Monitor your sales performance using key performance indicators (KPIs). Read on to see examples, how to set them and how to make them meaningful.
Is your business successful? To be able to answer that confidently, regardless of what your answer is, it depends on what you judge success by.
But what does KPI mean? KPI stands for Key Performance Indicator – the yardstick in determining which parts of your business function are succeeding or falling short (we don’t use the term fail!). KPIs can be set for the business as a whole, departments, customers and team members, all determined based on their contribution to the overall strategic plan of your business. Let’s take a look at some working examples of KPIs, how to set them and how to make them meaningful.
Key performance indicators examples
Let’s take a football team as an example. The KPIs set will vary greatly depending on the size of the club and the realistic targets they set at the beginning of the season. The team overall may have the following KPI targets:
- To score at least 50 points over a 38 game season.
- To get to the final of at least one of the 4 tournaments they will compete in during the season.
- To average less than 1 yellow card amongst the whole team per game, over the 38 game season.
These are what we would define as ‘high-level’ or ‘Primary KPIs’. As you can see, each of these examples has the following features:
- A defined timescale
- A realistic target that can be measured and influenced over that timescale
- Targets which are key to team success and can be directly influenced by team members, not by the performance of external parties. I.e. a point target is set, rather than a final position in the league table – this is something that is difficult to measure and influenced by external factors and the performance of others.
These are the overall targets of the team, but those of the individual departments, may have their own ‘low-level KPIs’ or sometimes called ‘secondary KPIs’ which may be more department specific, but all will contribute to the high-level KPIs. Let’s take the defenders, they may have a KPI specific to them:
- To avoid conceding a goal in at least 12 games over a 38 game season.
While the forwards may have:
- Score an average of 1.5 goals per game over the 38 game season.
Each of these will directly contribute to the achievement of the KPI targets set out for the team/club which directly influence the overall strategic plan.
Applying KPIs to sales
Now take the football team above and replace it with your sales team. Points scored, tournament progression and discipline are replaced with, for example: monthly sales growth, number of qualified leads and average conversion time. You need to consider those factors which can be influenced by your sales team and what activity they do directly impacts the overall business objectives, or high-level KPIs, of revenue and profit.
What are KPI targets in sales terms? Here are some examples:
- Monthly sales growth increase of 10% over the next 3 months in comparison YoY: This would be the primary KPI for the sales team to achieve. But there should also be consideration of what departments / individuals need to improve or introduce to achieve this. For example:
- Average conversion time reduced by 10% per month over the next 3 months in comparison YoY: This is your secondary KPI – a process change which has been identified as a key factor in driving sales growth – faster conversions, more sales, increased growth.
- Cost per conversion reduced by 10% per month over the next 3 months in comparison YoY.
A further secondary KPI which will again drive the achievement of the primary KPI.
How to set KPIs
The key point to remember when setting KPIs is this – a KPI has to be SMART:
- Specific: clearly defined and relevant to the overall business objectives.
- Measurable: can you measure impact and respond / adapt? Once we know the areas we want to see performance gains, it’s important to make sure these can be effectively tracked and reported against.
- Attainable: can we impact this with logical changes to process or effort?
- Realistic: does the team have the skill set, the influence and the time to achieve this?
- Timely: Are we able to use data to measure this on a shorter-term basis, quarterly over yearly for example or over the course of a 9 month season in the case of football?
KPIs should always be motivational and it’s important that your team recognizes the integral role they must play in achieving them and the contribution to the overall business objectives. It’s highly valuable to communicate them and give your team the tools to be able to monitor their own KPI performance so they can adapt their actions to meet them.
Utilizing a sales KPI dashboard
Using sales-i, you can create sales KPI dashboards that are unique to your business – used to track performance against the KPI metrics and to display these to your team using easy-to-read graphics such as pie charts, bar charts and line graphs. By aligning with your sales data, you and the rest of the team can monitor and react to performance across any defined time period.
So ask yourself again, is my business successful or as successful as it could be? Once you have developed and set your KPIs, find out more about how sales-i can improve your sales performance.