When you read the phrase ‘key performance indicators for sales,’ do you immediately think of sales quotas and revenue? While dollars are a great indicator of a sales team’s past performance, they don’t provide sales managers with a clear idea of how reps are performing right now, and whether they’ll meet revenue goals in the future.
Of course, revenue is still the most important indicator of sales success, but as a KPI for sales managers to measure, it’s simply not enough for today’s modern sales teams. Instead, sales managers need to clearly define specific key performance indicators for sales reps that break the sales process into individual, measurable activities.
The real sales KPI meaning is often misunderstood
When creating a new sales KPI list, clearly understanding what KPIs mean—and what they measure—is non-negotiable. While KPI’s are nothing new for sales teams, many sales managers struggle to identify new and improved KPIs each year, and fall back on old, antiquated metrics that no longer reflect their progressive goals and objectives. KPIs are meant to be tangible pieces of information that provide actionable insights that help the teams meet their goals. These metrics should change over time if they no longer provide this valuable information—or if they don’t reflect new products, sales strategies, and new business goals.
Sales KPI’s are also grouped into “lagging” and “leading” indicators. Lagging indicators measure the outputs of what already happened—for example, closed deals, average deal size, and sales cycle length. It’s a metric, but nothing can be done about it because it’s already happened. So, what happens when each lagging sales metric is not as successful as anticipated, and what action is needed to correct it? The answer to these questions lies within leading indicators. Leading indicators, such as customer satisfaction, number of sales meetings, and proposals sent, are action-based measurements that reveal whether a sales team is on track to achieve its goals and be successful. Unlike lagging indicators, sales teams can shift their behaviors, activities, and tasks, to affect these numbers.
The benefit of tracking leading KPIs
Successful sales managers choose leading key performance indicators for sales reps as the primary means of measuring and managing rep performance. Setting leading KPIs for sales representatives—and keeping track of them—gives sales managers a range of positive effects including:
- Improved sales management: By tracking leading KPIs for sales reps, sales managers can identify the activities that reps are doing and compare them to goals. Additionally, managers can see how productive each activity is—is it leading directly to demos and deals, or is it wasted time? Knowing the relationship between activities and goals allows sales managers to prioritize future activities and better forecast sales.
- More efficient training and coaching: Sales managers are responsible for training and coaching sales reps to improve their performance. Managers should use their sales KPI list to measure how sales reps are performing throughout the sales cycle to identify any gaps of knowledge and skills that require additional training and coaching.
Sample KPIs for sales teams
Once a sales manager clearly understands the benefit of correlating sales rep KPIs to measurable tasks, it’s time to build their new sales KPI list. Choosing KPIs depends on the specific sales process of the business, product or service so these sales KPI examples are not “one size fits all.” However, here’s a great foundation to get started:
Lead Response Time—Speed is a crucial factor in increasing the success of a sale. A Harvard Business School study found that sales reps who contacted leads within 1 hour of receiving an online query were approximately 7 times more likely to have a meaningful conversation compared to those who tried contacting the prospective customer at a later time. By incorporating lead response times, managers can drastically improve the speed and number of meaningful conversations sales reps are having day-to-day.
Opportunity-to-Win Ratio—This KPI is arguably one of the most important ones for a sales manager to measure. Aside from measuring the overall performance of a sales team, this metric determines the strengths and weaknesses of each rep. While some reps excel at creating new business opportunities, they may lack essential closing skills. On the other hand, some sales reps may be expert closers. By tracking the opportunity-to-win ratio, sales managers can identify rep strengths and weaknesses and then allocate the necessary resources to reps and ultimately increase close rates.
Rate of Contact—Almost every good sales manager wants to make sure that outbound volume—calls or emails—is high. A study from BridgeGroup found that reps should be generating an estimated 32 opportunities per 1,000 outbound calls. While this statistic is related to outbound prospecting, it still resonates with both inbound and outbound sales teams. If a high volume call activity doesn’t move deals through the pipeline, it may be time to start listening to calls and providing additional training and coaching.
Rate of Follow-Up Contact—Sales teams may be great at following up within an hour of an online query, but what happens if they fail to reach a potential customer the first time? Will they be persistent or give up? By monitoring this KPI, sales managers get a true snapshot of how many times and how often reps are following up. This provides a benchmark of how important it is for sales reps to prioritize this task in order to move sales through the pipeline and generate new business.
These are just 5 possible KPI examples that measure sales rep activities. Regardless of what metrics your team uses to determine performance remember that the best sales managers focus on the inputs—or actions—that sales reps do to positively impact team goals. Here’s one last tip: Most modern sales teams display their metrics on a sales KPI dashboard. A dashboard provides department visibility and transparency into sales team and rep responsibilities. Using a dashboard to display activity-based metrics will increase productivity in real-time and motivate reps to work harder towards team goals.
Improve your Action-Based KPIs with Lessonly
Lessonly’s team learning software connects the dots between sales training and rep performance. Reps learn, practice, and perform better when they receive the knowledge and skills needed in their roles. Take a self-guided tour, and see how we enable reps to boost their performance and deliver against their key performance indicators.