Here are the key metrics every business should track to understand and improve its sales funnel performance. Each section explains what the metric is, why it matters, and how to measure and improve it.
Lead generation rate measures how many leads enter your sales funnel compared to the total number of visitors or potential customers.
It indicates how well your marketing efforts are attracting interest and bringing people into your funnel. A low rate can reveal weak campaigns or unclear calls-to-action.
Divide the number of leads generated by the total number of visitors, then multiply by 100.
Formula:
(Number of leads ÷ Number of visitors) × 100 = Lead generation rate
This metric tracks the percentage of leads that progress to the next stage of the funnel or make a purchase.
It’s a direct indicator of how effective your funnel is at turning interest into action, revealing potential bottlenecks.
Divide the number of conversions (e.g., purchases, sign-ups) by the total number of leads, then multiply by 100.
Formula:
(Conversions ÷ Total leads) × 100 = Conversion rate
RPL evaluates how much revenue each lead generates on average. It’s crucial for understanding the overall efficiency of your funnel.
Divide the total revenue by the total number of leads generated in the same period.
CPL shows how cost-effective your lead generation efforts are. A low CPL with a high conversion rate means your campaigns are efficient.
Divide your total marketing costs by the number of leads generated in the same timeframe.
CAC measures the cost of acquiring a single paying customer, including marketing and sales expenses.
It ensures your acquisition strategies are cost-effective and sustainable.
Add up all acquisition costs and divide by the number of customers acquired.
Formula:
CAC = Total acquisition costs ÷ Number of customers acquired
This tracks the percentage of leads or visitors who leave the funnel at specific stages without converting.
High drop-off rates signal weak points in your funnel, where prospects lose interest or face obstacles.
Subtract the number of leads that progress to the next stage from the total leads entering that stage, then divide by the total leads and multiply by 100.
Formula:
Drop-off rate = [(Leads entering stage – Leads progressing) ÷ Leads entering stage] × 100
MQLs are leads that have shown enough interest to warrant follow-up by the sales team. Tracking this metric ensures marketing efforts are generating quality leads and not just quantity.
Count the number of leads that meet your MQL criteria over a given period (e.g., filling out a demo form, signing up for a webinar).
SQLs represent leads that are ready for direct sales outreach. By tracking SQLs, you can evaluate the sales team's ability to turn leads into opportunities.
Monitor how many MQLs convert into SQLs. This can be calculated monthly, quarterly, or yearly.
Time to conversion measures how long it takes for a lead to progress through your funnel and become a customer.
It reveals how efficiently your funnel operates and highlights delays that may frustrate leads.
Calculate the average time it takes for leads to convert from the moment they enter the funnel.
Retention rate measures the percentage of customers who remain active and engaged after making a purchase.
A high retention rate means your funnel attracts loyal customers, increasing lifetime value (LTV).
Divide the number of retained customers by the total number of customers, then multiply by 100.
Formula:
(Retained customers ÷ Total customers) × 100 = Retention rate
RPV measures how much revenue each visitor to your funnel generates.
It’s a key indicator of how well your funnel converts traffic into revenue.
Divide total revenue by the number of visitors.
Formula:
RPV = Total revenue ÷ Total visitors
LVR measures the growth of qualified leads month over month. It’s a key indicator of future revenue growth potential.
Divide the increase in qualified leads this month by the number of qualified leads last month, then multiply by 100.
This metric tracks how long it takes for a lead to convert into a paying customer. Shorter cycles often indicate a more efficient funnel.
Calculate the average time (in days or weeks) it takes for a lead to go from initial contact to a closed deal.
Anastasia Belyh
Anastasia Belyh is a senior tech writer with over 15 years of experience in marketing, sales, and business software. Having worked in investment banking, management consulting, and founded multiple companies, her in-depth knowledge and hands-on expertise make her software reviews authoritative, trustworthy, and highly practical for business decision-makers.