Top 5 Sales Team KPIs (Metrics)

Top 5 Sales Team KPIs (Metrics)

I was asked to write some articles on my top 5 Metric/KPI recommendations for various business functions. Here are my “Top 5 Sales Team KPIs”.

(Note: I use the terms Metrics and KPIs interchangeably – but prefer to use Metrics these days in an effort to reduce the use of 3 letter acronyms).

If you’re new to Metrics, I recommend taking a quick read of some of my previous articles first:

Every business model is different and you need to choose the right metrics that drive the performance of your Sales team, but here is a list of 5 generic metrics that are commonly used by my clients, and a brief explanation of each:

1. Sales

Let’s start with the obvious one. This is the result or outcome we are striving for. Yes, it is a lagging measure, but let’s clarify the outcome we want our sales reps to pursue. Is it sales revenue? Is it sales volume as in the number of units/clients sold? Be careful what you wish for. Read my article The Dark Side of Goal Setting then ask yourself 2 questions:

“If we focus on this Metric, what behavior is this going to drive in my people?” 

And here’s the interesting one, “Is there a potential dark side to this behavior if it were taken to an extreme?”

If a sales rep solely focuses on sales dollars or sales volume, is there a risk that pursuing this goal could come at the expense of company profitability if the sales rep offers discounts or unprofitable sales incentives to get a deal across the line? Or perhaps you could end up with customers who are a poor fit for your brand, who drag down your customer satisfaction and retention scores, and are a pain in the ass for your staff to deal with?

Sales revenue or sales volume metrics could be perfectly fine, but you may want to add balancing metrics that promote the profitability or quality of sales that are made e.g. sales margins, or average sale value.

2. Sales Qualified Leads (SQL) / Opportunities.

You could debate as to whether this could be considered a marketing metric or a sales metric. Regardless of where it gets assigned, this is the number of customer prospects who have confirmed they are interested in your product/service and have the authority and budget to make a purchase decision within the desired timeframe. These “hot leads” are now a genuine sales opportunity. We call these “hot leads” Sales Qualified Leads (SQL), or “Opportunities”.

You need to ensure that a sufficient quantity of Sales Qualified Leads (Opportunities) are being generated every week/month/quarter to fuel your business model.

3. Appointments / Demonstrations

What activities or actions are the key drivers of the outcome we are striving for?

As a sales manager, I don’t really care how many phone calls a sales rep makes, how many emails they send, or even how many appointments they “book”. Yes, these precursor activities at the top of the sales funnel should be tracked in your CRM and discussed with the team, but I am most interested in the number of “critical” activities they “complete” every week/month.

By critical, I am referring to meaningful interactions with sales qualified opportunities. This usually means the number of appointments or demonstrations that actually take place with these customer prospects. Whether they are face to face interactions or virtual meetings, a meaningful sales discussion must take place, and the prospective customer is moved along the sales funnel (or removed).

4. Proposals / Quotes / Pipeline Value

At the bottom of the sales funnel, we are negotiating the sale. We need a metric to quantify the value of potential sales in our pipeline – the potential number of customers, or the potential value of customers who are expected to make a purchase decision within the desired timeframe. If we know our existing conversion rates we can use this metric for revenue forecasting purposes.

5. Conversion rate

What effectiveness measures let us know how well our sales activities are being performed?

We need to know that we are getting in front of the right people and that our sales appointments/proposals are effective.  This usually means conversion metrics like the percentage of appointments/proposals that convert to closed sales. 

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Of course, there are many other Sales Team Metrics that you could consider, but these five common ones should give you a good start point for discussion.

Regardless of which Metrics you choose to measure, it is vital that your team meets every week to discuss performance.

There is a saying, “You can only manage what you measure, and what gets measured, gets done”.

I disagree with this statement. Just measuring the numbers will not deliver the outcomes you are looking for. I see plenty of companies who measure the right things, but they still don’t get the results they want, because they fail to meet to discuss performance every week, and they fail to hold people accountable for achieving the agreed standards.

You need to run effective meetings. Every week. Without fail. And you need to hold people accountable.

I have my own saying which I think captures it better: “Successful Business Execution is 20% giving people clarity about what needs to be done, and 80% following up to make sure it actually gets done”

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Until next time…
Stephen

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