Sales managers must thoroughly evaluate the efficacy of individual sales agents in order to increase revenues and efficiently manage sales teams using metrics or KPIs (key performance indicators).
What metrics or KPIs ought to put on your dashboards to provide yourselves with a more foreseeable, repeatable revenue-generation process is one of the constant issues you have at the outset of any business project. Sales managers ought to learn how to use analytics and gamification to keep their sales team engaged and focused before moving on to making use of KPIs because these metrics are not the same as KPIs. Sales gamification is a tactic that uses game features and strategy from games in a commercial setting to enhance sales engagement, but it is not the only way to forge better bonds with customers and encourage salespeople to finalize more transactions in a given amount of time. Gamification is all about improving KPIs.
Analytics, i.e. their results, on the other hand, may each have a different significance and meaning. However, KPIs are meant to be particularly meaningful and condensing. It could be argued that, in contrast to various analytical findings, no KPI is truly distinguished as a key indicator. KPIs are typically supported by additional analytics findings.
Of course, there is a difference between learning KPIs and business KPIs, which will give more insight later on. Let us just explain this for now: How can business KPIs and learning analytics be connected?
It can be difficult to distinguish between learning KPIs and business KPIs, which frequently show where learning should have an influence on performance. For instance, a customer service training team may determine that the most significant measure of program success for their learners—who utilize LMSs for employee training—is the CSAT scores of their trainees. The customer service representatives’ performance will be greatly impacted by their training programs and materials, but other factors might also have an impact.
In order to jointly drive success in this situation, a team responsible for customer service training must work with customer service leadership. As a result, the relationship between learning and business KPIs offers a chance to link learning and business teams.
Always Keep in Mind KPIs
KPIs are THE THING to keep in mind. Not only sales are covered with KPIs. Every little segment of your business can be covered with KPIs, even marketing. For instance, in the digital age we are living in right now, you cannot run a serious selling-related business without a website. But in order to get sales and customer information from a website to better understand consumer demographics and sales patterns, which is the website’s main purpose, you need to take into account KPIs measuring its performance: bounce rate, average session duration, acquisition, and so on. Yes, your products are portrayed in the form of photos edited in a high-end cosmetic retouching using best freelance photo editors on your website. Nevertheless, if your online presentation does not gather such data to aid you in the development of goods and services in question and benefit your clients more, making an effort to edit them is in vain. Well, the importance of measuring KPIs to generate more sales is even more vital.
Preserving an edge over competitors is getting harder at a time when businesses compete globally at Internet-wise speed. We shall paraphrase Thomas Davenport and Jeanne Harris’ explanation from their top-seller book “Competing on Analytics”. Many of the earlier competition’s bases, they said, are no longer accessible. In the age of global competition, a particular local advantage is irrelevant, and protective legislation has mostly disappeared. Patented technology is quickly imitated, and it becomes harder and harder to create breakthrough innovations in goods or services. The only thing left to do to compete is to run your firm as efficiently and effectively as you can and to make the best business decisions you can.
According to studies, product innovation is no longer sufficient to ensure company success in the modern world. However, sales managers may provide their sales teams a competitive advantage by maximizing efficiency and effectiveness with the use of their KPI measurement expertise.
First, we would like to provide a brief explanation of KPIs that we like, taken from a Forbes article by Walter Rogers of “Salesforce”.
KPIs are crucial. i.e. “key” to your organization’s success, Rogers said. Is the quantity of sales connections you make each week crucial to the viability of your business, for instance?
Relative to “performance”, it is easily quantifiable, monitored, and affected by the team members. Do you, for instance, have a reference that states that the worth of the final transaction will increase by 40% when a salesperson has a minimum of 5 interactions with Executive scale decision-makers throughout a sales cycle?
KIP is employed as an “indicator”, or anything that offers forward-looking information regarding potential outcomes. The 80/20 rule, for instance, states that the activity occurring in 20% of a sales maker’s accounts applies to 80% of their production. Given such information, it could be an excellent concept to keep track of the quantity of calls made and the duration spent by each salesperson with high-value contacts regarding these accounts and to establish some particular, measurable goals in that area.
Sales managers may quickly identify which representatives are having difficulties and what areas they require coaching, training, or other assistance by looking at the appropriate sales KPIs.
Comparing Lagging and Leading Indicators
Keep in mind the difference between leading and lagging key performance indicators, two different metrics used to evaluate performance in a company or organization, as well.
Because they display outputs and outcomes after the fact, lagging indicators frequently receive the greatest emphasis in reports on sales to senior brass. This category includes metrics like revenue, gross margin dollar growth, gross margin percentage increase, share of wallet, and new customers.
Indicators labeled as leading are the behaviors and activities that take place when a transaction is being made as the salesperson works the opportunity and fills the pipeline (not to be confused with a funnel: a funnel is a customer’s perspective of their buying process and the stages they go through before making a purchase, whereas a pipeline is a sales representative’s perspective and method to close the deal). Tracking leading indicators provides you the opportunity to make mid-course modifications and salvage a firm that is in danger, much like a system for early warning would. Ask your salesmen these questions to arrive at any of these indicators:
- How many calls do you make each week?
- Who exactly is the target?
- How many of your calls result in prospects and how many in successes?
- How do you compare to the standards set by your industry or peer group?
Unfortunately, KPI metrics are a challenge for many sales managers. Maybe you are one of them. The quantity of assignments each rep completes each day is one example of a valuable measure that may set you on the proper course.
Take a closer look at other illuminating indicators like activity ratios for efficiency, historical pipeline patterns, typical sales cycle time by stage, and pipeline inflow and outflow after you have a grip on one or two key KPIs. By identifying gaps in effectiveness, you may take action based on a more thorough understanding of the performance of your sales staff.
