For many entrepreneurs to make a buck, they have to develop a sales-marketing strategy to generate a profit.
Conventional wisdom holds that revenue-per-sales-rep is the only metric that ultimately matters in sales. But sales-process optimization is all about identifying key strengths and coalescing your team into an efficient selling machine. In other words, management is about coaching your team to success.
When we talk about key-performance indicators (KPIs), we're talking about leading indicators – signposts along the way that your sales team is doing the things they need to do in to be successful. Keeping your eye on nuanced, tactical KPIs is one of the best ways to keep your strategy on track: Practicing great fundamentals leads to great outcomes.
Here are seven KPIs to consider:
1. Lead-response time. When it comes to lead response, speed is essential to increasing sales reps' odds of success. The data seems to confirm what our instincts tell us – that prospects equate a responsive company with a good company. Since Harvard's study on response outcomes showed that sales reps that contacted leads within one hour were seven times more likely to have a meaningful conversation with a decision maker, other studies have affirmed the findings.
The only question then has been not when to respond but who should respond. Is some sort of automation such as an email or robocall enough? Don't kid yourself. There's really no substitute for a personal phone call by an actual sales rep. To measure this, you'll need to track inbound and outbound phone calls and look at how quickly your team, on average, responds. With few exceptions, try to ensure that your sales team responds within an hour.
2. Rate of contact. Virtually every good sales manager wants to make sure that outbound call volume is high. A new study from AG Salesworks & BridgeGroup estimates that reps should be generating roughly 32 opportunities per 1,000 outbound calls. Keep in mind that those numbers were for outbound prospecting, a term that tends to include many calls that are relatively cold. So keep an eye on those call logs. If lots of activity doesn't lead to achievement, it may be time to start listening to sample call recordings to try to work on the pitch.
3. Rate of follow-up contact. Persistence pays off. A National Sales Executive Association survey found that 48 per cent of sales agents never follow up with leads a second time. This is significant since 10 per cent of sales are closed on the fourth contact, and 80 per cent are made on the fifth to 12th contact. As a sales manager, you hope to look at every lead record that is being worked over time and see multiple leads and calls logged against it.
4. Clicks from sales follow-up emails. Think about the best sales follow-up emails you've ever received. Effective reps try to bring something to the conversation that will re-interest and re-engage you. That often requires links to content. That could be a link to a promotion, whitepaper, a new pricing page, or in the B2B world, even a study that validates the product being sold. The goal of this metric isn't necessarily about volume or click-through-rate. It's to ensure that reps are actually embedding links to content in follow-up emails that are tailored to the leads they're working. If you find it isn't happening, it may mean that you need to either get them more content they can use or make them aware of what you already have.
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5. Social-media usage. This is one of the more difficult data points to measure, but you need to make sure that your sales reps are active in social media. We know that top sales reps use LinkedIn, and that there is a direct correlation between reps that are social-media enthusiasts and revenue as a direct result from the channel. What's less clear is how much contact and what types of contact are making the difference. Since there are few KPI guidelines in place for measuring social micro-strategies, you'll have to rely on your own instincts to define how your reps are making connections and using the channel.
6. Usage rate of marketing collateral. As a marketer that has worked on many sales and marketing-alignment projects, I can say with confidence that much of the content created for sales enablement purposes goes unused. This can be because sales reps didn't get favorable responses to it in the past, or because reps forget it's available or they didn't know it was available in the first place. This is surprising because the right marketing content can provide tremendous value to reps. Great content such as whitepapers and videos actually offer reps an opportunity to follow up with leads to see what they thought of it.
To really close the loop on tracking, try using unique call tracking numbers on all your content. This will tell you whether you're getting callbacks after the content goes out.
7. Opportunity-to-win ratio. How many wins do your reps get after getting prospects to the opportunity stage? This is a surprisingly important metric. You might have sales reps on your team that are excellent networkers and door-openers, but awful closers. If so, then you need to help them either get better or move them into a different role so that they can open doors for your closers. Either way, tracking this metric is key.