The sales KPI guide

Introduction

Throughout the last 25 years, we have been in contact with more than 100,000 sales
organizations across Europe. Today, we provide more than 11,000 businesses with the practical
tools they need to improve their sales and marketing activities. This has given us a great
overview of the challenges and best practices that characterize sales organizations today.

In the current economic climate, there is a lot of attention on how companies can improve their
business results through efficiency increases, product development, acquisitions and other
measures. But why are improvements in sales not in focus? Why do so many companies neglect
sales as an area that can be optimized and improved the same way as other business areas?

Research has shown that companies can gain a 12% revenue increase simply by improving
the way their sales process works. That is a huge potential inside your own organization, just
waiting to be tapped.

The sales KPI guide SuperOffice AS © 2014 www.superoffice.com Page 2 of 13

 08
What can you expect from this guide?
The guide is not about how software works – it’s about how organizations, teams,
and individuals work and how they can achieve much better results by structuring
the way they sell.

The core of the guide is to address three fundamental issues that we see in the marketplace today:

 ad sales seen as a
B Low sales
1 result of a bad market
Poor sales are too often blamed
on market conditions, leading
sales managers to passively wait
for the markets to turn, rather than
to actively identify how they can
improve the impact of their sales
activities.
2 efficiency
Many organizations have
spent considerable resources
streamlining their work processes
e.g. in Administration, Production
and Delivery – but streamlining
sales has not received the same
attention.
Sales seen as a skill,
3 not as a process
The idea of the “natural born
salesman” is still alive, but in our
experience, less than 10% of sales
people have this natural talent
– the rest will benefit tremendously
from clear tools and guidance.

Within this paper, we would like to share some of the insights and ideas that can address the above issues. We hope that
by sharing these best practices, we will help you to improve your sales efficiency, to streamline your sales process and to
help you guide your sales team to success.

The sales KPI guide SuperOffice AS © 2014 www.superoffice.com Page 3 of 10

The sales challenge
Managing sales has never been more challenging. According to a 2012 survey of Sales Directors by Silent Edge, 49% of
sales directors felt that, although deals are closing, it takes a very long time to do so. (22% reported a lost pipeline as their
biggest challenge. This was later specified in the responses by individuals who chose the ‘Other’ category.)

What are the biggest challenges you face 8%

with your sales force at the moment
8%

22% 2%
Sales management is poor

Pipeline is not closing

Losing staff to the competition 10%

Sales force is not properly
trained or capable

Deals are closing but are taking

a very long time to do so

Other (please specify)

49%

For Sales Managers, the pressure to bring in the revenue is much harder than it was in the past. In this situation, being
able to react to market dynamics is crucial. Without this overview it becomes even tougher to predict your future sales
– and to give guidance to your organization and your employees.

For Sales Representatives, there is a strong sense of ever-increasing demands to bring in the numbers. But sales reps are
often left to themselves to figure out exactly how to reach their targets – and what tools to use. The results are homemade
spreadsheets and lists – and a struggle to maintain a solid pipeline. Fortunately, there are better ways to work, both for
sales managers and sales reps.

The sales KPI guide SuperOffice AS © 2014 www.superoffice.com Page 4 of 10

Key performance indicators (KPIs)
show the way
Most organizations work with Key Performance Indicators (KPIs) which help them to measure how well they are doing.
KPIs are critical metrics that measure actual performance against predefined goals and objetives. They also provide an
objective form of measurement that allows you a glimpse into your future – before it’s too late to change the direction or
solve any issues with your team.

Lagging indicators vs. leading indicators

When we talk about KPI’s, it’s important to note that there are lagging indicators and there are leading indicators. Lagging
indicators tell sales managers how they have been doing by looking at output and results “after the fact.” Lagging metrics
can include:

• Sales
• Gross margin
• Gross margin %
• Number of customers
• Churn rate
Lagging indicators focus on historical performance. They usually get the most attention in companies because these are
the types of numbers that get reported to management and to shareholders.

Now, let’s contrast this with leading indicators. Leading indicators focus on the likelihood of achieving goals and what might
occur in the future. You can almost think of them like signposts along the road. Leading indicators are activities and actions
that can be tracked or measured during the sales process as opportunities are being developed and the pipeline is being
built. Leading indicators include activities like:

• How many calls should a sales person make?

• How many prospects does a sales person visit?
• What types of prospect is the sales person calling?
• How many of these calls turn into opportunities?
• How many of these opportunities turn into wins?

Most companies will focus on both types of indicators in one form or another. But, if you really want to make a change in
your sales organization and behavior, we believe that leading indicators are the best indicators to focus on.

The sales KPI guide SuperOffice AS © 2014 www.superoffice.com Page 5 of 10

The benefits of leading indicators

A typical KPI in most organizations is the sales budget that

specifies what revenue each sales person is expected to
bring home during a given period.

Of course this is a very central and important goal to focus

on, but what happens if that goal is not met? What is the
reason for lack of results? What type of action is needed?

Lagging indicators are just numbers and they don’t give

you the exact reason as to why a sales person didn’t reach
his sales budget. On the other hand, this is where leading
indicators sine. Leading indicators can give you a peek into
the future and a chance to change the behavior of the sales
team and focus on what matters to achieve sales success.

