To really be successful as a sales team, you need well-defined goals that you know will make an impact on your company’s overall objectives—and a way to measure your progress toward those goals.
That’s exactly what key performance indicators, or KPIs, provide.
Keep reading to learn what KPIs are, why they’re helpful, how to choose the right ones, and how to track them.
What are KPIs?
Key performance indicators, commonly called KPIs, are quantifiable measures of performance that measure progress toward a company’s key objectives.
They’re the metrics teams track to determine whether they’re on pace to hit their most important goals.
Businesses and individual teams may define KPIs for overall performance or specific projects. KPIs help businesses set targets, measure progress, and ensure teams’ efforts align with each other and the company’s long-term goals.
KPIs vs. metrics
KPIs and metrics are similar, but they’re not exactly the same thing. Essentially, KPIs can be metrics, but not all metrics are KPIs.
Like KPIs, metrics are quantifiable measures of business functions. What sets KPIs apart from other metrics is the fact that KPIs are designated as the most important measures of progress toward the most significant goals.
Why are KPIs important for sales teams?
Why should your sales team track KPIs? Here are some of the key benefits.
KPIs keep you focused on your most important objectives
Since KPIs make progress toward your most important goals measurable and easily visible, they make it much easier to ensure you’re on track toward meeting them. KPIs ensure you’re using meaningful metrics to track your success.
KPIs prevent information overload
With so much data now available to businesses, it’s easy to get overwhelmed. KPIs help your team focus on the metrics that truly matter and avoid information overload so you can actually make use of your data.
KPIs turn abstract goals into measurable targets
Even if your team knows its goals, unless you break them down into measurable targets, it’s hard to know whether you’re on the right track. KPIs enable you to turn abstract goals into something you can measure.
KPIs help you achieve results faster
Since KPIs help improve focus, they often enable you to get quicker results. With well-defined KPIs in place, you’ll spend less time on tasks that don’t make as much meaningful impact and stay better focused on the most important tasks.
KPIs provide insight into business performance
When you’re tracking the right KPIs, your metrics and reports will provide more valuable insights. Analyzing KPIs over time can help your organization make better-informed decisions.
How to choose the right KPIs
To get value from tracking sales team KPIs, it’s essential to choose the right ones. These tips will help you pick the KPIs that matter most for your team.
Start with your goals
Before you can choose KPIs, you need to understand what your most important objectives are. Work with company leadership and others in your organization to determine what the most meaningful goals and top priorities are for your company and choose KPIs that will make the most impact on achieving those goals.
Determine how to make those goals measurable
When it comes time to define your KPIs in more detail, use the SMART framework to make your goals as useful as possible for your team. The SMART framework advises you to create goals that are:
Specific: More detailed goals are easier to track and provide a more focused target to aim for. Your KPIs should lay out specific numbers your team will aim for, such as a specific revenue number to hit or a percentage increase in new sales or leads.
Measurable: Have a plan in place for how you’ll measure progress toward your goals. A CRM and other software tools can help you with this.
Achievable: Your targets should be realistic while still providing meaningful growth when you hit them.
Relevant: Ensure the targets you set align closely with your company’s most important objectives. This helps you avoid vanity metrics.
Time-bound: Set a timeframe for your goals to help keep your team on track. For example, you could set a goal to increase sales by a certain percentage each quarter.
Narrow it down to just a few key metrics
You probably have a long list of metrics you’d like to track, but for KPIs, it’s better to focus on just a few key ones that will have the most impact on your top-priority objectives. This will help keep your team focused and help you get the most meaningful results.
How to track and report on KPIs
Once you’ve chosen your KPIs, you’ll need to create a solid system for tracking and reporting on them. These tips will help you keep track of your KPIs.
Identify who will track each KPI
To make sure your team tracks all the necessary KPIs, you’ll need to determine who is responsible for each one. This person will manage tracking, report on progress, and help identify any issues or roadblocks related to the KPI.
Create a reporting plan
For each KPI, decide which reports you’ll use to track it, how often you’ll create these reports, and who you’ll share those reports with. Creating this plan will help keep you on track and ensure you don’t lose sight of your progress.
Choose the right tools
Another key to success when it comes to KPIs is ensuring you have the right tools for tracking and reporting.
Your KPIs will always be tailored to your business’s unique goals, but here are a few examples of metrics sales teams often use with their KPIs. Combine the most relevant of these metrics with specific numeric goals and a timeframe and you’ll have a helpful KPI:
Average deal size
Average time to close
Lead response time
Make tracking your KPIs easier than ever with Nutshell
Want to make it easier to make an impact by tracking and reporting on your sales team KPIs? Give Nutshell a try!
When you choose Nutshell as your CRM, you’ll get customizable reports, helpful dashboards, and presentation-ready charts, plus features like sales automation, pipeline management, and lead attribution. Get started with a 14-day free trial.