Sales KPIsSales KPIs https://boldandsharp.com/wp-content/uploads/2023/04/The-World-of-Sales-KPIs-2.jpg 300 200 admin9696 admin9696 https://secure.gravatar.com/avatar/8b83dd9cffb078cab2c179ad988f64d9?s=96&d=mm&r=g
- no comments
A limited version of “The World of Sales KPIs” is available for download.
The topic of sales performance measurement is endless. Without overwhelming you with numbers and figures about all the available KPIs, we give in the sections below some keys to manage your sales organization while debunking some myths on performance measurement and sales productivity.
Sales KPIs: beware of best practices.
Do you have a standard framework and benchmarks? This is the question asked by many of our customers who get serious about KPIs. Of course, industry standards are useful when you start from scratch. CRM tools offer standard reports and many standard or custom objects that can be leveraged for reporting. They offer tutorials too to build your own performance measures based on their standards.
However, your business, your products or services and your sales force are different from other B2B vendors and from your competitors. The first trap to avoid is therefore the implementation of standard KPIs based on standard goals. Failing to do so is an open door to a second trap: “the data show trap”. The absence of thinking as a starting point does not generally bode well for a positive usage of smart KPIs in day-to-day business life…
If you are in a well-established company, chances are you have little leeway for creating your own metrics. You have enough historical data and experience to question and improve your own good practices. Sometimes to the point of falling into the “paralysis by analysis”. But that is another kettle of fish.
If you are starting or scaling your business, the starting point in implementing the right KPIs has little to do with best practices or standard metrics. You should start with your vision, your culture, and your goals.
Your vision: and the resulting strategy. If you sell a widget, as disruptive as you think it may be, which aims at improving customer experience on ecommerce websites, you will not have the same KPIs as a new entrant in the ERP market whose ambition is to own the market of global companies within 5 years.
Your culture: if you are in the culture of results, where the end justify the means, you will not have the same KPIs as a company where discipline and control are paramount.
Your objectives: speed, scalability, market share, survival… Your life cycle as an organization is unique. There is little chance that standard metrics and benchmarks will fit your specific situation.
The KPIs that really matter.
Vision, values, culture, talent, goals, measures. Nothing new under the sun. We have been sharing the importance of these strategy and execution fundamentals for months. Just because sales KPIs are available on any website about sales and marketing does not mean you have nothing to do.
The example of the “Leading, leaning, lagging” indicators is a tall tale one and their implementation can be counterproductive when adopted blindly with a sales organization.
The method is quite nice. It assumes that you will achieve your ultimate goals (e.g., turnover), if you generate enough pipeline and therefore make a certain number of meetings or phone calls.
It is mathematical. Yet, absurd – or to be completely revisited – in terms of business monitoring and management when selling in key accounts with seasoned sales executives.
Before copying and pasting KPIs, if you have the latitude to think before executing, first consider what matters most to your leaders: in general, growth and profitability. Hence their obsession with customer loyalty and sales force productivity. Here are some KPIs that you should master and the questions they imply:
Customer acquisition cost:
Sales and marketing spends/number of new customers
Does our economic equation hold water?
Customer retention rate:
(# of customer at the end of the period – # customer acquired during the period) /# customers at the beginning of the period*100.
Are we good at selling but unable to deliver value? Why?
Total length of the sales cycle and by stage:
Total number of days from phase 1 to n of your sales cycle/# number of opportunities
Are we building artificial pipeline and where do we need to align sales and marketing?
Revenue breakdown by product:
Number of active customers * type of product or associated services
Is our growth real on our core business or are we in survival mode?
Customer lifetime value:
Active customers * by average annual order amount * retention period
Does our sales force know/can sell value or is it focused on short-term wins?
What about my dashboards?
There is a great temptation to multiply the number of dashboards. The more data, the more we feel in control and on top of things.
Focus on no more than 5 to 6.
