflect the company's true health.

Annual growth figures assist sales organizations in gauging elements such as the soundness of their sales processes and the efficacy of their sales efforts — independent of seasonality or monthly volatility.

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2. Average Profit Margin

Average profit margin is a metric, usually expressed as a percentage, that measures the proportion of a company's net margin that comes from sales over a certain period, typically multiple years. It also considers business expenses, making it an effective indicator of how a company can manage costs concerning sales.

How to Calculate it

To calculate the average profit margin, divide net income over a given period by net sales over the same time.

Why is it important?

Tracking your average profit margin is one of the best ways to understand the efficiency of your sales organization. Seeing that it is one of the purest metrics for determining how much of the revenue you generate makes it to the bottom line.

This metric indicates how well your team's input translates into productive output. While revenue tracking is important, it does not provide a complete picture of how effectively your sales organization is leveraging the resources at its disposal.

You can generate impressive revenue figures in a quarter, but if you're investing more in supporting those efforts than you're reaping, those figures may paint an inaccurate picture of how your business is performing.‍

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3. Conversion Rate

Your conversion rate is the percentage of leads that eventually become customers.

How to Calculate it

To calculate your conversion rate, divide the number of leads you generate in a given period by the number of leads you generate. So, if you get 1000 leads per month and 100 of them buy your product, your conversion rate is 10%.

Why is it important?

This metric can assist you in calculating the number of leads required to meet your revenue targets. Historical conversion rates also indicate whether your sales representatives are becoming more effective. If your average conversion rate is increasing and you're closing the same or more deals, your sales performance is improving.

If your conversion rate is decreasing and your deal volume is flat or decreasing, something is likely wrong with your process

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4. Customer Acquisition Cost (CAC)

Customer acquisition cost (CAC) is the average amount of money spent by a company to convert a lead into a new customer.

How to Calculate it

To calculate customer acquisition cost, first, choose a timeframe for your calculation. It can be a month, quarter, or year. Once you've settled on a point of reference, total your marketing and sales expenses from that period and divide the total number of customers you acquired during that time.

Why is it important?

Customer acquisition cost, like so many other metrics listed here, is a measure of your organization's efficiency — it reflects the soundness of your sales and marketing strategies, as well as how effectively both departments are leveraging the resources at their disposal.
A lower-than-ideal customer acquisition cost can indicate that your sales process has some flaws, that sales and marketing aren't properly aligned, that your reps aren't putting in enough effort, or that other aspects of your efforts aren't being received well by prospects.

A low CAC is one of the better indicators that your organization needs to improve in some way — tracking it provides a starting point for determining what you're doing well and where you can improve.

It's important to note that this list is far from exhaustive and may not cover all of the bases you're looking for. The performance metrics you choose to track, will be determined by your sales organization's needs, interests, and structure.

Still, the metrics listed here are a good starting point for getting a sense of what you're doing well and where you might be able to improve.

How to Supercharge these metrics?

Companies that have invested in digitalizing their processes have typically outperformed their industry counterparts in recent years. This digitalization entails not only updating rudimentary and time-consuming processes but also adopting new approaches to increase their competitive advantage.

When searching for leads and clients online, a combination of sales and marketing, or "Smarketing," has proven to be the most effective combination. This department combination is typically accomplished by implementing a CRM system, such as HubSpot.

Let's take the metric of customer acquisition and see how we can boost it with HubSpot. When a company implements a CRM system with their sales and marketing, one of the first things they notice is how much less it costs to acquire new clients. But why does this happen? CRM systems provide numerous benefits, one of which is automation. There is no need to increase your physical workforce or waste countless hours on what software like HubSpot can do in the blink of an eye by automating various tasks. Everything from creating client profiles to keeping track of all interactions, email follow-ups, automated newsletters, and much more is possible. The average profit margin metric also benefits from the same positive effect.

Now that we've covered the customer acquisition cost and the average profit margin, let's move on to the Conversion Rate metric. CRM systems, as the name implies, are excellent for customer relations. These systems enable you to engage and satisfy your prospective and existing customers in real time, ensuring that your audience is always catered to. Chatbots, knowledge base features, follow-up emails, tailored content, and much more are all available. When implemented correctly, these features allow for higher conversion rates, making them critical for business growth.

Finally, year-over-year growth! An increase in YoY is almost guaranteed, when all of the above-mentioned benefits of implementing a CRM system are combined.

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