Which KPIs Are Valid?
When some experts discover up to 100 KPIs in the array of metrics, how can you concentrate on just four or more?
Revenue-per-rep is, in the end, among the most significant sales success measures. However, some sales executives make the mistake of being so preoccupied with quota and making the numbers that they neglect to keep track of key crucial performance indicators.
If you, as a firm, miss your sales objective by, say, 15% on one customer assignment, and revenues were down 6% from the prior year, you might not blame the salesforce because the average sales per salesperson reached $1 million (up from $900,000). This is just an illustration, of course. Analyzing a few of the reps allowed us to see where they needed more practice. The issues facing the business were far worse and more extensive than the boss realized. We looked at the main elements affecting revenues. Here is the fundamental formula:
Total revenues = # of opportunities in the pipeline
x average deal size
x win rate
You need to know how the sales team can be impacted by the underlying KPIs. Here is one – deal size. It mostly depends on how many things are included in each offer. By bundling, the sales manager may get deeper into KPIs and increase transaction size. As a sales manager, you must concentrate on the crucial areas under your direct control in order to have significant control over your sales results and activity metrics. By doing this, you may enhance greater long-term sales success and revenue growth.
We have identified several crucial sales indicators and KPIs you ought to devote attention to in order to assist you in enhancing the effectiveness of your sales staff. But, bear in mind that the goal of this piece is not to go in-depth on KPIs; rather, it is to portray a higher level of thinking about how to use KPIs to boost sales success.
Breaking down each step that affects sealing the purchase should be considered as a whole in the sales process. As we add deals to the pipeline, it starts at the front end. What actions should we base our KPIs on? Are your salespeople making the required efforts to assist you in meeting your targets? How many phone calls, connections, emails, and appointments did each salesperson make during a specific time frame?
Reps Require Definite Objectives
An interesting side note: According to Harvard Business School research, representatives who get in touch with leads within an hour of getting an online inquiry are roughly seven times more likely to have an insightful discussion with them than those who wait even an hour.
You may significantly enhance the amount of potentially fruitful discussions with prospects if you make lead response times one of your KPIs. So, it is important to gauge persistence. According to VentureBeat, 48% of sales representatives never follow up with prospects again! Due to the fact that 10% of all sales are finalized on the fourth contact and 80% occur on the contacts between the fifth and 12th, this flaw is important.
Your skill as a sales manager to gauge your team’s perseverance will pay off in closing transactions. Your sales representatives cannot work in a vacuum, so assist them in achieving their objectives while measuring and displaying the outcomes to meet corporate targets. Using a comprehensive understanding of your pipeline, focus your sales team’s efforts on high probability leads to achieving more reliable forecasts.
4 Primary KPIs
Examine the degree to which the efforts of your sales representatives add fresh prospects to the pipeline. Convert that pipeline next, which entails identifying buyer behavior to help you decide which opportunity deserves priority. The metrics that we advise:
# 1 Integrity of the Pipeline
Which of the subsequent opportunities you are close to attaining are vulnerable?
Keep tabs on the quantity of close-date transactions, deal volume, stage age, and momentum. Then – action!
# 2 Win Rate and Sales Funnel Conversions
How far along are opportunities in the pipeline’s funnel? How many of the possibilities that your sales representatives pursue end up becoming closed deals? Which phases within the sales process have the highest drop-off rates?
Knowing where your representatives struggle to move chances to the next step can help you maximize their time and raise their win rate. Examine your sales funnel stage by step to see where transactions are being lost. Boost these areas and fix the leaky funnel by coaching your reps.
# 3 Duration
This measurement is also known as the sales cycle by stage. Duration is the average amount of time your won and lost chances spend in each sales stage. To better identify potential buyers and at-risk possibilities according to how long they have been in particular phases, you need past information on your typical sales cycle.
How do your sales cycles for closed and open deals compare? How long must an opportunity remain in a particular stage before it is deemed at risk? You can effectively organize your reps’ schedules, give them time-sensitive tasks to complete, and determine potential losers in your pipeline by having a comprehensive knowledge of the way won and lost possibilities differ by stage.
# 4 Win Rate by Prospect Value
Here, we examine how transaction size affects victory rate. Do your salespeople struggle to close deals that are larger or smaller than a specific size? You may set priorities for your representatives’ time, have a better understanding of the possibilities in your pipeline, and determine the best deal-size circumstances for your reps by measuring how deal size influences your team’s win rate.
The magnitude of an opportunity frequently dictates the strategy your salespeople should use. This indicator shows you what size transactions your representatives have the highest chance of winning, which deals they might need to devote more time to, and if it is even worthwhile to devote time to certain deals, which helps you spend your reps’ time more effectively.
For the End
These in-depth KPIs may be divided into three groups: measurements for activity, pipeline, and sales. Based on the information you gather from these KPIs, evaluate your sales performance and modify your sales strategy. Of course, adding more KPIs would have us delve much more. But before you venture too far, it is wise to take things carefully and on solid footing.
With these indicators in your head, you have the majority of the data that’s required to make data-driven choices about how to teach your team for long-term success, where to devote resources, and what is necessary to meet your numbers.
We must stress that the only way to properly manage your sales staff is to carefully monitor their performance via the use of clever KPIs. Ingenious KPI measurement will additionally help you to:
- set expectations and improve communication.
- make prudent decisions.
- better implement the strategy in question.
- plan your supervising activities and make the most of your time.
- alter sales representatives’ doing for the benefit of the business.
Now, start measuring. The outcomes could surprise you. We will see you up top!