All of you have metrics and key performance indicators that you measure. Even if you don’t have a formal process, you know certain factors: how much business has been quoted in the last 90 days or how many networking events your sales people have attended this month. However, many of you set the goals for your metrics in a manner that has been passed down for decades and is no longer relevant. Think about that for just a moment – you might be setting goals for “quotes generated” using the same formulas that alarm dealers were using in 1975, even though you’re a security integrator in 2016.
So, what are the right goals for each metric? That is completely up to your scenario. Your market, sales cycle, and business maturity all factor into calculating the right goals for your metrics. Use your company’s historical data to help you determine how much each metric’s goal should be. For example, if you determine that your closing ratio after quotes is 40%, then set your quotes goal accordingly. (Regarding close ratios, it’s most accurate to calculate by dividing the number of “wins” by the total number of quotes. Do not compare wins vs. losses – there are dozens of quotes that are not won or lost but should be counted in this ratio.)
The very best take-away from this post is NOT how to calculate your goals, but that you have to calculate your goals. Don’t simply use conventional wisdom that tell you something like: “take your quota and multiply it by five”. Research the data and do the math. You’ll feel much better when you do.
