What are Key Performance Indicators?
Key performance indicators (KPIs) are specific metrics that illustrate a company’s performance. They help determine whether a company is achieving specific goals. KPIs can measure financial, operational, or strategic success.
Within a sales team KPIs are used to measure a team’s overall effectiveness. They are also used to help improve methods of conducting sales, and help sales reps set realistic goals to work towards to help achieve long-term objectives.
Why are KPIs Important?
Setting and measuring KPIs is crucial.
Why? Because it will help ensure your team stays competitive and actively works towards achieving their goals. You can’t simply create KPIs and then assume everything will go according to plan. Instead, you use them as a benchmark and actively check in to make sure performance is trending in the right direction.
Without KPIs business can flounder. You won’t know what metrics need to be achieved to be successful or stay competitive. Instead, you’d have data available, but wouldn’t know if it’s showing progress, stagnation, or decline.
Staying on top of KPIs ensures your sales team is progressing, achieving goals, and setting themselves up for success every quarter. Performance is key for any sales team, and KPIs will help drive revenue in the right direction.
Every sales team should be utilizing KPIs. It’s the sales manager’s responsibility to determine KPIs and use them to forecast goals and long-term objectives, and ensure their sales teams understand all expectations.
But what should you look for when setting sales KPIs? For starters, they should be specific, measurable, achievable, relevant, and timely (SMART). The information gleaned from setting SMART KPIs will allow your team to scale and grow and remain competitive.
However, you don’t want to become inundated with data either. This is why KPIs should always be specific and focus on the most important targets. This way, you can monitor high priority metrics and ensure that overall sales trend upwards.
KPIs You Should be Tracking
Specific KPIs will vary between different companies depending on their specific business models. However, there are common KPIs that many sales teams will set.
How many leads are becoming customers? Calculating your company’s average conversion rate will help set a benchmark for sales reps to work towards. This KPI is crucial when it comes to ensuring overall revenue. You want to strive to have the highest conversion rate possible, and any underperformers should be addressed.
How long does it take a sales rep to close out a deal? While there will inevitably be some back and forth before a sale is closed, you don’t want the process to become drawn out. If it takes too long, a sales prospect may lose interest or move their business over to a competitor. Make sure your sales reps are working within a realistic timeline to move sales along.
Average Response Times
Is communication being sent out, but not returned or followed up on? Sales rely on engaging conversations, and if leads aren’t responding (or worse, your sales reps aren’t following up in a timely manner), deals won’t get closed. Have a KPI in place to set precedent for appropriate response times.
Getting a new lead to sign on with you is great, but how long do they normally stick around for? If you have a product that requires yearly renewals, for example, you want to ensure customer retention.
Number of Sales
How many sales should each sales rep on your team be closing each month? To hit revenue goals, everyone should have an average amount of deals they need to secure, or amount of revenue they’re responsible for generating.