Key Sales Performance Indicators: An Intro

Written by Bloomfire Admin

Every business wants to get better.  Wanting to improve isn’t the hard part–it’s actually making the progress that’s the tricky part.  And once you’ve set some long-term goals, measuring progress toward those goals can seem like an insurmountable task.  Key sales performance indicators bridge the gap between the idea of making progress and, well, the progress itself.  So, what are key sales performance indicators?

First, a few definitions.  Key means important, so it’s not a key performance indicator unless it’s fundamental to the business.  Performance means it’s measurable and within your control–hence the term perform–excluding categories outside of your control, such as the wind or the weather.  Indicator means it demonstrates information that will be useful to the business going forward.  Consequently, not only are good key performance indicators fundamental and quantifiable, but they also provide information that is helpful going forward.  With a basic understanding of what constitutes a key sales performance indicator, here are two types of goals that shape how you set those benchmarks.

First: Strategic objectives.

These goals are the big-picture, long-term strategies that indicate the direction of the company.  They’re basically the business equivalent of deciding whether you’d rather have a big field or turn your yard into a basketball court.  Both are great, but you can’t start the landscaping or pour the concrete until you decide what you want.  This category includes measurements that signify whether the business is making large-scale improvements, but the goals should be more measurable and more concrete than, say, a company vision or mission statement.   Once you have an overall strategic goal, it’s easier to figure out ways to reach and measure that goal.  For example, if the strategic goal is “increase customer loyalty,” the specific measurements might include comparing the number of repeat customers in a given month or year, or perhaps finding a way to track customer referrals.  Similarly, if the strategic objective is to “decrease employee turnover,” the specific indicators might include number of employees in a given year as compared to the number who quit.

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Second: Ongoing goals.

These goals are made up of the repeated achievement stuff; basically the business equivalent of unloading the dishwasher when it’s done.  The job of unloading the dishwasher is never “complete” because the dishwasher is constantly being loaded and unloaded.  These sorts of tasks will pretty much always need to be done; nonetheless, keeping up with them is a worthy, measurable goal.  Similarly, a zero-percent weekly defect rate, no inventory problems in a given quarter, and a satisfactory rating on all employee surveys are all examples of steady, ongoing goals that serve as valuable sales key performance indicators.

A word of caution: key sales performance indicators are NOT things like “be happier” or “work harder” or “rock more socks off.”  Why?  Because they aren’t measurable.  It’s impossible to quantify what it means to simply “work harder.”  Instead, come up with a way to measure effectiveness at work; for example, many companies will have an hourly goal or daily goal for their individual sales reps, with corresponding weekly and monthly goals.  These goals can range from actual, closed sales to calls made or answered.  Regardless of the form they take, the gist with all key sales performance indicators should be the same: the more concrete the better.

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