| Key Performance Indicators (KPI's) are performance | | | | picture of what is going on to produce your actual |
| metrics that management use to help make | | | | sales results. This is where many sales managers end |
| effective decisions to guide a business and enhance | | | | their use of KPI's and balanced scorecards, simply |
| performance. Common sales performance metrics | | | | consigning them as management measures of what |
| include total sales revenues, number of sales, | | | | has been rather than using these powerful tools for |
| average order value, repeat sales, sales for | | | | their true purpose, not measurement but control. |
| year-to-date, and so on. These metrics on their own | | | | Taking an holistic approach to sales performance |
| only provide part of the story however, and as a | | | | management will mean that you are able to establish |
| sales or business manager you need to be able to | | | | and explain why performance gaps appear, and set |
| understand what the metrics actually represent and | | | | realistic targets that can be compared not only |
| how they are affecting your overall business | | | | internally, but with industry benchmarks. The ability to |
| performance. Looking at KPI's in isolation is not of | | | | identify KPI's and implement standard reporting and |
| such great help, but when you are able to look at | | | | measurement allows managers to implement individual |
| trends and the relationships between metrics and | | | | team member targets that will contribute to the |
| how these integrate to form a complete picture, you | | | | overall sales plan and gain acceptance and |
| are well on your way to unleashing the power of the | | | | responsibility for delivering personal targets. Further, |
| metric. | | | | historical data produced by metric reporting on sales |
| Certain sales metrics provide more information than | | | | performance will assist in deciding where future sales |
| others, for instance gross sales is quite an accurate | | | | efforts are best placed. The ability to determine |
| and absolute indicator however it does little for | | | | which sales territory or customer is likely to produce |
| providing information on it's own, particularly if you | | | | the best results will assist in reducing wastage and |
| are looking to maximize profitability with a diverse | | | | improve sales team effectiveness. |
| product range. Similarly, it is of little use if you are | | | | Control over a sales team's efforts can be readily |
| looking to direct sales efforts by incentivizing sales of | | | | exercised if management understand where |
| certain product lines that provide the greatest | | | | performance is coming from and where remedial |
| contribution to the bottom line. In short, you need to | | | | attention is needed if sales metrics are updated and |
| use a range of KPI's to provide a fuller picture of | | | | collated as part of a standardized reporting routine. It |
| overall sales performance. | | | | is a management maxim, that you cannot measure |
| When identifying the KPI's you will be using, ensure | | | | what you do not measure however, it is also equally |
| that they are relevant, can accurately be measured, | | | | important that the metrics you select for inclusion in |
| and collected in a timely fashion. Applying weightings | | | | your reporting are contributing to the picture of sales |
| to those metrics that you consider more important | | | | performance and not clouding the fundamentals with |
| to overall sales performance will allow you to produce | | | | extraneous information. |
| a balanced scorecard that will provide a realistic | | | | |