Key performance indicators for sales are essential. Sales KPI measurements let people know how they are doing while there is still time to do something about it.
Overall sales performance trends give no information about the reasons for increasing success or failure. Sales KPI measurements provide an instant indication that allows rapid reaction. As soon as key performance indicators for sales show a negative divergence from expectations, salespeople and organisations can take corrective action.
In addition to providing an early warning of shortfalls, Measurement data identifies development and improvement opportunities.
Everyone is motivated to some degree to beat a personal best. Peer pressure has long been recognised as a powerful motivator. Publishing measurements to individuals and teams leverages peer pressure and impacts behaviour.
Collecting comparable public data on the performance of competitors, provides an instant benchmark for sales KPI comparison with market norms and sets a bar for the best performers.
Task level indicators can encompass any criteria that mark progress towards goals. Obvious measures for salespeople include:
- Number of customer contacts by day or week. This might be further broken down into number of inbound customer telephone calls dealt with; number of outbound customer telephone calls made, and the number of emails sent to customers. All of this data is available in the various telephone and email systems.
- These days face to face meetings are in decline. Measuring meeting time might include online or video sessions with customers.
- If proposals or quotations must be logged, the records readily reveal success ratios.
- Value of identified pipeline opportunities is usually captured in CRM systems and forecasting regimes.
- With a record of customer contacts, forecasted business, and proposals or quotations, respective conversion rates can be calculated for each stage.
- The number of new customers or amount of business from customers buying for the first time.
You might expect a general correlation between work rate and results. Sales KPI measurement will provide the facts. Whether or not results correspond to work rate, the measurements will provide invaluable information about the most effective habits and practices.
Analysis will show relative productivity as well as which salespeople are most active. Publishing the results creates immediate interest. People like to be measured when the measurement is factual and non judgemental.
Performers will naturally want to demonstrate superiority and will compete to score ahead of their peers. Regular contributors will pay more attention to whatever is being measured. Poor performers will seek to demonstrate their credibility by changing their behaviour.
Collect and publish the sales kpi data weekly to maintain the effect.
If you want to change behaviour, change or expand the focus of measurement.
Once you have established the means of collecting and presenting an array of key performance indicators for sales, you will have a new set of controls that influence behaviour without relying on management skills, monetary incentives, or policy declarations.
Emphasising or de-emphasising particular measurements provides a means of influencing preferred behaviours. Individual salespeople can use the same principles to influence their own behaviour and to achieve more of what they set out to.
The ingredients are:
- Measurement of the desired behaviour.
- Comparison with respected peers.
- Comparison with industry or market norms.
The process involves collecting historical data, setting up a monitoring system, and analysing the results. It is hard to deliberately lose weight without a set of scales.
While it is easy to identify measurable parameters, it is much more challenging to set up a system to capture and publish the results consistently. There is an overhead to leveraging this overlooked means of improving results. New monitoring and reporting processes need to be established and maintained.
Obtaining internal records is much easier than acquiring comparable market figures. Some metrics for competitors can be derived from public information sources however, most depend on obtaining cooperation via a third party or performance benchmarking alliance.
Despite the obvious advantages of benchmarking and the years of management training advocating measurement, many organisations find it hard to implement stronger sales KPI disciplines. Even when the benefits are recognised and there is collective will to take advantage of these principles; even when all of the actions necessary to collect and publish the data are clear, projects falter.
It seems that day to day priorities push aside such projects and undermine resolve.
An outside party, temporary employee, contractor, or consultant may be necessary to give benchmarking the impetus required for it to succeed.
Return on the investment in the form of increased results arises from intelligent direction of resources without the need for manipulation of monetary incentives. Monitoring key performance indicators for sales is an underutilised means of providing motivation, raising the bar, improving or changing behaviour, and improving the selling process.
These tools have the power to harness everyone’s will and cause it to be focused in the same direction. Key performance indicators for sales are an essential element of effective sales management.
As the saying goes, “if you can't measure it, you can't manage it. Measure sales KPI to manage for sales performance.
Article by Clive Miller
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