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Is Your Sales Team Driving Growth, or Just Spinning Its Wheels?
Are you truly in control of your sales team’s performance?
For most sales leaders, the answer isn’t so clear-cut. While there might be occasional hints that some weeks are better than others, you don’t always have solid data backing up your assessments.
That’s where key sales metrics come into play. Understanding these lets you track performance and better pinpoint where you’re doing well, and where you’re not.
What’s more, they aren’t hard to get your head around. Once you grasp the basics, you can start making more informed decisions that improve overall performance.
But what are these metrics? At Solomon Coyle, we’ve distilled over 20 years of industry expertise and financial benchmarking into six key metrics that every sales leader can directly influence to drive success.
Revenue Growth
Revenue is ultimately the gold standard for sales leaders. It measures the total revenue generated by the sales team and reflects the combined efforts of managers, salespeople, and their strategies. It can also capture sales culture, accountability and the effectiveness of the organization’s hiring and development practices.
Revenue matters because it is why the sales team exists first and foremost. It helps managers gauge performance and track goals (i.e. meeting quotas). It also improves resource allocation, enabling managers to dedicate financing to regions or products that appear to perform better.
But it shouldn’t be considered in isolation. Other metrics can also contribute to the overall health of the sales team.
Installed Margin % of Sales
Installed margin represents how well your team is optimizing pricing and controlling costs, directly reflecting your profitability. As a sales leader, you control this measure by influencing pricing decisions, managing discount practices, and optimizing sales processes to reduce hidden costs.
Tracking this metric over time shows how your cost structure is evolving. A rising margin percentage indicates stronger vendor negotiations, more strategic pricing, and effective cost control measures across your sales process. Meanwhile, a falling one suggests the opposite. Generally, an installed margin as a percentage of sales that consistently meets or exceeds industry benchmarks is considered strong, with top performers achieving even higher rates.
To improve this metric as a sales leader, focus on securing more favorable vendor terms, optimizing your sales process to prioritize high-margin products, and eliminating unnecessary expenses. For example, you could strategically target product categories with the best financial performance and push high-margin offerings to premium clients.
You could even consider segmenting your clients by purchasing power or project budget. Directing your sales teams to push high-margin installations for high-value clients often moves this metric in a more desirable direction.
Sales Expense % of Sales
Sales expense as a percentage of sales measures the total cost of your selling activities relative to revenue generated and typically include:
- Marketing costs
- Sales team salaries
- Design and project management expenses
- Commissions
- Promotions and trade show costs
Keeping an eye on this metric can be helpful for:
- Streamlining sales processes
- Better qualifying clients
- Reducing strain on design, project management, and the sales support structure
You can improve your sales expense as a percentage of sales by streamlining your sales processes. One option is to enhance qualifying processes, avoiding overstraining of the sales team and optimizing costs.
You can also improve this metric by coaching and developing your team. Showing them how to sell more and make more money improves performance.
Most top leaders invest in learning and self-development to ensure skills remain relevant. As colleagues learn new approaches, they acquire knowledge that makes their sales efforts more efficient and reduces time-wasting.
Sales Staff Compensation % of Sales
Sales staff compensation as a percentage of sales measures how much of your sales revenue is allocated to paying your sales team. Comparing this metric to industry benchmarks helps you determine if your pay structure is competitive and aligned with your business goals.
This metric matters because it strikes a balance between performance and profitability. A high percentage might indicate an intentional investment in growth, such as hiring new team members or expanding into new markets. Alternatively, it could signal inefficiencies, like underperforming salespeople or a team that no longer fits current sales needs. Regularly reviewing team size and composition helps ensure your compensation aligns with performance and business goals.
You can improve sales staff compensation percentage of sales by designing a fair, performance-based compensation plan. Setting up commissions in the right way ensures that compensation aligns with sales performance, motivating your team while maintaining profitability. When sales increase, the ratio remains balanced, allowing both the company and salespeople to benefit.
By carefully managing sales staff compensation, you can motivate your team to perform at their best while maintaining efficient sales compensation expenses. Coaching and regular reviews can further align individual performance with company goals, keeping this metric on target.
Product Margin % of Sales
Product margin as a percentage of sales tells you how much profit you make after accounting for the cost of goods sold (COGS). This metric drives home the point that maximizing the value of each sale is often more important than pushing volume. As such, this metric is helpful for:
- Determining your overall profitability levels after covering direct costs
- Ensuring your pricing strategy is working
- Evaluating your performance relative to industry benchmarks
You can improve product margin percentage of sales by focusing on purchasing strategies. For example, you could evaluate more than the price by also considering the overall value and long-term benefits of the products you offer. This includes assessing quality, durability, and how well they meet customer needs, all of which can justify higher pricing and increase margins.
Another strategy involves better understanding your customers’ needs by improving communication and relationships with them. Technology, such as CRM tools and data analytics could also add helpful insights into what they want and need.
Lastly, you can guide and coach your teams to improve on positioning. Casting products as a premium option will sometimes allow you to charge higher prices.
Revenue Per Salesperson
Finally, the revenue per salesperson metric lets you monitor staff productivity. It is an indicator of your capacity for growth or whether you are overstaffing with underperforming salespeople.
You can increase revenue per salesperson through numerous approaches. The best strategy is to enhance sales development, coaching and accountability using a suitable course.
You could also try:
- Improving your lead generation process so that only high-potential clients who stand to benefit most from your services interact with your salespeople
- Refining your sales script and standardizing your approach across your reps
- Making better use of your CRM tools to identify the most promising leads and prioritize them for follow-up
- Seeing whether other firms in your industry are performing better than you and adopting best practices
Transform Your Leadership Approach Today
Are you ready to transform your sales leadership approach and boost your team’s performance? Solomon Coyle’s Sales Leadership Program, beginning February 26, equips you with everything you need to understand and influence these key metrics, enabling you to grow revenues and increase profitability.
Seize the Advantage
For the team leaders wanting their sales reps to succeed, this training is indispensable. In a market defined by rapid change and intense competition, the companies who succeed are those who leverage data-driven decision-making. The six metrics specified through Solomon Coyle’s industry experience and financial benchmarking offer a clear pathway to enhance your leadership capabilities. With them, you can align your strategies with business goals and foster a culture of excellence within your team.
Transform your sales leadership: Enroll in our Sales Leadership Program now and start leading with purpose! Don’t wait—secure your spot today and take the first step toward a more profitable future.