Many business leaders will argue that sales is a numbers game. But what if you’re not focusing on the right numbers?
Today’s business ecosystem is almost all digital, which makes it easy to obsess over all kinds of data. As a result, many sales leaders will fall into the trap of measuring the wrong metrics.
In this blog, I’m going to take a deep dive into the numbers and uncover the top five Key Performance Indicators (KPIs) for sales. If you’re new to KPIs, I recommend taking a quick read of some of our previous blogs about KPIs:
When identifying your key metrics, always start with the end in mind. The best KPIs create focus, delivering the results you outlined in your strategic plan. By isolating the activities related to those outcomes, you make your team’s priorities clear and ensure they know how to ask the right questions. This sets them up for success. For sales teams, we’ve identified 5 leading measures to drive results:
1) Appointments Booked
Often, outbound calls or customer contacts are considered the cornerstone metric for sales teams. Although this is a valid metric, we recommend you focus on the intended outcome of this activities instead - appointments booked. By measuring the results of these calls, we are not only encouraging the activity but also focusing on the effectiveness of our performance. This metric could also be measured as opportunities to ‘quote’ or ‘proposals submitted' if the next step of your sales process doesn’t involve appointments.
2) Face-to-Face Appointments / Demonstrations
Once an opportunity is created, the next step for sales is to get in front of the decision makers. We know that appointments get cancelled and rescheduled, so focusing on the number of appointments that actually take place is another leading indicator that our sales team is busy and effective. Tracking this number tells us that prospects are moving along the pipeline - or provides us with an early warning if losses are increasing.
Always remember the purpose of KPIs is to ensure we are taking actions to track our numbers in the right direction. By using a common traffic light system for your management dashboard (red-yellow-green), the sales team can feel good when they are winning, incentivizing further action. Continuing to hit these numbers over time increases our likelihood of hitting our overall sales numbers - celebrating small KPI wins can lead to very big wins down the road.
3) Conversion Percentage
Activity is great, but we need to know that we are meeting the right people.Tracking appointments converted to closed sales is key not just for your salespeople, but for your entire sales process. Reviewing conversion rate patterns gives you vital insight to your team's ability to close.
This information is critical to being able to ask the right question: “What can we do to move this number forward?”. Do we need to tweak our marketing? Do we need training and support in any area? Who is doing well and what are they doing differently? These are important questions when there are discrepancies in conversion %, either from the goal itself or between team members.
4) Average Sale Value
If growth is a key strategic objective for you, then increasing your average order value is the most efficient way to achieve this. It doesn’t take the same time and effort to secure one $100,000 deal as it does for ten $10,000 deals. Selling more product to our existing customers is an easier proposition than finding and converting new customers.
5) Discounts / Price Variance
One of the most important factors in creating a KPI structure is to ensureit drives the right behaviour. Focusing on sales volume and dollars alone can encourage sales teams to discount and offer incentives in order to get a deal across the line. Offering additional services or product discounts can ensure we hit our short-term sales figures, but at the cost of reduced overall company performance.
Sure, allow the sales team leeway to get deals across the line. But be sure to keep them focused on the bigger picture and put a flag up when overall company profitability is at risk.
This combination of KPIs will ensure your sales team are doing the right things and doing them well. Remember, KPIs do their job best when they’re reviewed regularly, with progress and success being celebrated frequently. Weekly meetings focussed on performance are our recommended frequency.
Are you ready to create effective KPI’s for your whole company?