Set KPI’s for Sales Reporting to Track Your Business Growth
What are Key Performance Indicators?
Do you regularly “take the temperature” of your business?
Key Performance Indicators (KPIs) are metrics that provide a quantitative measurement of your company’s performance over time. They should act as a “flash” report, giving you a quick understanding of how your business is progressing, and a sense of how you can expect it to perform in the near future.
Setting the best KPIs provides a high-level snapshot of success for the business and are rooted in the vision of the organization. They are well-defined and measurable and are tied to key business processes and operational activity that supports the company’s overall goals.
How to set a KPI for sales
KPIs should be as specific as possible, based on realistic goals specific to your company and “normalized,” or expressed in a way that is easily understood. For example, a KPI for increasing revenue might be calculated like this:
Annual Sales Goal: $2,000,000
Average sale/number of sales: $4000/500; sales per week/day: 10/2
Close rate: 50%
Appointments per day: 4
Cold calls per appointment: 5
KPI: 20 cold calls per day
Because KPIs are company-specific, there’s no such thing as a “standard” KPI. Every company has a different driving force, so setting KPIs will vary from one to another.
Once you determine your KPIs, it’s important to communicate them consistently and continually throughout your organization. One way to do this is to visibly chart their progress in break rooms or in periodic updates to your employees.
KPIs should also be incorporated into your performance management system and/or tied to incentives such as raises or profit distributions.
Once you start setting KPIs, you’ll be able to track your company’s performance over time in a way that can be easily understood by your management team, as well as employees, board members and potential partners.
Just remember, nothing is forever — if you find that a KPI is not giving you actionable information or is no longer relevant, find a different KPI.