You get what you measure. Whether that’s SAT results for school kids or a company’s stock price for CEOs. Does it always correctly incentivise the most beneficial long-term behaviour? Arguably not.
Likewise with sales, does measuring your team purely on total value of deals closed lead you to the most beneficial long-term outcomes for your team? We would argue no.
Ask any sales rep and they will tell you that at some point in their career they have carried sales tasks purely to boost their stats. Whether that’s making dials to boost their activity numbers, or whether that’s leaving really long voicemails to boost call times.
We don’t in anyway condone the gaming of stats, but if you've ever had to work in a team where undue importance was placed on meaningless KPIs then you'll understand that a mild finessing of one’s call times can make for an easier life.
Ultimately performance stats are great, but they should used as a tool to aid managerial judgement not as an absolute replacement. There are lots of exogenous variables that affect the outcome of a salesperson’s performance over a given period. Not all leads, or territories are created equally. What managers want to determine is who has been consistent in their approach, and made the optimum decisions for each of their leads throughout the sales process.
So what KPIs can we look at to best discern this? Rep level KPIs will obviously vary depending on the specifics of your company e.g. your product’s price point, target market, typical sales cycle length, the span of operational responsibility your reps have (i.e. do they cover prospecting to close, or just from qualified to close). But here is a useful categorisation you can work within to formulate your own basket of KPIs
Input KPIs are indicators that a rep is 100% completely in control of affecting. E.g. they do not reply on any external factors. These could be things like number of calls made, number of emails sent, speed to answering the phone, average call time, total call time. Because a sales rep has a high level of control over these indicators they provide a useful correlation towards a salesperson effort. E.g. if there is a significant dip from one month to the next in average call time perhaps this might indicate that a sales rep is getting complacent with their qualifications calls which might warrant digging into call recordings or conducting some call shadowing.
Effectiveness KPIs should give an indication of the quality of a salesperson’s interactions within the sales process. Whilst these KPIs relay on some outside factors, there are fewer dependent outside factors than with our next group of indications -- Output KPIs. Effectiveness KPIs aren’t necessarily an end result in themselves but rather an intermediary indicator showing that certain aspects of the process are being executed well. They can highlight areas of best practice that you might want to share with the team. Example Effectiveness KPIs might be the average length of time in a sales stage; average conversion rate from a sales stage to the next sales stage; or email open rates.
Output KPIs should be aligned with the company’s ultimate business goals. So things like total number of deals closed, total value of deals closed, average deal size, or perhaps for account managers it might be something like year over year percentage account growth, or even NPS. Ultimately, this is what keeps the lights on so they are the most important indicators. But over-reliance on these numbers can mask potential improvements. For example one rep might have the best bottom line figures, but given their basket of leads would another rep have producers even better outcomes?
It’s also important to note the various temporal factors when constructing your basket of KPIs. Cohort conversions give the most accurate indication of a salesperson’s effectiveness, but if you have a long sales cycle waiting for January’s cohort to mature before formulating feedback will leave you permanent playing catch-up. Make sure you are able to split your KPIs on a cohort basis as as well as on a nominal basis.
97 essential questions to evaluate the current state of your Sales set up. See how your team stacks up against the competition? Feed your curiosity.