10 Important B2B Sales Metrics You Need To Know

Sales is the lifeblood of any organization, especially businesses-to-business (B2B) companies. To properly understand and manage your company's sales performance, you need to track the right metrics.

This article provides an overview of the 10 most important B2B sales metrics that you should know. Keep these in mind, and you'll be on your way to a healthy, growing business.

1.Annual Contract Value (ACV)

Annual Contract Value (ACV) is the average annual revenue generated from each customer contract, excluding fees. If a customer signs a 3-year contract for $300K, averaging this value per year will give you an annual contract value of $100K.

ACV = Total Contract Value / Total Contract length (years)        

2. Total Contract Value (TCV)

Total contract value (TCV) measures how much a contract is worth after it’s been executed, including recurring revenue and fees (onboarding fees, professional service fees, etc.). It provides a clear picture of how much your business can expect to earn from an individual customer after the contract is signed.

TCV = (Monthly Recurring Revenue x Contract Term Length) + Contract Fees        

ACV versus TCV

ACV normalizes the recurring revenue from each customer contract across a single year. TCV, measures revenue across the entire contract. ACV gives you an apples-to-apples comparison of the value of customers with different contract periods, including multi-year contracts.

TCV tells you who are your most valuable customers across the contract term.

3. Annual Recurring Revenue (ARR) and Monthly Recurring Revenue (MRR)

Annual recurring revenue (ARR) is the normalized revenue on an annual basis that a company expects to receive from its customers.This is popular for subscription and SaaS businesses.

ARR vs. MRR

The ARR metric is very similar to monthly recurring revenue (MRR). The only difference between the two metrics is the period of time at which they are normalized (year vs. month).

MRR is ARR just broken down on a monthly scale. ARR provides a longer-term view of a company’s progress, while MRR is a more short-term metric.

4. Sales Quota

A sales quota is a sales target established for a sales representative or the sales team. Sales managers typically assign these to a team or individual salespeople to achieve within a set period. They are normally time-sensitive and set to be accomplished monthly, quarterly, or yearly. 

5. Sales Productivity

It is measured with a metric like ‘ACV per Rep’ or ‘% of reps above quota.’ In simple words it is the productivity output of the sales representative or the sales team.

6. Renewal and Retention Rate

Customer retention rate is the percentage of existing customers who remain customers after a given period.

Retention Rate v/s Renewal Rate

The difference between the renewal rate and retention rate is in the customer intent. Renewal rate is the measure of customers who actively choose contract renewal at an expiry. Retention rate refers to customers who have chosen not to cancel their subscription even when they had the chance to.

7. Churn Rate

Churn rate is the % of your customers who leave you over a given period of time divided by the total remaining customers.

8. Marketing qualified leads (MQL) to sales qualified leads (SQL) ratio

MQL is a lead that marketing believes meets the criteria of a qualified prospect. SQL is a lead that sales has independently qualified and believes meets the criteria of a qualified prospect.

MQL (Marketing Qualified Lead) to SQL (Sales Qualified Lead) conversion rate is the percentage of MQLs that are converted to an SQL.

9. Pipeline velocity

Sales velocity is a sales pipeline metric that measures how quickly your business is generating new revenue.It is calculated by multiplying the number of opportunities you generate by the average size of a deal and the conversion rate of lead into a deal. Then you divide the result of that by the length of your sales pipeline.

10. Average Order Value (AOV)

Average order value (AOV) tracks the average dollar amount spent each time a customer places an order on a website or mobile app. To calculate your company’s average order value, simply divide total revenue by the number of orders.

Average Order Value = Revenue / Number of Orders        

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