Are You Making the Most of Your KPIs?
Key performance indicators (KPI) are a key tool in today's sales environment and are necessary for a sales manager to effectively coach their sales team. With today's customer relationship management products,you can track pretty much any KPI for your sales team that you would ever want. This data is very important in helping identify choke points in your sales process and identifying where to focus your time and efforts. But with all this data it is easy to get sucked in and start managing based solely on the numbers your CRM is showing you without any additional analysis. The must successful managers are using KPIs in conjunction with other tools to effectively focus their coaching and training efforts on skills and activities that can quickly impact their team's production.
Here are four considerations you need to think about as you review your KPIs and adjust your coaching and training program.
1. KPIs are only a snapshot of a specific point in time.
When you log into your CRM you only see the current measure of your teams results. This means that results will very from day to day depending on time of the month. If you try to adjust your coaching based only on this snapshot in time you will continually be second guessing your training plan and trying to put out the most recent perceived fire.
What you want to do is track the trends. You want to identify patterns in your numbers and then watch for changes in these patterns. These changes could be a signal of something you need to attend to if you see a new pattern emerging. Or it could be a one time aberration.
For example, do you consistently see a higher number of new prospects entering the pipeline at the beginning of the month? If you see that trend push deeper into the month, you need to then figure out why. Is it because the pipeline is lacking late stage prospects and your team is trying to make up for this by growing their pipeline? Or is marketing running a new lead generation program that is pushing new prospects into the pipeline?
2. Are you cross referencing your KPIs?
You also need to look at your KPIs in relation to each other. Every KPI has a cause and effect relationship with other KPIs. Identifying the relationships and understanding how your KPIs impact each other will give you a deeper understanding of what is actually happening in your team. Specifically, it will help you understand the performance levels your team members need to consistently attaining quota. Is the rate of new prospects entering the pipeline decreasing but the closing rate increasing? Is the closing rate increasing but fulfillment times decreasing? Looking at these metrics together gives you a more complete view and helps you identify where to focus your improvement efforts.
3. Are you tracking the right KPIs?
Many mangers think the key KPI to manage against is sales quota attainment. While this may decide the fate of a sale representative with a company, by the time that KPI is available it is to late for a manager to impact the results. The mistake many sales managers make is failing to understand the difference between KPIs that track results that are manageable and those that are the end results of your sales process. This is why understanding the relationship between metrics is so important.
What metrics are most closely correlated with an increase or decrease in sales results?
What metrics drive your sales pipeline?
If you don't understand what KPIs drive quota attainment for your team, it is most likely that you aren't effectively tracking the right KPIs and are missing opportunities to improve your team's production. You can read more about identifying the right KPIs for your team at our blog "Building a Better Sales Metric".
4. Field Observations
Having the most accurate metrics will do little for you if you aren't backing up the numbers with your own in the field observations. As a sales manager you should be spending 60 percent of your time in the field with your team. This time in the field how you validate the initial assessments based on your KPIs. Plus it will also help you identify the specific activity you need to refine through coaching or training. Just seeing that your close rate is dropping does very little to help you change that trend. Seeing the metric and being able to say that it is dropping because of failure to build value early in the sales process is gold.
KPIs are powerful management tools that provide managers a view into their sales team's activity never effectively seen before. But it is critical that sales managers align their KPIs with their strategic goals and focus solely on the numbers. KPIs aren't the be all end all of sales management tools. But if used effectively, KPIs can open the door to opportunities to up your sales team performance and profitability.