You've probably heard of Key Performance Indicators, also known as KPIs. If you’ve spent any time in a sales organization, you’ve probably heard this term thrown around by sales managers, executives, and sales reps grumbling about how they have to meet them. In short, a KPI measures a particular type of performance. That could be an individual, an activity, or a company product or service your company sells. Every department in an organization uses KPIs in some form or fashion, and even though many of us don't like them, leveraging KPIs correctly will send your sales through the roof—but only if you use them right.

But what are sales KPIs and how as a salesperson can you use them to blow past your goals? It’s easy to Google examples, but without knowing why you need KPIs, you run the risk of implementing benchmarks that are either ineffective or actively undermine you and your company's actual goals. So before you dive into the web for someone else's KPIs, take a second to learn the formula for making them right for you.

1. Determine the company’s goal. When building a KPI, you should have a primary goal in mind. This isn’t your individual goal; this is the overall company goal that guides its strategy across all departments and informs its vision of the future. Everyone in your organization regardless of where they fall on the org chart should know this goal. This objective will guide the KPIs you need to be successful. Plus, it’s always smart to go into your performance reviews knowing exactly how you contributed to the company’s strategic vision, and this gets you there.
    
2. Identify your professional goals. Now that you’ve identified the “big” goal, define the benchmarks you need to achieve that help your company get there. You should know the who, what, where, why, when, and how of these goals:
   
   a.     Who contributes to this?
   b.     What is the outcome of this?
   c.     Where can I achieve this?
   d.     Why should I want this?
   e.     When should I achieve this?
   f.      How can I achieve this?
   
   
3. Build specific metrics from your goals. Once you know how you fit in the company’s overall vision, you can give context to the actions that lead to your goals. For a salesperson, that doesn’t necessarily mean revenue, especially if your compensation considers other factors beyond it. Here are a few examples:
   
   a.     Activities per day/week/month
   b.     Cost per client acquisition
   c.     Leads qualified per month
   d.     Closure ratio (Win rate %)
   e.     Volume of accounts signed or market share increase
   f.      Average subscription fee of new accounts
    
4. Structure your KPIs to mirror your pipeline. You have everything you need to create a solid set of KPIs, but don’t just go slapping a bunch of goals together and think you’re done. Consider everything you do in sales and how you achieve your goals. Likely, your day-to-day activities fall neatly into your pipeline's structure: You must prospect potential clients, convert leads into opportunities, and close business to earn commission. Where does revenue fall in this structure? At the very end! There’s so much more involved in driving performance before you get to revenue. It’s critical you don’t sacrifice the top of your pipeline for the bottom, otherwise you’ll never make the money you deserve to make.

You can build KPIs as complex or simple as you like, but just because a KPI is intricate doesn’t mean it’s more effective. The universe favors simple solutions, and it’s just easier for many of us to wrap our heads around a simple solution rather than a complex one. 

Here are a few examples of KPIs our sales team has created to get us to our goals. Would they work for you?

·      Most valuable lead source (by revenue and by volume)

·      New leads to monthly goal

·      Activities to lead conversion

·      Ratio of converted leads to open opportunities

·      Average activities per salesperson to won opportunities

·      Ratio of won vs. lost opportunities

·      Number of won opportunities to annual goal

·      Revenue of won opportunities to annual goal

·      Average annual recurring revenue per salesperson

·      Average monthly subscription fee per salesperson

Last but certainly not least keep one thing always in mind: KPIs aren’t written in stone. Sometimes, what we think works in theory falls flat in practice. Be smart about your KPIs. Revisit them often with your manager to make sure they’re driving you to your goals, and if they aren’t, work to find a solution that will.

KPIs do more than just give you metrics to succeed; they also demonstrate your value to the organization. If a KPI doesn’t work right, it might not present your value correctly (or at all), so it's critical to get them right. Revisit and rely on them, and you’ll set yourself up for success now and into the future.

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