Essential B2B Sales KPIs That Every Team Should Track
Discover 16 B2B growth metrics that matter and how to calculate them
Tracking the right key performance indicators is critical for B2B sales teams that want to understand their ability to execute. Without the right metrics, it’s hard to know if your strategy’s working or if you need to pivot.
We’ll be taking a closer look at some of the most important KPIs that drive B2B sales growth, as well as what makes them indispensable.
Why B2B sales KPIs matter
Business is about numbers just as much as it is about people. Day in and day out, founders need to answer questions like:
- Am I profitable or not?
- Am I bringing in enough revenue to cover expenses?
- Is there room to invest in new opportunities or pursue new developments?
The answers to these questions give insight into how long your business can keep operations running, and – if you have them – update your investors about your company’s health.
16 important B2B sales KPIs
B2B sales KPIs reveal how well your team is doing and which areas need improvement. They also let you know how efficiently you’re selling your product, and if there’s a stumbling block that’s stalling growth and causing you to make fewer sales than expected.
Here’s a rundown of some of the most useful sales metrics.
Marketing Qualified leads to Sales Qualified Leads (MQL-to-SQL conversion rate)
The MQL to SQL conversion rate shows how many MQLs become SQLs.
Marketing-qualified leads (MQL) are people who have shown interest in your product. This could be downloading a whitepaper, signing up for your newsletter, or following you on social media.
In comparison, sales-qualified leads (SQL) are individuals who have shown enough interest in your product, and who fit your ideal customer profile and buyer persona. Upgrading a lead to SQL signals that the lead is ready to be contacted since they’re more likely to make a purchase.
Ideally, your sales team doesn’t have to look for potential customers on their own. Instead, your marketing team supplies them with promising leads they can nurture. Knowing the MQL to SQL conversion rate lets you see how well your marketing team handles this task.
Here’s how to calculate the MQL to SQL conversion rate:
(Number of MQLs that become SQLs / Total number of MQLs) x 100%
Let’s say you have 200 MQLs over the past month, and 50 of these were evaluated as SQLs. Your conversion rate is (50 / 200) x 100% = 25%.
A low MQL to SQL rate is a frequently overlooked sign of sales pipeline problems. It means that (a) your marketing team isn’t supplying your sales team with enough leads to work with, and (b) your marketing is attracting too many of the wrong people (i.e. they don’t fit match ICP or buyer persona).
Sales qualified leads by source
After you find out how many SQLs you’re getting, you’ll want to know where they’re coming from.
To calculate the number of SQLs by source, you just add up all SQLs who reached out to you through a specific channel: your website, social media, newsletter, or any other sales and marketing channel you’re using. It’s also good practice to track leads separately by social media platform (Facebook, LinkedIn, Twitter, YouTube) rather than grouping them all in one category.
A breakdown of 50 SQLs can look like this:
- Website: 25 (50%)
- LinkedIn: 15 (30%)
- Facebook: 5 (10%)
- Newsletter: 5 (10%)
SQL by source helps you plan your marketing and sales budgets, and allocate money and resources to the channels that pull in more prospects. If the majority of leads come in through LinkedIn, then you might minimize ad spend on Facebook and up your ad budget on LinkedIn.
Sales outreach
Sales outreach is the total number of contacts your sales team initiated with potential customers over a given period.
To calculate sales outreach, simply add up all touchpoints over a period. If your salespeople sent 150 emails and made 50 calls last week, your total sales outreach is 200.
Sales outreach helps gauge your team’s productivity, but it shouldn’t be their sole KPI. In B2B sales, the quality of contacts often matters more than quantity. When evaluating sales team performance, use sales outreach in combination with other metrics, such as sales close rate and speed to lead.
Average lead response time (“speed to lead”)
The average lead response time, or speed to lead, shows how long it takes your sales team to get back to a potential customer. The faster they respond, the more deals they pursue and can possibly close.
Here’s how to calculate the average lead response time:
(Total response time for all leads) / (Total number of leads)
If your sales team responded to 24 leads with a total response time of 8 hours (480 minutes), your average response time is 480 minutes / 24 leads = 20 minutes.
Minimizing speed to lead is now more important than ever, as customers are extremely busy and have shorter attention spans. Even if you write back in 60 minutes, it might already be too late.
That’s why you should drive your response time as low as possible. At the moment, your target response rate should be under 10 minutes.
This is one spot where AI SDRs in B2B sales shines. Solutions like AiSDR can respond to incoming lead messages within 10 minutes.
