Today’s high-growth sales leaders understand that sales is a process. They know they need to define the key steps that lead to closing more business -- their key performance indicators (KPIs). However, defining those KPIs can be an intimidating process, and many sales managers get overwhelmed by the sea of data that’s accessible to them. Which ones are really most important, and which can our team affect through their daily behavior?
Never fear. I’m here to tell you that creating a metrics-driven sales team doesn’t have to be a headache. Here’s a six-step process for defining your sales KPIs:
1) Pop the Question (To Yourself)
No, not to your significant other. I’m talking about the golden sales KPI question:
What sales activities are truly meaningful to the sales process?
Stop and brainstorm this on your own. Rather than starting with the 100-plus metrics you could track, brainstorm the activities and behaviors that are most meaningful. These are the activities that move prospects through the sales journey, and they’ll be different for every sales organization.
For example, an inside sales rep might count “meaningful conversations” among their most important metrics. Outside sales reps, on the other hand, might need to be measured on “VP-level conversations.”
Remember, KPIs must be controllable and actionable behaviors, and ideally they are leading (not lagging) indicators. Check out these tips if you’re not sure how to choose the right KPIs.
Keep this list to yourself for now. You’ll come back to it later -- asking yourself this question just better prepares you for the next step.
2) Start a Conversation
Next, take that same question to a group of your frontline sales reps and managers. The best sales leaders discuss sales KPIs with their teams to communicate their purpose and value and get buy-in. When your team knows you are thinking about this topic, it’s an indicator that you are developing a solution. Having an open-ended discussion with your team also communicates that you aren’t going to prescribe answers. Rather, you want them involved in the process.
Opening a dialogue with your sales team will give you insight into the activities they think are the most important to defining your sales process. Don’t just interview your top performers, though -- sometimes they can’t even define what it is they’re doing that makes them so successful. Take the time to talk to your middle-performers as well, since they make up the majority of your sales force.
3) Summarize and Decide
You’ve probably gathered a lot of data from conversations with your salespeople and sales managers. Now, it’s time to combine those suggestions with your own list and narrow it down. You probably heard all kinds of great ideas, but trust your instincts.
In terms of how many KPIs you should track, less is more. Focus on three to four, otherwise their your sales team’s focus will be spread thin.
4) Analyze Data and Define Metrics
Once you’ve determined the key behaviors you’ll turn into metrics, it’s time to figure out how much of each activity it takes to get to your target sales numbers.
The best way to do this is to start with your end goal in mind and move backwards. Here’s a great post from Justin Hiatt, HubSpot's global head of Sales Development, about metrics-driven sales coaching.
Take the time to analyze historical data. On average, how many product demos does it take to close a deal? How many conversations do you need to get that many demos? What’s the number of connections required to create that number of conversations?
For example: You know that each rep needs to make 50 connections to have 25 conversations that will turn into 15 demos and then ultimately 10 new customers.
One big tip on this point: Don’t overcomplicate it. Too many people overanalyze this one and get stuck. Just come up with your list and your numbers, and go with it. You can always adjust later if it turns out your targets were off.
The key is that every day you don’t define your KPIs is another day your salespeople aren’t focused on what matters. LevelEleven’s internal research has shown that simply focusing your team on the right activities will spike overall productivity by 15 to 40 percent.
5) Create Visibility Around KPIs
What’s a great way to motivate your team? By giving them visibility into KPI performance. Now that you’ve defined specific KPIs and shared them with your team, display progress around your office and make sure you’re talking about them regularly. This can include taking time at your team meetings and in your weekly one-on-ones.
If you need to, set up a CRM dashboard or even a dry-erase leaderboard. Sales reps will enjoy the company-wide recognition, as well as have insight into which peers they might be able to learn from. On that same token, this visibility will help you, as a sales manager, see who needs a little coaching and with what behaviors.
6) Revise, Rewrite, Reboot
The final key to this process: Your KPIs aren’t set in stone. Modern sales leaders realize that sometimes they need to be revised as your company learns, grows and changes.
Watch and measure your KPIs on a daily basis, and you’ll start to see which ones really drive performance. Then you can adjust accordingly.
How does your team use KPIs? Let us know in the comments below.