The thing about KPI sales metrics is that it’s probably one of the most commonly referred to terms in the business world. But there are a surprisingly high number of people that don’t really understand what this acronym really means – even if they casually pepper their patter with a few casual mentions on a regular basis.
Allow us to not only provide a solid definition of KPI’s but also to give some meaning and context as to why these 3 letters carry so much weight, especially when aligning them with sales metrics.
Imagine for a minute, that you’re trying to cross a busy highway on foot while blindfolded. You have no way of knowing where the traffic is coming from or where your ‘sweet spot’ for a safe crossing is located. Now imagine that same highway, but with the addition of major roadworks and diversions.
The nightmare has just got real. You’re leading a group of thirty other blindfolded people across that road who are all shackled together behind you and it’s only a matter of time before a big old truck leaves you all for roadkill.
That’s quite enough with the graphic analogy, but it’s served its purpose. The longer you go without robust key performance indicators (KPIs), the more hazardous and unknown your objective and performance journey becomes for you and the people you manage. Especially in the competitive world of sales.
Back to basics, KPI sales metrics that inform and track the performance of individuals, teams and whole businesses and are determined against set goals and objectives. For example, at a high level, the next financial year strategy across a company is to break a product line into the European market, how each person or team contributes to realization of that is weighed up against this as a KPI. And getting back to our roadkill fable for a minute, the more opaque or obtuse the strategy, the trickier it is to navigate across eight lanes of traffic in one piece and level up with that solid KPI sales metrics.
When applying this thinking to the sales arena, it’s not just a blind spot, it’s a vehicular pile up.
Now we’ve looked at the worst-case scenario, we can shine a light on the benefits of robust KPI planning. And the great thing is that KPI sales metrics, when carefully considered should work at all levels of personnel; the individual, product team, global sales division or board of directors, with the intended benefits of determining their:
- Overview of progress towards goals
- Performance visibility
- Performance evaluation
- Behavioral direction
- Decision-making ability
Whether your business is a start-up, scale-up SME or global enterprise, strong KPIs can be designed, implemented and measured with ease – especially when reviewed in tandem with reliable and value-rich sales performance management (SPM) software, such as that offered by Varicent. And as some of the most widely-used sales KPIs include: monthly sales growth, new leads and opportunities, average profit margin, client acquisition rates, monthly sales bookings and average cost per lead, bringing in a software suite is a sure-fire way of being able to back-up the figures with both real-time and historical reporting and analytics.
A final consideration is that ill-considered and poorly thought out KPIs could potentially derail your sales team and every piece of strategy that comes with it. As KPIs tend to come hand in hand with objective-setting and targets, everyone in the business needs to understand their purpose and how they relate on an individual basis.
Such is the dissent that badly executed KPI sales metrics can create, you may find your team willingly throwing themselves (or you) under that truck, rather than blindly following impossible targets.
Align yourself and your sales team with rationale, sensible and incentivizing KPIs and you’ve got yourself a clear road ahead to success, without a single piece of roadkill in sight.
Find out what Varicent’s sales software packages can bring to your business at www.varicent.com.