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As a business ‘maximising growth’ sounds like an obvious and sensible goal. But when you think about it, ‘growth’ is actually a big and rather vague ask to lay on your sales team. Your best chance of motivating your people to deliver on that overarching goal is to break it down into smaller, more specific sales metrics or KPIs. 

What is a KPI anyway?

Everyone throws the abbreviation KPI around these days, but what does it actually mean? By a Key Performance Indicator, we are talking about a sales metric that is:

  • of central importance to your commercial success (key)
  • affected by the behaviour of your team, in a way that can be both quantified and potentially improved (performance)
  • something you can use as a shorthand way of understanding how effective current performance is against a stated goal (indicator) 

Take a common sales KPI - like opportunity-to-win ratio. Clearly this is an important metric in terms of business success, or growth (key). Looking at this metric over time will give you lots of insights about how your team is doing, both as a group and individually (performance). And of course if the number is heading the wrong way, you have a clear sign that something needs to be done (indicator).   

Every team is different, of course. So how do you go about setting effective sales KPIs for your team? Learn how with our top 6 target-setting tips:

1. Be SMART  

As a framework for effective target setting, SMART is a always a good place to start. Rather than just setting sales targets for this year that are just a percentage increase on last year’s, go for KPIs that are:

  • Specific: Targets should be clear and unambiguous, giving the team a clear idea of what’s expected and how it can be done.  
  • Measurable: The sales KPI should be clearly quantifiable in a way that lets people know how it will be measured and what success will look like, eg ‘reduce or maintain average lead response time at 1 hour max, as reported by CRM data’.
  • Achievable: Good SMART sales targets should feel tough but doable – motivating people to work hard and perform to their potential. So it’s important to balance your business’ growth imperative with a healthy dash of realism. If the target feels simply too far out of reach, morale and productivity will inevitably dip. 
  • Relevant: Your team should get a clear sense of why the goal matters. In a sales context, this can often be done by linking a specific sales metric to your overarching growth target. 
  • Time-bound: Milestones and accompanying incentives should be set within an agreed timeframe. Deadlines serve to concentrate effort and focus, helping to ensure that meeting the target doesn’t get overtaken by day-to-day issues that may be important but less urgent. 

2. Set stretch targets

The phrase ‘stretch target/goal’ can mean different things to different people. But in our context, a stretch goal is an additional milestone beyond the primary target. These can be set at both the team and/or individual level.

Say, for instance, you set someone a sales target of £50k for the quarter. This is the amount you need them to bring in as an individual contribution to the overall team goal, based on careful SMART thinking (see point 1, above). But you might also set them a stretch target of £75k, for any of several good reasons: 

  • Adjusting for unrealistic expectations: Sometimes salespeople work to achieve exactly their target, without accounting for the possibility that even the best-qualified deals can come unstuck at the last moment. A stretch target can help compensate for this, and encourage better pipeline management. 
  • Rewarding over-performance: Sometimes, a sales team will smash its target for reasons it can’t take complete credit for: an unexpected windfall deal, perhaps, or favourable market conditions, or the demise of a competitor. Hitting a target easily can be a cause for the team to sit back and relax, when in fact pushing harder could encourage even further growth by capitalising on the advantage. 
  • Hedging against under-performance: In the bigger picture, it’s not much use if one individual massively exceeds their target, but several others fail to hit theirs, resulting in the overall target not being met. Each shortfall needs to be dealt with individually, of course, but incentivising over-performance can help mitigate this risk. 

3. Set sub-targets to help future-proof the business 

As a business, there will always be an overall sales or revenue figure you are striving to hit. But how you slice and dice the ways you make the number is down to your sales ingenuity. 

One way to approach the challenge is to set sub-targets – smaller milestones which you have identified as key to business success. These can also help you to drive organisational change and future-proof your sales operation, and might include: 

  • sales of a specific product line
  • enquiries about a specific new service
  • number of new customers 
  • B2B leads from a certain sector or of a certain minimum management status   

These goals can help to address minor factors that are having a major impact on sales performance. But they can also help to steer the business towards sales of products and services that are likely to be more of more strategic importance in the future. 

While it’s tempting for salespeople to focus on quick short-term wins, markets never stand still and today’s cash cow may end up as tomorrow’s white elephant. Sub-targets can help you diversify your selling and so lay the groundwork for a sustainable sales strategy.  

4. Look at your data

Your historic sales data is a rich source of insight to help you define more granular sales KPIs. Your CRM system, for instance, is a great way of sourcing accurate shared data and giving you access to insights to inform future target-setting based on past performance. 

For instance, you might look at where an individual’s efforts are falling down along the sales journey: where are their leads dropping off – is it after the first call, at first meeting, or even at contract negotiation stage? This insight could help you set a really specific target – eg ‘improve number of first meetings booked by 10%’ or ‘increase average call time by x’ – and identify a related area of focus for training and mentoring. 

5. Consider productivity and other targets 

Not all sales KPIs have to be directly commercial, if there are other useful ways in which they can support growth and overall business performance. For instance you might, if relevant, look at productivity, eg number of calls made per week or average time to complete a proposal, or your sales prospecting activity on a relevant social platform such as LinkedIn

6. Get feedback and sense-check your targets 

Finally, always be ready to review and fine-tune your target-setting. Make time to check in with your team to keep abreast of any developments that could be impacting on motivation and/or the feasibility of meeting targets. 

Being prepared to tweak your sales KPIs in line with constructive feedback will make your sales people feel listened to, and empower them with a sense that they have an important role to play in the target-setting process.

Delve deeper in to utilising sales metrics to increase your company performance with insights from six UK & Ireland sales leaders by downloading The Sales Metrics That Matter e-book. 

 Sales Metrics that Matter eBook