How to Create Meaningful Sales KPI’s
How to Create Meaningful Sales KPI’s
Sales KPI’s are not made in one day. You must understand the market, your turnover, the economic conditions, your analytics, the improvement of your sales reps, and many other factors. Once you have your inbound and outbound activities in place for a few months, you can then determine what a fair target is. Never, ever, ever create a moving target. It secures you are a bad forecaster that is unwilling to live with the consequences of your predictions.
Targets are extremely delicate; they pay bonuses and boost team morale. When the wrong target is marked, it could cripple your company. Do not set false targets and do not employ people based on targets that will never be reached. Picture this – you have your monthly meeting coming up and all you can do is think about the spin you need to create to explain why the target is not met. Do you really want to create stories to help explain why you didn’t hit target? Most likely that issue falls on the Director of sales or the Managing Director. Those are the people that are responsible for team morale. Those are the people that should be creating targets that can be achieved. If it is a blowout, and you are 20% off your target, while only 5 months into your role, I want you to know that is not on you. I am tired of the dreamer KPI setters. Use KPI’s as a tool to boost morale and you will see the impact of a Rep, a Manager, and a Director all going home with a smile on their, every day they are working. It is a long term play, where confidence leads the company into unfounded territory.
Here are some important aspects to KPI fluctuations that you need to consider when setting them.
Good sales people love being number one
Make sure you set a number that allows friendly competition near the top amongst more than 20% of the team.
Hire people that are hungry for rewards that they earn through effort
How many of us know of a sales person or manager that complains of faulty reports? Guess what!? They are right, and your system is broken. Nobody knows their numbers better than a sales rep. You must make sure the numbers are timely and accurate.
In order to fuel a larger pool of people to earn more bonus money, I feel strongly about creating stretch goals. Don’t just say, “here is your stretch goal” with no chance of that longer goal being hit. Study what it would take to get to the second plateau.
Business is best when you have two measures in place and you are hitting at least one of the goals. I call this system, Secondary Momentum, where you have the chance of more lift even after hitting a primary goal. The primary goal, MUST be hit. This is your, “ok team, clap your hands and feel proud, we are more profitable this year goal.” The second goal, your stretch goal, is something that you might not hit, but if that number is achieved, everyone responsible for that KPI, gets a larger percentage payout than they would for just achieving the primary goal.
Primary goals VS stretch goals
The difference is clear. What number can everyone achieve with clear communication, the right tools, the impact of the brand and solid sales people. The stretch goal is something that is achieved when all sales reps are improving constantly, the brand is improving its perception, the sales director chooses the right managers to motivate the team and has access to the best technology to deliver results.
Can you imagine everyone working day and night to achieve a common stretch goal? Can you imagine what your team would feel like if it had more people hitting the first plateau of KPI goals? That bonus just might incentivize them enough to learn more about the business, excel their skills, and possibly make them want to stick around so they can be more help to the company in another position with all of that knew knowledge.
Stop making impossible goals. Start thinking about morale.
Motivation from Goals
We have all seen the director/managing director in action that makes senseless goals, with a lack of vision. You can choose right now to create goals that allow celebration, perseverance, and planning to take shape. This set of goals aims to rally a group of people behind you, with loyalty and trust every step of the way. Here are 3 simple tasks you can take on to ensure you set goals that motivate.
- Influence the team to take part in the goal setting: allow them to say “YES” before you implement the goals. This should be done just before Christmas time when the company is winding down. Allow them to picture these goals taking shape while they have time off. Directors: “But wait John, we could never do that. We have to create the goals for the team.” You may think so now, but if you actually look at the 101 concept behind managing a sales agent, they are the ones that come up with the goals in coaching sessions. Why not allow them to help formulate goals that matter to their bank. All you have to do is hire the right people, that like a challenge.
- Create a compelling story about the reason for these goals being created. Share the evolving story of the company, and what it would look like 730 days down the road if these goals are attained. For example, “if we can achieve these goals in 2017, our company will grow to 125 employees, we will be able to create 4 new management posts for you, and we will commit $45,000 to renovating the sales floor in order to ensure you have the best environment to achieve in.”
- Create Core KPI’s to measure results, while also paying attention to the Soft KPI’s.
- Core KPI’s – Revenue, Acquisitions, Leads
- Soft KPI’s – Calls, Talk-time, Contact Attempts
If you can create specific measures for each, then have one simplified report created that measures everyone on the team for each KPI, daily, you will undoubtedly succeed.
It is critical to invest the time in creating reports so that sales agents are constantly motivated to perform.
Do not be that company that has to constantly justify why their reports are right and the agents’ manual report is wrong.
Just to be clear, you must get buy-in from the team first, create a compelling story about why these targets are important for them, and then track all of the KPI’s you have set for everyone. Make it a game, and ensure that everyone is actively trying to reach the number 1 spot.
John Lilly is a sales and marketing professional, with deep experience in building sales teams while co-ordinating the marketing effort. You can catch up with him on his new project, www.reson8agency.com, where he and a team of creatives are seeking clients that need agility and a partnership. His latest passion project is “Utterly Speechless” on Facebook Live. It is a show dedicated to leadership, marketing, communication, and laughter. You can join us every Friday at 3 PM at http://www.facebook.com/reson8agency
He is also very passionate about building www.streamserveinc.com to becoming a leader in sales advice and sales action for businesses.