The Sales team is one of my favorite teams to coach through the Rhythm Cascade process. Having been part of a large sales organization myself, it's always interesting to see different teams in action. Some teams have a list of 50 KPIs that they track, while others are starting from scratch. No matter the starting point, I get the same question: "What are the most common ones you see as a Rhythm Coach?" Below are a few of the usual suspects, along with some tips from some of our most successful sales teams on Rhythm.
1. Start with your results sales KPIs. What numbers are the team responsible for delivering? Is it a revenue figure? Number of new customers? An existing customer retention rate? You'll find some answers in your Company's Annual and Quarterly Plans.
2. How are you going to get there? Start with a result KPI and ask "What" or "How" five times to reveal some possible leading sales KPI indicators. It goes like this: How do we get to $100m in Revenue? We get in front of 200 new customers. How do we get in front of 200 new customers? We set 300 meetings. How do we get 300 sessions? etc. ... The answers will reveal some possible leading KPIs, such as the Number of Meetings, Number of Quote Proposals, Number of Outbound calls, Number of Leads from the Website, etc.
3. Narrow it down. Once you have a good list of leading and results sales KPIs, narrow the list down to 5 or fewer. Be sure to maintain a good mix of leading and results indicators. Set your Red, Yellow Green success criteria for each. Set your overall company goals for the quarter and ensure they align with the annual targets.
4. Take it to the masses. Once you have your final list of 5 or fewer sales KPIs, it's time to dash them for all your salespeople. Take that set of 5 core sales KPIs and set RYG criteria for each person on the team. What is John's revenue goal? How many meetings will he need? How many proposals must he deliver? Again, make sure the individual goals align with the overall quarterly goals. Ensure your team energy is enough to get you to Green at the Company level.
5. Make it visible and hold people accountable. If you are using Rhythm strategy execution software, this part is easy. Record your KPIs (company, group, and individual) in Rhythm. Have each person status their KPIs weekly. Hold a Weekly Team Meeting to discuss Yellows and Reds. This is a great way to utilize the natural competitiveness of salespeople to drive results. It also fosters sharing of best practices and helps the sales manager identify opportunities for coaching. A visible whiteboard or flipchart will work if you don't have the Rhythm software tool. It also is an excellent framework for impromptu contests: Whoever has the most meetings this week gets dinner on the company!
Sales KPI Examples
1. Revenue Growth Rate
- Measure: Compare the current period's revenue to the previous one to calculate the growth rate.
- How to Measure: Divide the difference in revenue by the revenue of the previous period and multiply by 100.
2. Customer Acquisition Cost (CAC)
- Measure: Calculate the total cost spent on acquiring new customers over a specific period.
- How to Measure: Divide the total acquisition cost by the number of new customers acquired.
3. Customer Retention Rate
- Measure: Analyze how many customers continue to buy from you over a given time frame.
- How to Measure: Divide the number of customers at the end of the period by the number at the start, minus new customers, and multiply by 100.
4. Lead Conversion Rate
- Measure: Determine the percentage of leads that become paying customers.
- How to Measure: Divide the number of converted leads by the total number of leads and multiply by 100.
5. Sales Target Achievement
- Measure: Assess how close the team is to hitting sales targets.
- How to Measure: Divide the actual sales by the sales target and multiply by 100.
6. Average Purchase Value (APV)
- Measure: Calculate the average value of each purchase over a specific period.
- How to Measure: Divide the total revenue by the number of purchases made.
7. Sales Cycle Length
- Measure: Determine the average time it takes to close a sale.
- How to Measure: Calculate the average time between the first contact and the final purchase.
8. Churn Rate
- Measure: Analyze the percentage of customers who stop buying during a specific period.
- How to Measure: Divide the number of customers lost by the total number of customers at the start of the period and multiply by 100.
9. Customer Lifetime Value (CLTV)
- Measure: Estimate the total revenue a customer will generate over their lifetime.
- How to Measure: Multiply the average purchase value by the frequency of purchases and the customer's lifespan.
10. Sales Team Engagement
- Measure: Assess the engagement and motivation of the sales team.
- How to Measure: Regular surveys and feedback sessions are used to gauge team satisfaction and alignment with goals.
In summary, it's all about measuring the right sales KPIs that drive the right behaviors and making the proper adjustments along the way. Happy selling!
Looking for some KPI Examples to help get you started? Check out our additional resources:
Rhythm Systems KPI Resource Center
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