By focusing on leading indicators you can:

Set expectations and improve Keep the execution of high impact

communication activities consistent

Leading indicators can highlight the activities that
produce results, and provide a blueprint for sales
coaching meetings. Once your sales team understands
the activities they should focus on, they will devote
more time and energy to them. In addition, this takes
the guess work out of evaluation and coaching.
Leading indications give you an objective basis for
evaluating performance.
Focus is the name of the game and what gets
measured gets done. When your sales people
understand what you are going to review every week,
they are much more likely to execute consistently on
what matters most.
Despite the advantages of leading indicators, most
companies still focus heavily on lagging sales metrics.
This is because lagging metrics are easy to find and
to identify. And, as we mentioned before, these are
the metrics that get reported to management and
shareholders. On the other hand, finding the right
leading indicators that your company should be
keeping an eye on can be a bit of a challenge.

For the rest of this paper, when we talk about KPIs, we

are talking about leading indicators – the signposts
along the road which tell you if your sales team is
doing the right things they need to do in order to be
successful.

The sales KPI guide SuperOffice AS © 2014 www.superoffice.com Page 6 of 10

Key performance indicators (KPIs)
show the way
Results are the cornerstone of all budgeting – and meeting the sales budget is what matters. However, from what we’ve
learned over the years, the best performing sales organizations are the ones that are able to break their sales process into
individual, measurable activities.

The point is that most sales happen as a result of certain predictable activities – and a decline in sales is most often due to
negligence of these activities.

As a sales manager, here are a few critical KPIs that could be interesting to follow:

1. Average # of days in each 3. Opportunity

opportunity stage to close ratio
By tracking this metric, you can get a better idea of which How many wins do your reps
pipeline opportunities are likely to close and be able to get after getting prospects to
forecast more accurately. This type of information helps the opportunity stage? This is an
you to treat each opportunity individually rather than interesting and important metric.
assuming that all opportunities have the same likelihood You might have sales reps on
of closing. 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.

2. Stage to stage conversion ratios

This is another metric which helps sales managers be
better sales coaches. If you see that one of your sales
reps has a dramatic drop-off from the second stage to
the third stage, this should raise a red flag. Does he need
help in that part of the sales process? Is there some
additional training/ coaching that needs to be done in
that stage? This can help you to provide more productive
sales coaching and feedback to the sales rep.

The sales KPI guide SuperOffice AS © 2014 www.superoffice.com Page 7 of 10

How to create the right KPIs
for your business
Setting up your activity-based KPIs is very dependent on your specific area of business, your products and services and
your sales organization. Determining which KPIs are right for you require answering two central questions:

1. Which customer types do you have?

2. Which sales activities are appropriate for these customer types?
Once you know your customer types and sales activities, you can start to set targets for each activity in relation to each
customer type. Here is a simple way to move forward:

1. Map the activities to the customer types 3. Set up a support system

Look at your sales activities one by one. Start by
determining how relevant the activity is in relation to
each customer type. For instance, some activities may be
focused on bringing in new customers, whereas other may
be targeted at existing customers.
2. Set activity targets
For relevant activities, set a target for how many activities
you expect your sales organization to perform on a
weekly/monthly/quarterly basis (see example below).
Once you have set your targets for your organization, you
can start to break it down, so each sales representative
has individual targets.
Set up a system to allow sales reps to input their activities.
This would preferably be a CRM system that is a shared
resource for all sales and marketing employees.
4. Monitor, review and adjust
Once you have established the system, use it to measure
the performance of your sales activities.
By looking at the relation between activities and actual
sales, you can start to adjust what activities are most
relevant in the future – and you can adjust your targets
accordingly.

Customer Types
Customer A Customer B Customer C Prospects

Meetings existing customers 6 per month 6 per month - -

Activities

Meetings new customers - - - 6 per month

Written offers 3 per month 3 per month - 2 per month

Seminar participants 15 per quarter 15 per quarter - 15 per quarter

Phone calls - - 40 per month 50 per month

By looking at the relation between activities and actual sales, you can start to adjust what activities are most relevant in the
future – and you can adjust your targets accordingly.1

The sales KPI guide SuperOffice AS © 2014 www.superoffice.com Page 8 of 10

Conclusion
Working only with lagging indicators is similar to driving by only looking out the rear view window – just because you can
see the pitfalls that you’ve avoided doesn’t mean you’ll know what to avoid on the road ahead. Tracking KPIs as leading
indicators gives you a crystal-clear windshield to look to the future, allowing you to spot potential pitfalls well before they
arrive and knock your vehicle off-course.

No matter which KPIs you choose, there are three fundamental principles you should be aware of:

1. Focus on KPIs in two separate categories

• The Prospecting Cycle – This is what happens before a
qualified opportunity is identified

• The Sales Cycle – This is what happens from the time an

opportunity is qualified until it is won or lost

2. Don’t focus on too many KPIs

Teams that are given too many goals tend to achieve only
a few of them. Focus like a hawk on the ones that are the
most important to your sales organization.

3. Make the KPI’s visible and review them

in team, one-on-one, and executive settings
By tracking this metric, you can get a better idea of which pipeline
opportunities are likely to close and be able to forecast more accurately. This
type of information helps you to treat each opportunity individually rather than
assuming that all opportunities have the same likelihood of closing.

The sales KPI guide SuperOffice AS © 2014 www.superoffice.com Page 9 of 10

 For more best practices,
please visit us at
superoffice.com/blog

Or you can visit

superoffice.com

Simple
We believe that these things together will result in higher and
better sales. As an added benefit, efficiency and employee
satisfaction will most likely increase – as well as the general
quality of cooperation between the Sales Manager and the
Sales Representative.

superoffice.com