Companies that want to succeed in today’s economy must define their goals in a clear, measurable, and achievable way. Therefore, they need to create a useful and effective set of key performance indicators (KPIs).
Many companies struggle with setting up the right goals or they blindly adopt branch-specific KPIs. We’ll show you both what problems can result from the use of inappropriate KPIs, and give you some tips to guide your own KPI development.
A good KPI can overcome these common pitfalls.
Challenge 1: Unclear or Unachievable KPI Goals
Everybody should know the SMART method. Use it! This method helps you to clearly understand the impact of your KPIs. When you set up your KPIs, make sure that your statements are formulated clearly. Here are some examples:
- Reduce sales cycle time by X%.
- Increase win rate by Y%.
- Increase the number of net new names per year to Z.
Don’t forget to make sure that the KPIs reflect your true strategic intentions over the next three years. If you set too many KPIs then you run the risk of confusing your team to the point that your essential goals won’t be accomplished.
Challenge 2: Lack of Communication
Another problem is that KPIs aren’t used or are completely ignored by employees. The reason for this is the lack of communication. Management needs to clearly communicate the benefits and the value of the KPIs as they relate to the business. In doing so, it is important that the employees understand that KPIs are not a ball and chain—they represent the aspirations of the team, like winning a championship or qualifying for a national conference.
Challenge 3: No KPI Action Plan
Setting up the right KPIs costs money, time and effort. To do it right and avoid overstraining monetary and non-monetary costs all at once, you need to break down the plan into smaller steps. Creating specific actions makes your goals clearer to others and helps them to grasp what needs to be done right away.
Challenge 4: Lack of Measuring KPIs
You can only improve what you are measuring. But if you have no standardized way of measuring your KPIs, this is the point you’ll need to focus on. It’s key that you measure your KPIs on a regular basis in a way that doesn’t cost too much effort.
Solution: Set Up a KPI Action Plan
To get the right KPIs, you need to break down the following business areas into subsections:
- Sales
- Demand Generation
- Customers
- Internal Organization and Environment
For these subsections, you should define how to measure and achieve the KPIs. Within these subsections, set up action plans with steps that will be key in ensuring the KPIs are achieved. Unfortunately, there is no generic KPI process that can be applied to every industry and business. Therefore, developing and achieving a KPI is an activity that always requires a degree of customization depending on the strategic business goals of the organization.
We have some game-changing sales tips to increase your win rates, your sales efficiency, and the accuracy of your sales forecasting. Find out more here!
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