The Key Result Areas in Sales need a yardstick to be tracked. This yardstick or benchmark for each KRA is known as KPI (Key Performance Indicator). We can say that KPI is the scale on which KRA achievement of a salesperson is measured. If a Salesperson fails in achieving his KPI, he has failed to achieve the corresponding KRA’s.
If you cannot measure it, you cannot improve it!
Why track Sales?
The above challenges of sales management clears the reason for tracking sales with KPI’s.
KPI for Front line Salespersons
|1||Territory Planning||Beats No, Route No, Journey Cycle No|
|2||Demand Forecasting||MNOC/day (Min no of Contacts|
|MCPC/week (More Customer per Customer)|
|MCPT/month (More Customer per Type)|
|3||Daily Sales Inputs||Daily Sales Tracker to be updated on CRM software and following KPI’s calculated:
a) New Contact Index
b) Old contact Index
|4||Daily Sales Funnel||Sales Funnel Ratio Tracking
a) Lead Ratio
b) Lead : Proposal Ratio
c) Proposal : Negotiation Ratio
d) Negotiation: Order Ratio
e) Lead : Lead Engagement Ratio
|5||Daily Sales Huddle – SOD (Start of Day)||Planned Highlights of the day|
|6||Daily Sales Huddle – EOD (End of Day)||Analysis of the failures of the day|
|7||Sales Pipeline Follow up||Planned follow ups for the day as per pipeline|
|8||Sales Dashboard Management||All sales metrics to be within permissible limits only|
|9||Sales Intelligence tracking||What is the competitor doing in the market?|
|10||Sales Trend Analysis , Business Intelligence||Regression Analysis quotients and indexes which help in sales decision making|
|11||Learning and Development||Acquire new skill sets – soft or hard as per L&D schedule and calendar|
|12||CRM Metrics||Average Basket Size
Average Basket Value
The above figure very clearly suggests that the KPI’s required to track new business development is different the one required to track repeat business from existing customers. We call this NTC (New to Company) and ETC (Expected to Company).
Step 1: What is the challenge in Sales Management?
Step 2: What are the Key Result Areas (KRA) for these challenges specified in Step 1?
Step 3: What are the metrics for these KRA’s?
Step 4: What are the KPI’s that can easily be implemented?
The above table will give you an idea of what are the areas for which one needs to prepare KRA and KPI in Sales. Most of us are busy in measuring Sales Performance whereas it is equally important to measure business potential, Strategy maps, Objective fulfilment, sales effort optimisation, Sales evaluation and Sales Success.
Some KPI’s are best measured as numbers and some KPI’s are measured as Ratio. Independent variables are measured as numbers and Dependent variables are measured as Ratios.
The Key Performance Indicator, as shown above, should always be able to separate an average performer from a top performer on one hand and a top performer and a high potential (HIPO) performer from the other.
The essence of KPI is always to provide the right indicators to management so that all sales management decisions are taken on time with the basic mathematical inputs to have arrived at the same.