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Sales KPIs and the metrics that predict revenue

Most teams track too many sales KPIs and act on none of them. A useful set is small, calculated the same way every period, and split between lagging indicators that report the result and leading indicators you can still influence.

All answers

The core sales KPIs to track

These eight cover almost every question a revenue team needs to answer. Add more only when a specific decision requires it.

KPIHow to calculateType
Win rateClosed-won deals / all closed dealsLagging
Sales conversion rateCustomers / qualified leads, per stageLagging
Average deal sizeClosed-won revenue / closed-won dealsLagging
Sales cycle lengthAverage days from created to closed-wonLagging
Pipeline coverageOpen pipeline value / period targetLeading
Pipeline createdNew qualified opportunity value per periodLeading
Lead response timeMedian minutes from inbound to first contactLeading
Forecast accuracyActual revenue / forecast at period startDiagnostic

How to calculate CAC and customer lifetime value

Customer acquisition cost is total sales and marketing spend for a period divided by new customers acquired in that period. Include salaries, tooling and ad spend, not just media cost, or the number flatters you.

Customer lifetime value is average revenue per customer multiplied by gross margin, divided by the churn rate for the same period. A healthy LTV to CAC ratio is typically three or higher; below one, every new customer loses money.

How to measure sales team performance fairly

Measure reps on inputs they control and outcomes together. Ranking only by closed revenue rewards territory luck; ranking only by activity rewards busywork.

  • Attainment against a quota set from territory potential, not a flat number.
  • Stage-by-stage conversion to see whether a rep loses deals early or late.
  • Pipeline created, so prospecting effort is visible before it converts.
  • Data hygiene: percentage of open deals with a next step and a realistic close date.

Reviewing KPIs on a cadence

Weekly reviews look at leading indicators only: pipeline created, response time, deals at risk. Monthly reviews look at conversion and cycle length. Quarterly reviews look at CAC, LTV and forecast accuracy. Mixing horizons in one meeting is why KPI reviews turn into status updates.

Frequently asked questions

What sales metrics should I track?
Track win rate, sales conversion rate by stage, average deal size, sales cycle length, pipeline coverage, pipeline created, lead response time and forecast accuracy. That set explains both what happened and what is about to happen.
What are the most important sales KPIs?
Pipeline coverage and pipeline created are the most predictive leading KPIs; win rate and sales cycle length are the most useful lagging ones. If you can only track two, use pipeline coverage against target and stage conversion.
How do I calculate sales conversion rate?
Divide the number of deals that reached the outcome stage by the number that entered the starting stage over the same period. Calculate it per stage rather than end to end so you can see exactly where prospects drop out.
How do I calculate customer acquisition cost?
Add all sales and marketing costs for a period, including salaries and tooling, and divide by the number of new customers acquired in that period. Compare it against lifetime value rather than reading it alone.

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