This week, we're going to focus a little more on monitoring and analysis. Tracking sales performance is an essential part of adapting and improving your strategy. But as basic as it may seem, setting up and monitoring the right indicators isn't that easy. There are (very) many of them, and they need to be scalable, adapted to your business and your sales people, etc. So, let's get down to business KPIs together.
The selection of key performance indicators(KPIs ) is often botched, whether through lack of time, lack of knowledge or lack of structure. In fact, there's a tendency to choose "boilerplate" indicators. If you proceed in this way, you risk not only failing to motivate your sales force, but also failing to produce analyses that are relevant to your business, particularly where sales KPIs are concerned.
"Strange as it may seem, commerce is often the least structured activity. Yet it's essential to have a very precise, calibrated sales organization in place, based of course on relevant KPIs. relevant KPIs to provide the best possible business management. This is essential for forward-looking visibility, to ensure that development plans are kept to, and to anticipate market trends". Christophe PORCHE, WIKANEthe network of consultants specialized in business development.
So how do you choose the right key performance indicators? Unfortunately, there's no magic bullet when it comes to choosing business KPIs. It will very much depend on your activity, your processes, your customers... However, here are the basic rules to follow when making your choice:
There's no need to define 50 business KPIs to monitor on a daily basis. The risk is to end up with a multitude of data and not be able to produce a relevant analysis. Focus on the indicators that really make the difference.
💡As standard, 4 to 10 indicators are more than enough.
They must be measurable, explicit, reliable and accessible.
Accessibility really does play a key role, and is often overlooked in the selection process. You need to ensure that you can measure and access this data easily. Either via your CRM or via your Excel file (or others). But the aim is to avoid having to make elaborate calculations every time you want to track your sales performance indicators.
Indicators must be there to monitor the achievement of your objectives. So you need to take the time to define them beforehand. In this respect, we strongly advise you to co-construct your objectives with your team. This co-construction will help you get everyone on board and involved. To set motivating objectives, I refer you to the SMART method. Your sales KPIs will then flow naturally from your objectives, enabling you to identify success factors. These can then become a real source of motivation, but also help you understand your company's strategy. What do you want to achieve? Where should the focus be? By understanding what's expected of them, sales people will be more involved and more effective.
💡For example, you're not going to have the same sales KPIs if your main objective is to increase additional sales or if it's to increase the number of your customers.
Indicators should help you make decisions about whether to intensify a particular action or stop it altogether.
💡For example, "sales were down 10% in the second quarter". Sales KPIs should help you understand why. Is it because marketing hasn't fed the sales force enough leads? Is it because sales cycles have lengthened? You can then define your action plan accordingly.
In article n°1, we talked about the different types of sales force structuring: by geographical sector, hunting team, lead generation team... This choice of structure will obviously have an impact on the choice of sales KPIs.
💡 For example, if we have a lead generation team in place, we're bound to have sales KPIs linked to this activity: number of leads, transformation rate (leads > prospects etc.). Whereas if we've set up an organization by geographical sector, we'll find sales indicators such as the number of appointments per week, the rate of successful appointments / total number of appointments etc....
This list is not exhaustive, but it's a good starting point for your choice. For each indicator you choose, look at all the points listed above and ask yourself if the selected indicator meets all the criteria.
"Acceptance of these commercial KPIs requires education. Both from the field teams, but also from the management and Back-Office teams. Pedagogy means: explanations of the nature of the KPI chosen, learning how to cross-read these KPI in order to master them, and this inevitably involves demonstrating the effectiveness of the approach in the field."
Christophe PORCHE, WIKANEthe network of consultants specializing in business development.
We've just told you that business KPIs must be determined uniquely for each company. So it's almost impossible to give you a laundry list of indicators and hope they work for you. However, we're not going to abandon you just like that. We can't stress this enough: you need to adapt them to your own context.
An opportunity is a potential project with a prospect. It seems obvious to follow the evolution of the opportunities created, won or lost to follow the development of your activity.
The trick: this indicator can be tracked in a global way but you can also segment it. For example, you can track the indicator by salesperson. The goal is to detect either the salespeople who sign the most or those who lose the most business. The idea is not to monitor but to identify trends in order to implement corrective actions and adapt your action plan.
Once again, you can segment this business KPI as needed, or keep a global view based on your objectives.
This indicator identifies the team's (or a salesperson's) performance in converting a prospect into a customer.
Tip: It is interesting to go further on this indicator and calculate the transformation rate per offer. Depending on your activity, it is possible that you sell different products, ranges or services. Analyzing the transformation rate by offer will allow you to know which segment transforms the most and on the contrary, which segment has difficulty in winning new customers.
This time, we're dealing with a qualitative business indicator, but one which we believe to be very important. Identifying the most common reasons for failure is an excellent way of reversing the trend. For example, if you realize that 85% of lost projects are due to a budget that's too high. It's time to ask yourself the right questions and determine whether your target is the wrong one, or whether your price is too high compared with the competition.
With these business KPIs, you've already got a good base from which to start. Now it's up to you to pick out the ones that interest you and adapt them to your business. Before concluding this article, it's important to remember thatan indicator must be properly monitored. You may have defined the best KPIs for your business, but if you don't track them assiduously, they won't have much impact. Some KPIs need to be monitored daily, others weekly, and still others monthly! It's up to you to define the most relevant frequency. And above all, you need to think about analyzing them. Knowing about them is one thing, but they're there to help you make decisions.
Draw conclusions and adapt your strategy accordingly! Once again, your CRM is your best ally in doing just that 😉
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