For the record, I believe Key Performance Indicators (KPI) and metrics are extremely valuable tools to coaching your sales people, projecting future sales, and making the right course corrections. However, I believe most security companies use them in a manner that is wasting their time. Here’s why…
- The goals are wrong. Most companies use historical ratios and conventional wisdom to determine the amount of quotes, outstanding quotes, demos, etc. that are required. Another common mistake is giving the same KPIs to each person. Even if their quotas are the same, each sales person has different skills and different ratios throughout the cycle (i.e. some are strong at closing their proposals and others are very good at generating many proposals). Giving each sales person the same goals to reach their quota is a disservice to them and the organization.
- The reporting is cumbersome and therefore inaccurate. Most managers complain about metrics being outdated or inaccurate. Most sales people complain about reporting being cumbersome. Two ways to solve this problem: make the reporting reasonable, and hold the sales people accountable to their metrics without bugging them – eventually they’ll figure out that they need to have their forecast updated by Thursday at 8:30 if you consistently report their outdated numbers. If you always remind them, it’ll become a pattern.
- Management uses these numbers in retrospect instead of forecasting and coaching. The critical word in KPI is “Indicator”. Use these numbers to coach your sales people and predict their performance in the next 90 days or two quarters or fiscal year. Using KPIs as an analysis of past performance can be helpful, but it’s not the best use for KPIs.
Whether in management or sales, think about your process for a few minutes. Considering the three points above, how can you improve? Put it to use today!
