Why KPI’s Are Important to Your Sales Growth
Business success is usually measured in Key Performance Indicators (KPI): quantifiable evidence used to determine how well the sales goals are being met or will be met in the future.
Selecting the right set of key performance indicators is critical to the success of any sales organisation, in particular, those organisations aiming at future sales growth.
However, two main risks arise in the assessment of how well a B2B sales team is performing. First, B2B sales organisations tend to risk overloading their teams with too many KPIs, dashboards, and non-actionable data. Measuring an excess of performance indicators reduces the impact of each KPI, leads to confusion and lack of focus.
Sales leaders face a second, although sometimes less grave risk: knowing what to measure – and not to – when looking for sales growth. Finding the right balance among a broad set of actionable sales metrics can represent one of the most overseen challenges for a B2B sales manager.
Sales leaders should, therefore, be cautious of shortcuts, magical recipes or KPI checklist. Every business situation might require a different set of performance indicators, depending on strategy, assessment, sales region or key account manager.
How to choose the right KPIs for your sales team?
The consistency of your sales team’s results will firmly determine sales growth and ultimate success. You will only achieve excellent sales results if your sales team regularly meets expected targets and goals.
Nevertheless, there is no one simple formula to identify which KPIs to consider. Different sales circumstance require a different set of performance indicators. The same sales team, facing a different market challenge, should evaluate different KPIs to measure.
How to select the best performance metrics for your sales team is more a craft than a science. There are several points to consider. First, you need to reflect on the kind of challenge your sales team is facing. Second, though it is not a bad idea to start with a list of most common KPIs – no need to re-invent the wheel – remember to contemplate them in detail.
Let’s discuss here, a short list of the most frequent sales KPIs in B2B.
Selecting the best performance metrics for your sales team is more a craft than a science.
There are two different kinds of KPIs: objective KPIs and subjective KPIs. Although both measured in numbers, subjective KPIs depends on the sales leader’s judgment and opinion and might not accurately reflect a real status of a company. Examples of subjective KPIs can be those measuring abilities or competencies; experience or attitude. If you think your sales growth challenge lays on this kind of subjective measurement, an experienced sales consultant might be your best help.
On the other hand, objective KPIs are those that can be unambiguously measured. They are usually applied to compare performance over time and from one company to another. In this article, we focus on objective KPIs, with particular emphasis on those that sales leaders in B2B should consider using in their business if the aim to accelerate sales growth.
There are three categories of objective sales measurements or KPIs: output, input and advanced sales performance indicators. In the table below, we collected some examples for each group.
|Output Sales KPI||Input Sales KPI||Advanced Sales KPI|
|Number of active accounts||Number of Activities||Ratio: Activities / Sold Per Account|
|Number of new accounts||Number of planned Activities||“Penetration Ratio”|
|Number of lost accounts||Number of Offers||Orders per Call (hit ratio)|
|Total Sales / Margin||Days worked||Churn-Risk|
|Number of orders / transactions||Activities per day||Unfulfilled Potential|
|Average Size Deal||Selling time vs. non-selling time||Pricing Opportunities|
Output indicators are fundamental. They constitute the main financial indicators a company will have to measure, such as total sales, total margins, numbers of active buyers, etc. However, they are lagging indicators – they come too late for growth. The output of the system the sales leader is mandated to improve.
What KPIs you should be measuring if you want sales growth?
If your business objective is sales growth, you should measure the set of sales activities driving it. That means, put your focus on input sales indicators. These KPIs cover the performance of the sales actions resulting in the current sales output. Input sales indicators are future-oriented. They determine how well a company should financially perform in the quarters to come.
Nonetheless, in most classic B2B sales situations, with long sales cycles and expensive sales forces, input KPIs might still do not provide with a real advantage. Critical to the future revenue growth of any B2B organisation is to move beyond input KPIs, by computing specific sales insights: valuable pieces of information that can be used to steer a sales team into exponential growth. Advanced KPIs are a combination of ratios and algorithms enabling the discovery of underlying future trends.
Advanced sales performance indicators provide valuable sales insights. They measure predictive analytics tweaks a B2B sales team can optimise to increase sales efficiency in the medium and long-term. Examples of advanced performance indicators are unfulfilled potential, attrition (or churn) risk and number of projects in your sales pipeline vs sales goal.
Advanced performance indicators are nowadays critical to the success of any revenue growth strategy. They help you to predict the future and be able to change a situation long before it becomes hard to change. Predictive sales analytics is the engine that provides you with valuable insights, critical to the growth of your revenues.
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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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