Key Performance Indicators – a vital tool for measuring sales progress, or a tick-box exercise that drives the wrong behaviours?
Metrics can of course play an important role in tracking an individual’s achievement and encouraging healthy competition. But have you ever been part of a team where most of Monday morning is spent frantically inputting data? Or worse, found yourself trying to force-fit (or even make up!) the work you did so it allows you to meet your targets?
I was once part of this insanity when I worked in recruitment many moons ago. It always baffled me – I knew I had done my job well, so why wasn’t that enough? Why did I have to spend time weaving ever more fantastic stories to put into our system?
Our work with clients often finds that teams tend not to be assessed on the quality of their calls or interactions with customers, but more often on the quantity. This can frustrate hard-working teams who find it difficult to meet their KPIs and therefore feel demotivated - the opposite of what the targets are trying to achieve.
Traditional sales incentive schemes tend to use KPIs, targets and payouts that only relate to deal closure. This is particularly prevalent in industries with high numbers of transactions, such as recruitment, car sales and insurance. And it is no coincidence that these industries are also associated with a high turnover of staff. Often a lack of adequate onboard training strategies and a resulting lack of target achievement can lead to regular lay-offs or resignations.
But how much better could it be if instead these industries considered more innovative ways of targeting. What about using cycle-stage specific measurements? In other words, rewarding the movement of a potential client along the sales cycle, rather than only focusing on the finalised deal. The benefit of this is that it incentivises the salesperson to focus on the building of relationships with customers, rather than just a series of one-off sales.
Most of us could probably come up with a story about trying to buy a car from a showroom salesperson and how frustrating that process can be. If you ever meet a sales rep who appears genuinely interested in your requirements for your new car, they stand out a mile from the rest.
In order to achieve this, there are two aspects of selling that should be focused on. Firstly, sales training. Taking the time to induct the sales team in relationship building skills is key for this to work well. Too often people in these roles are regarded as disposable and left to sink or swim, easily replaced. But investment in some core behavioural training at the outset, can be time well spent.
Once you know your staff have been well trained, then you can move on to measuring their performance. Ideally, companies should be collecting data on every aspect of the selling process. The pipeline of potential clients, the staff involved in the selling process, the accuracy of last month’s forecasts, for example. If this data is held in a transparent, unified system of customer and sales transactions, then it can be trusted by both sales and non-sales teams.
This way, innovative sales compensation models have the fact-based clarity they need to succeed. Choosing technology that enables real-time management of sales performance can also add an extra dimension. It can help to design and administer role-specific KPI measurement, ensuring the driving of the right behaviours for each team.
To conclude? KPIs definitely have their place, but they must be used wisely to achieve real value.