28 Aug Key Performance Indicators and Sales Systems:
The essential tools for effective selling
As the founder of modern management, Peter Drucker, once said, “What gets measured gets improved.” Without a set of sales KPIs and an effective system to track and monitor them, a sales team is operating without knowing where the goal posts are.
It’s a recipe for inconsistent results. The lack of clarity affects all levels of a sales team too. Individuals have no focus, managers can’t see if their team is performing (or not), and leaders lose the ability to forecast accurately.
The dos and don’ts of determining your KPIs
Every business is different. There’s no one set of KPIs that works for everyone. However, there are a few rules that companies can use to help them select the right ones for them.
Don’t focus only on lagging indicators
Lagging indicators consists of output or outcome metrics, such as month to date revenue, profit, and deals won, labour cost per unit (no); essentially anything that is a result.
Do incorporate leading indicators
While lagging KPIs are necessary, they have some limitations. It’s why they are often paired with leading indicators, which are behavioural measures.
“Leading indicators can be the number of phone calls, the number of referrals, the number of meetings, the number of proposals presented,” says Paul. “They are the things we can influence now to change the final outcome. These are what we focus on.”
Tip: Reverse engineer your sales process
If you’ve got an effective sales process in place, work the numbers backwards to produce a set of meaningful KPIs.
For example: If you’ve got a 50 per cent conversion ratio from presenting, then how many proposals do you need to have? How many proposals does each salesperson need to present per week? Therefore, tracking number of proposals per week could be a handy leading indicator for your sales team.
Don’t have too many KPIs
While it’s tempting to track everything, it can lead to confusion. The more KPIs you have, the more difficult it is for your staff to know which to prioritise.
“If you’ve got 12 KPIs, which one is the most important one?” Paul posits.
Do make it easy to understand what success looks like
When setting KPIs, keep it simple. Less often leads to more. SalesStar, for example, focuses primarily on four KPIs:
- Number of discovery meetings this week.
- Number of proposals presented this week.
- Number of discovery meetings booked for the week ahead.
- Number of proposals booked for the week ahead.
Finding the best sales systems
Businesses can use one or many sales systems to help track and measure KPIs. However, the biggest error companies make is choosing systems that don’t replicate their sales process.
The most effective KPIs are those that allow salespeople, managers and CEOs to see deals going through the milestones of their sales process.”
Having a dashboarded system not only helps you track KPIs and deals, but helps managers pick up on non-performers. Most of all, it helps business leaders forecast.
“You don’t know if you’ve got sufficient cash flow to fund growth and, from a procurement point of view you, you don’t know if you have the necessary stock to fulfill orders. All because you don’t have that visibility.”
What do we use?
We’re asked this question a lot and the truth is we use several, but our top three are:
HubSpot provides inbound marketing and lead generation tracking. It’s also worth noting that it comes with a free CRM that follows on a high-level, milestone centric sales approach.
Email Marketing. Marketing Automation. Measure open rates, click rates, A/B testing to which emails are working best and so on.
Google Analytics lets you measure your advertising ROI as well as track your Flash, video, and social networking sites and applications.
These are just a few of the options available. If you’re looking at implementing a new sales system(s), remember that the best system is one that can replicate your sales process.
SalesStar One Page Strategic Plan
Implementing effective KPIs and a supporting system is just one step to creating a high-performing sales team. Learn the others in our free guide: The 9-step pathway to transformational sales results