Why KPIs Might Be Outdated
For decades, Key Performance Indicators (KPIs) have been used to assess the performance of salespeople worldwide. However, these KPIs are often seen as daily targets and tools to criticise underperformers, which leads to decreased motivation, lower performance, and the need for Performance Improvement Plans (PIPs). Which, in turn, creates additional work for sales managers.
When speaking with sales teams, they perceive KPIs as imposed targets set by management without understanding how these targets can help them achieve revenue and annual goals.
This is why introducing Objectives and Key Results (OKRs) helps sales leaders gain the support of their teams and transform targets into motivators rather than punishments.
Here’s an example.
Company X has a sales team of four selling software for customer experience centres, facing a decline in new business opportunities. Their KPIs were set at four Sales Qualified Leads (SQLs) and 12 business meetings per month. However, the team only achieved an average of 3.5 SQLs and 15 new business meetings. Their outbound activity lacked structure and heavily relied on emails.
Upon reviewing the data with the sales team, they identified that the conversion rate of emails sent and meetings booked was below the standard desired. They realised they needed to make more cold calls and that a structured outreach approach towards said cold calls led to better outcomes. Additionally, they noticed that they typically received responses on the fifth or sixth cold call attempt.
Although the sales manager had identified these points, setting a new KPI target of 250 weekly calls did not yield the desired results.
The key factor was the individuals recognising these issues.
Working backwards to analyse collective SQLs is key. Out of their collective SQLs, how many meetings did they have to hold? From those meetings held, how many did they have to book? How many emails/calls/social messages did it take to book one meeting?
The distinction between OKRs and KPIs allowed the salespeople to visualise the steps required to achieve their end goals. They could then track their KPIs to reach their OKRs. Their focus shifted to finding ways to reduce their efforts while reaching their objectives and promoting self-improvement.
The sales team realised that to achieve four SQLs, they needed to book 12 meetings, which required making 1,200 dials per month. However, they only needed 84 conversations to secure those 12 meetings. Targeting four exchanges per day could meet their monthly goal of four SQLs.
Shifting the focus from making 1,200 dials per month (300 per week or 60 per day) to having four conversations per day allowed salespeople to assess their daily activities and concentrate on improving their own skills.
Summary
Recognising that statistics will vary among salespeople is crucial. Setting an overall KPI for everyone might make some feel inadequate. Each salesperson’s circumstances must be considered. For instance, one person may only need to book five meetings to generate four SQLs due to their exceptional qualification skills, while others may need to book 12 meetings to achieve the same result.
Salespeople must reach these conclusions themselves. Salespeople are typically autonomous and self-motivated, so they may struggle when given specific instructions on what to do and how to do it. By working together and allowing them to make their calculations, understand their conversion rates, and realise the need for increased effort, salespeople can take ownership of their future actions and performance.
Finally, instead of completely changing the sales team’s approach, introduce incremental improvements and provide coaching on specific areas for marginal gains. Focus on refining their opening lines, addressing objections, and asking effective questions. Over time, this approach will lead to greater overall improvement, increased buy-in, and greater confidence among individuals as they develop their own customized approaches that work best for them.