Sales qualified lead to customer conversion rate (sales close rate)
The sales close rate is the percentage of your SQLs that become actual customers. While sales outreach shows how active your team is at approaching people, the sales close rate tells you if they’re reaching out to the right people.
Here’s how to calculate the SQL to customer rate:
(Number of customers / Total number of SQLs) x 100%
If your team got 50 SQLs over the past week and 20 of these became customers, the close rate = (20 / 50) x 100% = 40%.
Note that the sales close rate isn’t the same as the sales win rate, which we explain below.
Sales win rate (closed-won opportunities)
Sales win rate is the percentage of all sales opportunities that your team turned into actual sales. Compared to the sales close rate, it’s a bigger-picture KPI that considers all sales opportunities, and not only SQLs.
You may want to use the sales win rate instead of the sales close rate if you mainly use outbound outreach and rarely get inbound leads.
But even if you do have inbound, calculating the sales win rate can reveal how efficient your lead-scoring process is. Your scoring strategy works well when the sales close rate is much higher than the sales win rate.
Here’s how to calculate the sales win rate:
(Number of customers / Total number of sales opportunities) x 100%
If your team reached out to 50 SQLs and 100 unscored prospects over the past week, netting 30 customers, the sales win rate is (30 / 150) x 100% = 20%.
It’s twice lower than the sales close rate we just calculated. In this case, it makes sense for the sales team to include all leads in the scoring process to stop spending time on leads less likely to become customers.
Demo-to-purchase rate
If you offer product demos, you probably want to know how effective your demos are at getting prospects to subscribe.
That’s what the demo-to-purchase rate is for. It shows how many demo bookings end with an actual sale.
Here’s how to calculate the demo-to-purchase rate:
(Number of customers after demo / Total number of demos given) x 100%
If you gave 40 demos and 10 demo bookers became customers, your demo-to-purchase rate is (10 / 40) x 100 = 25%.
Cost per lead (CPL)
CPL shows the average amount of money you spend to generate one lead.
Here’s how to calculate your CPL:
Total marketing spending / Total number of leads generated
If you spent $5,000 on marketing and generated 100 leads, your CPL is $5,000 / 100 = $50 per lead.
Should you want to get even more specific, you can calculate the average cost per qualified lead, and then just swap out the total number of leads for the number of qualified leads.
Measuring CPL is important to gauge the efficiency of your marketing spending. However, CPL is one of the most frequently misinterpreted KPIs.
Many B2B marketers believe they should strive to minimize CPL at any cost. As a result, they end up raking in low-cost but irrelevant traffic, which drives the MQL to SQL rate down and affects the whole pipeline.
In reality, a high CPL is not always a problem. When you have a high customer lifetime value and decent SQL-to-customer conversion rate, high-quality leads are well worth the cost.
Customer acquisition cost (CAC)
CAC shows the average amount of money you spend to generate one sale.
Here’s how to calculate your CAC:
(Total marketing + sales expenses) / Total number of new customers
Example: If you spent $10,000 on marketing and sales in the last month and acquired 50 customers, your CAC is $10,000 / 50 = $200 per customer.
Just like CPL, CAC helps gauge how efficiently you’re spending to get new customers, but you shouldn’t have a razor-sharp focus on driving this number down. If your CAC is $200 but your average sales value is $1,000, you’re still making $800. Sure, there’s plenty of room to optimize your spend, but just make sure you don’t start cannibalizing your current performance.
Customer retention rate (CRR)
Customer retention rate is the percentage of customers that stay with you after a given period.
This KPI is particularly important for SaaS businesses. However, even if you have a different business model, customer retention is still worth measuring. A higher retention means more opportunities for repeat sales and better word-of-mouth.
Here’s how to calculate your CRR:
(Number of customers at the end of period – New customers during that period) / Number of customers at the start of the period) x 100%
If you had 100 customers at the start of the month, gained 20 new customers, and ended with 110, your retention rate is ((110 – 20) / 100) x 100 = 90%.
Customer retention directly influences customer lifetime value, which is another important metric.
Customer lifetime value (CLV)
CLV is the average revenue that you make from each customer during their whole relationship with your company. Basically, that’s how much money each new customer brings you.
Here’s how to calculate CLV:
Average revenue per customer per period x Average customer lifespan in periods
If a customer spends an average of $100 per month with you and stays for 24 months, your CLV is $100 x 24 = $2,400.
Higher CLVs justify higher CACs and CPLs (and vice versa – a low CLV should be used as reason to decrease CAC and CPL). High-value customers can be challenging to onboard, yet they contribute a lot of value to your business.