You must keep an eye on the results of the divisions that impact sales. You must know how to interpret their performance indicators. However, keep your analytic skills for quarterly reviews: this is where your leadership skills are needed and you need to chime in, whether to congratulate or share your concern about other departments’ performance. No matter how far away they may seem from the core business, the quality of the support provided to customers or the ability of your service team to deliver projects on time and on budget will eventually impact your ability to retain and upsell your installed base.
As for your main dashboards, keep the same structure for each of them: that will allow you to easily navigate from a region to a division, from a team to an individual, from a type of business to a category of accounts and finally to the products or services details. Most CRMs include filters and hierarchies that allow zoom in or zoom out from a single source of truth.
We will not bother you with details about dashboards summarizing activities of your sales reps or performance achieved against goals. Rather, you will find below a non-exhaustive list of dashboards that you can leverage as your north stars.
Opportunities won or lost: this is where you learn the most and these data deserve dedicated sessions in addition to quarterly business reviews. Beyond the hierarchy mentioned above on geographies or reporting lines, special attention must be paid to the source of the opportunities and the real reasons why you win or lose. Indicators such as the conversion rate by source and stage or your win/loss ratio tell you a lot about your sweet spot and the sales plays to optimize.
Pipeline and forecast: this dashboard follows the same pattern mentioned above and goes from region to individual contributors. The point is to measure your ability to achieve your goals over a period of time. However, analyzing your business by channels is critical to measure the contribution of each of them. The time spent at each stage of the sales cycle, the average amount by type of business or by type of account provide unlimited information on where your team needs coaching and where you need to adjust your sales strategy.
Lead generation: this complements the pipeline management and sales forecasting dashboard. This dashboard allow you to analyze the effectiveness of each channel: sales, outbound, marketing, partners, etc… KPIs such as opportunity amount allocation by source, lead generation cost, or the variation in the amount of early stage leads tell a lot about whether your sales engine runs on all cylinders and the command of the business by your sales teams.
Sales discipline and delinquency: by definition, this dashboard measures the adoption by your teams of your standards of sales excellence. Empty fields, single threaded conversations, no access to power, opportunities amount or stages variations… All these criteria are valid sources of questions about your salespeople’s deep understanding of their current opportunities. To be used without moderation as a change management tool to measure your team adherence to a new sales methodology.
Going further with sales KPIs :
Our goal as a consulting firm is not to let you know what is done elsewhere. Our goal is to get you off the beaten track and find the right path to accelerate. In the “World of Sales KPIs” , you will find spreadsheets to calculate your budget or allocate your pipeline generation resources. You will also find templates to detect your most impactful sales leaders (see our article “Who is your most valuable sales leader?”).
In the same vein, we are sharing a very financial approach to measure the performance of your sales reps. Wait a sec? How applying an ROI approach to my key contributors could make sense? Take it easy. This approach is a complement to our “Keys to Sales Performance” offer. It aims to compare, like a classic return on an investment assessment, revenue and costs related to the activity of your individual contributors over 3 years. So, it should be used as a complement to any appraisal of your most valuable business assets: your sales talents.
You will also discover in the full version of “The World of Sales KPIs” the fundamentals of customer centricity performance evaluation . Customer centricity is not only a business strategy, but this is also a philosophy.The KPIs to measure it are specific. No wonder KPIs such as customer lifetime value, customer equity or share of wallet prevail to support its implementation and measure its success. Other KPIs such as portfolio value by customer are fundamental to segment your market and align your resources accordingly.
As for the NPS, we cannot argue it is useful to measure customer loyalty. However, it is not enough to bet on the renewal of a customer contract and long-term commitment to do business with you. To come back to our warning about the implementation of the so-called best practices discussed in Section 1, it is imperative to complement the approach with key indicators that demonstrate the true engagement of your customers. The adoption rate of new products or the number of referrals are more indicative of customer engagement than a score of 8/10 on your NPS survey.
Need to set up sales performance indicators relevant to your business and your sales force maturity? Contact us on Bold & Sharp. Follow us on Bold & Sharp.
Think. Good selling.
- Post Tags:
- talent management
- Posted In:
- Sales methods