No matter what part of your business it is that you want to improve, choosing the proper key performance indicators (KPIs) to focus on is the first step towards achieving your goals.
KPI’s are essential as what gets measured gets improved. If you can quantify your current performance you can then begin to measure how things are improving, or diminishing, over a period of time….and then continue or change your activity accordingly.
Results are the cornerstone of all budgeting – and meeting the sales target is perhaps the most important result for most businesses. The best performing businesses and sales teams are the ones that are able to break their sales process down into individual, measurable activities that can be replicated.
Most sales happen as a result of certain predictable activities – and decline in sales is most often due to negligence of these activities
But how do you choose the right KPIs to focus on for your business?
How you decide upon your activity-based KPIs is will depend on your specific area of business, your products and services and your sales organization.
- Prioritise activities. Do this based on how important the activity to your business and ultimately your bottom line. Determine how relevant the activity is in relation to Sales. For instance, some activities may be focused on bringing in new customers, whereas other may be targeted at existing customers. This is fine but understand which has the biggest impact on your revenue and then make sure you prioritise KPI’s for that activity
- Set activity targets. The best way to do this is to work backwards for your sales targets. For example, you might want to make 20K with of sales for the month. What is your average sale value? How many sales would you need to win to achieve your target? How many proposals would you need to send out? How many prospects will you need to speak to? For relevant activities, set a target for how many activities you expect your sales organization to perform on a weekly/monthly/quarterly basis. Once you have set your targets for your organization, you can start to break it down, so each sales representative has individual targets.
- Set up a CRM support system.This is vital if you want to properly measure your team’s performance against their KPI’s. Set up a system to allow sales reps to input their activities. This would preferably be a CRM system that is a shared resource for all sales and marketing employees. You can restrict access so people in your team only see enough detail that is required for them to do their job. You will have a complete view of all your team’s activities and how they stack up against KPI’s as well as sales tracking and forecasting reporting.
- Monitor, review and adjust.Once you have established the system, use it to measure the performance of your sales activities. By looking at the relation between activities and actual sales, you can start to adjust what activities are most relevant in the future – and you can adjust your targets accordingly.
To get the most out of your sales KPIs, here are the three main points that to keep in mind:
- Base your KPIs on activities, not just results
- Prioritise your activities based on revenue generation
- Support your team with easier ways to work so that they meet their KPI’s
KPI’s are a great way to measure and improve, but they are only helpful if they are tracked and measured. Pay attention to any trends so that you can react appropriately. It is also helpful to include the sales team in the process and review with each team member once a week so that you can spot any lags in performance early on and be able to correct quickly. Before you know it, you will find that you can actually change the future course of your sales and your business as a whole.