Pipeline creation by month
This KPI is the number of new leads or opportunities added to your pipeline over the past month. To calculate it, simply add up all new leads or contacts your sales team received. If they got 50 SQLs in September, your pipeline creation for this month is 50.
The pipeline creation dynamics show whether you consistently create new opportunities for your sales team to pursue. A downward trend often indicates poor quality of MQLs and ill-targeted marketing efforts.
Pipeline velocity
Pipeline velocity is the speed at which leads progress through your pipeline stages. A higher velocity means that your sales team generates more revenue within a given period.
Here’s how to calculate pipeline velocity:
(Number of qualified opportunities x Deal value x Win rate) / Sales cycle length (in days)
If you have 10 opportunities, each worth $5,000, with a 20% win rate and a 30-day sales cycle, your pipeline velocity is (10 x $5,000 x 0.2) / 30 = $333.35 per day.
Pipeline velocity is an essential metric of sales process efficiency. The faster your team moves the leads down the pipeline, the more money you make.
AI in B2B sales can improve velocity by automating the pipeline and reducing the length of the sales cycle.
Sales revenue
This is probably the most intuitive KPI in B2B sales. It’s calculated simply as the number of units (products, services, or subscriptions) sold within a given period multiplied by the unit price.
A bigger sales revenue is better, which is self-explanatory. However, its dynamics are equally important. A modest revenue but a steadily rising trend means a healthy outlook for your business while strong but declining revenue signals concern.
Sales growth rate
The sales growth rate measures the change in sales revenue over a given period. It shows whether your sales effort supports the growth of your business.
Here’s how to calculate the sales growth rate:
((Revenue this period – Revenue last period) / Revenue last period) x 100
If last month’s revenue was $10,000 and this month’s revenue is $12,000, your sales growth rate is (($12,000 – $10,000) / $10,000) x 100 = 20%.
It makes sense to monitor your CAC dynamics alongside this metric. When CAC grows slower than sales revenue, your growth is sustainable.
Revenue by lead source
This metric breaks your sales revenue down by lead sources to see which channels contributed the most.
Such a breakdown can look like:
- Website: $15,000
- LinkedIn: $30,000
- Facebook: $5,000
- Newsletter: $10,000
When used alongside SQLs by source, this metric reveals which channels bring you the highest-value customers.
In the example above, LinkedIn contributed fewer customers than the website (15 against 25), but they bought more expensive products, accounting for 50% of total revenue. Thus, it makes sense to prioritize LinkedIn in the company’s marketing spending.
So, which B2B sales KPIs should you keep an eye on? This depends on your company’s business goals, industry, and specific circumstances. However, there are best practices for choosing the KPIs that will work for you.
Tips for setting KPIs for B2B sales
KPIs are a tool to make your sales process more efficient. These tips will help you properly establish your sales KPIs.
Choose KPIs that align with your business goals
This might seem a no-brainer, but not all KPIs are an equally good match for you. For example, if you focus on premium customers, it makes sense to prioritize CLV and revenue by lead source. But if you’re striving to expand your subscription base quickly, then you might want to prioritize pipeline velocity, sales close rate, and SQLs by source.
Analyze historical data
Compare the current KPIs with the historical data from three weeks, six months, or one year ago to see which metrics are improving and which still need work. Involving AI in the analysis process can be helpful since it can spot less obvious patterns that often escape humans.
Set benchmarks against industry standards
What is considered a good customer retention rate in your industry? What are the average CAC and CLV? Benchmark your performance against the industry to see where you stand compared to your competitors, as well as which direction you need to head.
Prioritize actionable metrics
It’s important to have a plan for improvement in case KPIs reveal inefficiencies. While hiring more salespeople might not be an option, you can still improve average lead response time or pipeline velocity by involving AI in the B2B sales process.
Use the SMART framework to help set goals
One approach to setting goals is to use the SMART framework. Here’s an example of what this might look like:
- Specific – Is your goal clear and narrow? – (reduce lead onboarding time…)
- Measurable – How will you measure progress? – (…by 20%…)
- Achievable – Is your goal realistic? – (…to surpass the industry average by 5%…)
- Relevant – Does your goal contribute to your overall objective? – (…to generate more revenue and speed up pipeline velocity…)
- Time-bound – What is the deadline? – (…over the next 6 months)
Track progress and update regularly
Tracking KPIs is a continuous process. You need to know how your sales are going right now—not just how they did months ago.
That’s another task AI in B2B sales can help you with. Getting real-time updates and reports will be much easier once you train your AI tool to handle KPI monitoring.
