Why are sales KPIs so important in B2B?
Sales leaders can hardly change the way their customers buy, but they can certainly influence the way their team works. This is accomplished with the help of actionable metrics and key performance indicators.
Controlling and motivating a B2B sales team with the most fitting sales KPI is critical to its success. Sales leaders need well-thought, modern metrics to make informed decisions about their Key Account Managers and customers.
Actionable metrics and key performance indicators are signposts along the way, and it should be used to modify sales behaviour, measure and compare performance and set sales goals.
Choosing the right set of sales KPI helps a manager in B2B to cut through the noise and see the actionable indicator they need.
What are common KPI best practices in B2B Sales?
Selecting the best performance metrics for a sales team is more a craft than a science. There are a couple of guidelines a B2B sales leader can follow.
For sales managers, KPI reduce complexity to precise and observable vital figures. This reduction in complexity helps to gain information systematically, recognise early warning signals, identify critical customers and account managers, optimise sales processes, assess competitors and undertake improvements.
One of the main risks facing sales organisations in B2B is overloading their sales team with dashboards, data visualisation and non-actionable KPI.
A sensible best practice is to select a limited number of sales KPI, those with the highest impact on sales performance. Putting the focus on the vital aspect of a sales challenge represents a crucial difference. KPI should emphasise causes and be discussed with the sales team regularly.
Although not always related to goals, KPI can also follow the popular S.M.A.R.T. acronym. They should be specific and strategic, depending on the pathway defined by the company. They should be measurable and motivate the sales force. Sales KPI in B2B should be action-oriented, aligned with corporate goals and relevant.
Last but not least, sales KPI should be time-bound.
How to choose the right KPI for your sales team?
There is no single prescription to select the right KPI for a B2B sales team. Striking the best balance among a broad set of actionable sales metrics can represent one of the most overseen challenges for a B2B sales manager.
A sensible best practice is to find a healthy top-down and bottom-up balance.
Sales leaders should follow the leading company metrics regarding financial growth and should discuss with the sales team how to achieve those goals. Moreover, they should define sales KPI as activities and not only as business goals.
Sales KPI in B2B should be selected and fixed for at least several quarters but should be not set in stone.
They should be regularly discussed and reviewed, depending on the sales challenge the organisation is facing. Sales leaders should prioritise KPI: what is more important, sales growth or margin per sales?
Sales managers should focus on the situations where sales can achieve the best results by using Predictive Sales Analytics.
Output Sales KPI
Output Sales Indicators, also known as lagging indicators, measure the results of sales activities “after the fact” and show how sales have evolved in the past.
This type of leading performance indicators is hugely relevant in B2B. Output Sales KPI are directly linked to the financial performance of the company.
The most relevant B2B Output Sales KPI should include metrics like:
Total Sales/Margin, Number of active accounts, Number of orders/transactions, Average Size Deal, Number of new Customers, Number of lost accounts.
Input Sales KPI
Contrary to output indicators, Input Sales KPI are leading indicators.
They hint to the future development of the economic situation of a B2B company. They measure the sales actions and sales activities leading to the sales results.
Input Sales KPI are growth drivers and a critical incentive for the sales team. They are crucial in Business-to-Business due to long sales cycles.
Input Sales KPI in B2B should include the following examples:
The number of Sales Activities or Sales Visits, Number of Offers sent, Selling time vs non-selling time, Number of Planned Activities or sales calls, days worked, Sales Activities or calls per day.
Pipeline Key Indicators / Sales Funnel KPI
Attentive observation of the sales pipeline allows a basic form of predictive analytics. The skyrocketing costs of chasing an opportunity in B2B means sales leaders should dedicate special attention to the KPI measuring the status of their pipeline.
First, sales leaders should keep in sight an overview of the general status of the sales funnel, new leads and projects.
Second, a list of each sales plans with details.
Sales leaders should use a limited number of closing probabilities or chances, instead of the classic, but highly error-prone zero to hundred per cent.
Examples of Sales Funnel KPI are:
Average Deal Lifetime, Number of Sales Plans, Number of Sales Plans per Stages, Win-Rate, Average Size Deal, Pipeline Coverage, etc.
Advanced Sales KPI & Predictive Sales Analytics KPI
Using advanced ratios and predictive sales analytics, sales leaders can quickly take appropriate measures, sell more and save time.
Advanced Sales KPI include relationships between output and input sales KPI.
Predictive Sales Analytics use specific algorithms for prediction and forecasting.
Examples of Advanced Sales KPI are:
Activities / Sold Per Account, “Penetration Ratio”: Active Accounts per Total Number of Accounts, Orders per Call (hit rate) per Call and Key Account Manager, Loyalty Scoring or Churn-Risk, Unfulfilled Sales Potential, Pricing Opportunities.
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Free eBook for download: Guide to Sales Key Performance Indicators For B2B Controlling
The KPIs that medium-sized companies have to measure are changing. The inexorable digital trend in B2B sales also affects how managers should select sales metrics for successful controlling.
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