Key performance indicators can help set better goals for sales reps
Sales managers often rush to judgment if sales reps aren’t meeting their quotas, and automatically assume that they either don’t have the skills or the understanding to perform.
Instead of assuming the worst, however, managers need to take on the responsibility of examining the root cause – or “blockers” – of a rep’s poor performance.
By focusing on a few key performance indicators, a manager can better determine if a rep can realistically meet the quotas and financial goals the company has set for him. This is a far more effective approach than simply raising a reps quotas and hoping the increased pressure will get him to perform.
Rather, managers should recognize and identify all of the activities their reps are asked to perform, based on the company’s objectives for the year. Some of these activities might include customer meetings, cold calls, proposal writing, lead generation, negotiation, client management, and all of the other activities a rep must perform to reach important sales objectives.
Obviously, the amount of activities a rep must perform limits the time he has to actually sell, and most reps today are only spending 40 to 45 percent of their workweek on sales efforts. This limited selling time, based on numerous activities, could be the primary reason salespeople aren’t meeting their quotas.
Key Sales Performance Indicators
After taking into account all of the activities a rep is asked to perform, an effective manager should then identify the activities that would be considered the key performance indicators for their organization. These specific activities should be highly correlated to the production of the ultimate result.
For example, key performance indicators a manager might want to measure on a weekly, monthly or quarterly basis could include:
- The number of new prospects a rep contacts per week
- The number of new client meetings the rep schedules
- The number of proposals the rep writes
By focusing on a few metrics that are non-financial, it’s easier to prioritize a rep’s workday or workweek and anticipate a rep’s ability to meet sales objectives. A manager should choose what he believes are the top two or three key performance indicators and have reps who aren’t performing well focus on these areas, based on the objectives for the year.
As an example, one objective of a company might be to increase the number of new businesses in the customer mix. The activities that will help a manager and his sales team meet this objective are prospecting calls, new customer meetings, and proposal writing.
A manager can identify these activities as key performance indicators and better measure results, as they relate to the overall objective, knowing that their reps are focused on the proper activities. Because these activities relate to the overall objective, the manager knows his reps are focused on the proper activities.
Another objective may be to expand the company’s share of business with certain customers. Key performance indicators to be measured for this objective are the number of new contacts a rep is establishing within the exiting customer base, and the number of on-site appointments he’s scheduling. Both activities force the rep to interface with existing customers, establish new points of contact, and identify new sales opportunities.
Most companies have multiple objectives for the year, so a manager should be prepared to blend the activities reps are performing so they are dividing and using their time wisely. For example, taking the two examples given above, a manager can break out the activities by assigning targeted goals for each activity every week. More specifically, if a rep is making cold calls, she might be asked to conduct 15 appointments every week.
Following this scenario, the cold calling key performance indicators to be measured would be the number of dials every day and the number of times the sales rep actually speaks to new contacts per day. Additional key performance indicators would include the number of customer appointments each week, the number of prospect appointments every week, and the number of proposals completed each week.
By taking the time to identify key performance indicators, a manager can help his team of reps succeed by focusing on the activities most important to the company’s overall objectives. Less time will be wasted on activities that aren’t relevant to ultimate results, and manager will be able to better assess the true skills and understanding of his reps.