Setting SMART KPIs For Your Sales Team

Tuesday, October 4, 2016

Whichever niche or market you find yourself in, chances are competition is tough at the moment. As a sales leader, motivating your team members, tracking their success and managing their performance should be a primary consideration. Doing so will help you to achieve your business objectives and increase your chances of sustained growth.


To get the most out of performance management, you'll need to set defined goals that are in line with company strategy. Admittedly, this will take time and effort, but be assured that any investment will pay dividends in the long run. As with any goal setting process, developing smart KPIs should be a collaborative approach between a sales manager and each individual sales person. Personalised goals that are agreed upon, that are ambitious, motivating, yet realistic, are more likely to have the desired effect of improving performance.


To help you set smart KPIs and goals that work, we're going to take a closer look at the processes involved, and offer some insight into measuring and managing performance.


Importance of setting sales goals and KPIs

If you want to support both business growth and your sales team’s success, setting sales goals and Key Performance Indicators are going to be essential. Without ongoing measurement, it’s very difficult to know how well your team or business is doing. Gut feeling isn’t enough to ensure sustained business growth; ongoing measurement and performance management is key to empowering your team to reach their potential.


Setting SMART KPIs

To help you set functional KPIs, SMART is a really handy framework for assessing each KPI. SMART is an acronym for Specific, Measurable, Achievable, Relevant, and Time Bound.


Specific: Is the KPI specific? How will your team members know if they have been successful? Being specific ensures that everyone knows what needs to be achieved, and how it will be achieved.


Measurable: Can you measure success? Can success be quantified? Is it clear to your team how success will be measured and what success looks like?


Achievable: Ideally targets should be ambitious but achievable. Targets should be agreed with each individual sales person and should motivate them to improve on last month’s performance. Unrealistic targets are demotivating and can cause undue stress which can further affect performance. By setting achievable targets your team will be motivated by their success, and once success is achieved you can up the stakes by setting higher targets.


Relevant: Is the KPI relevant to the salesperson’s success? The best way to show this is to link it your company’s overarching goals. This will show why it is important that your salesperson performs well in this area.


Time bound: When will the KPI be assessed? By setting agreed time frames you’ll be able to monitor and more importantly, reward success. Your team will know what is expected of them and by when, and you’ll know when you need to check in on their performance. Deadlines are a great motivator and by setting an agreed time frame, you’ll have an additional tool to focus your team’s efforts.


Different types of goals/KPIs are relevant to different needs:

Every company’s goals and KPIs will be different, and what’s most important is that you work out what’s most relevant to your company’s needs. It’s useful to think of your goal setting process as a funnel. At the top you’ll have your achievement goals, these are your over-arching company goals. Are you hoping to build growth? Are you attempting to launch a new product? Are you trying to break into a new market?


Below your achievement goals you’ll have different types of KPIs that will help you to monitor your team’s success towards those goals. One of the most common types of KPIs are action oriented. These are regular and scheduled actions that your team should be performing well in for example: Number of prospecting leads, number of follow-up calls, and number of sales demos.


As part of your goal setting, you may also need to set limit goals. These are goals that support your team to manage their time effectively. For example this could include minimising the length of time spent reading and answering emails. This can help your team to prioritise how they spend their time and help them to avoid ‘time sinks’.


You may also find yourself setting development goals that focus on training and development, or layered goals that allow you to set staggered goals with priorities, such as - Top priority: to achieve 20% growth on last month’s sales, 2nd priority – to achieve 25% growth on last month’s sales, and 3rd priority – to achieve 30% growth on last month’s sales. Setting staggered goals in this way can help you to set staged incentives for success at each level.


Why you should include each sales person in the goal setting process

Including your sales team in the goal setting process is an important step. By doing so you’ll be able to work together to set achievable targets that both groups are happy with. Importantly, you’ll get the buy in of each salesperson, and they will be more committed to achieving the goals they’ve set. Nobody wants to have arbitrary targets imposed on them. By setting them in collaboration, all parties will understand what is expected of them. Not only is this important for the salesperson in question, it also important for you as a sales manager. By working with them you’ll be able to work out what support they need to achieve their goals. Do they need mentoring, training, or additional resources? It’s important to remember that their success is as much your responsibility as it is theirs.


Measuring performance

The important thing about sales goals and KPIs is that ease of information is key. The easier you make it for your sales team to measure their own performance, the more likely they are to achieve their goals. Is your sales team able to see their own metrics in real-time? If not, you might need to look at sales platforms that will allow you and your team to monitor success in real-time.


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