How to choose good Sales KPIs
Sales KPIs
A Sales KPI (key performance indicator) is a performance measurement used by sales teams to monitor the effectiveness of relevant sales activities within a company. These measures help in tracking and perfecting the company’s sales performance.
Choosing the right KPIs is crucial in achieving high performance and here we’ll discuss some cogent points in choosing the best sales KPIs.
Identify both lagging and leading indicators in sales KPIS
The difference between lagging and leading indicators is essentially knowing how you did it and how you are doing it.
Lagging indicators measure the outcome of something that has already happened. Total sales for the past month, number of new clients, or hours of professional services rendered are examples of lagging indicators. These types of metrics are suitable for measuring results since they focus solely on them.
Leading indicators measure progress and your probability of reaching a goal in the future. These types of metrics serve as predictions of what is coming. Website traffic, conversion rates, lead duration, and sales rep activity are just a few examples of top indicators.
Leading indicators are not necessarily better than lagging indicators, or vice versa, but knowing the difference between the two is the first step in choosing the right set of KPIs which need to
have a mixture of the two.
More so, we need to be careful not to choose KPIs just because they are easy to track or because they measure data that is already available. For some KPIs, engineering resources need to be allocated to create the infrastructure for collection and presentation such as charting or reporting.
In choosing the performance indicators, we present below some additional characteristics of good KPIs along with some advices:
1. Alignment
You have to choose KPIs that align with your company’s strategic objectives. Choosing key performance indicators that go along with the company’s direction is essential when selecting sales KPIs.
2.Feasibility
To select sales KPIs for your company, you have to choose KPIs that can be easily achieved, realized, obtained, and measured.
3. Relevancy
you have to choose only the most suitable and appropriate KPIs that will have relevance in the future analysis.
4. Periodic
KPIs must be analyzed periodically (daily, weekly, monthly) and adjusted or changed if they are not relevant anymore. In other words, the KPIs have to evolve to stay aligned with the business.
5. Precise
the data that you measure through the KPIs must be reliable and of quality.
6.Actionable
KPIs have to provide us with actionable insights and knowledge to process and support decision-making.
7. Prioritize
Lastly, it is good to choose a few KPIs, which allow you to be more efficient and not waste time measuring non-relevant data.
Below are some sales KPI that could be used by most sales teams:
- Closed opportunities
- Monthly touchpoints (i.e. calls, emails)
- Prospect/sale conversion ratio.
- Leads/sale conversion ratio.
- Average conversion time
- Sales cycle per team member
- Costs including both base allowances and commissions.
- Sales by contact method/touchpoints (useful to segment by online or telephone touchpoints)
- Email volumes per week
- First response time to a prospect’s email
- How many emails to a first prospect’s response
Conclusion
Choosing the right sales KPIs for the sales team is central to a high performant team. In the search for the right indicators, the leaders need to look for lagging and leading indicators and sometimes use engineering resources to expose indicators that are not easily available but are crucial to the company’s success.