How Important Are KPIs To Your Sales Analytics Strategy?

  • Ed Thompson, CTO
  • August 28, 2013

How Important Are KPIs To Your Sales Analytics StrategyThanks to BI dashboards, Sales Analytics has never been easier or more powerful. But the ‘secret sauce’ is a mix of compelling KPIs: get them right, and watch your business start to power its way to higher sales and better margins.

Sales Analytics is undeniably becoming very fashionable. And it’s not difficult to see why: take a look at those companies which have been leading the pack, and some compelling stories quickly emerge.

But by and large, these case studies are of ‘traditional’ Sales Analytics: backwards-looking analyses, using Business Intelligence tools, to examine the performance of the salesforce over a period of time.

And make no mistake: such analyses can be very useful indeed. But, as with all backwards-looking analyses, the story they tell is ancient history.

What managements really want to know is how they’re doing right now—in order to be able to make better decisions about where they’re going. Forward-looking KPIs, in short, rather than backwards-looking charts and reports. KPIs that can be drilled down into, in order to flag outliers and spot causal factors.

Multi-purpose insights

And that’s the beauty of Sales Analytics delivered via BI dashboards. At a glance, you’ve got an up to the minute picture of how the salesforce is performing.

From the perspective of a senior director, wanting a strategic view on current trends, that can be very useful. Because the right time to spot those trends which can threaten the business is before that threat has materialised.

From the perspective of a sales director, or sales manager, Sales Analytics delivered via BI dashboards can be a vital operational tool, providing compelling insights not just into overall salesforce performance, but the performance of individual salespeople against targetsAnd from the perspective of those individual salespeople themselves, Sales Analytics on a BI dashboard delivers detailed, compelling information as to how they are performing, and how that performance stacks up against that of their peers.

Not just revenues

Among the uninitiated, there’s a tendency to think that Sales Analytics is all about sales volumes. In short: am I meeting my targets in terms of sales revenues?

While that’s undoubtedly useful information, it’s only a small part of the overall picture that Sales Analytics delivers. Indeed, from the perspective of the finance director—or the sales director, for that matter—progress against sales revenue targets is probably one of the least useful parts of the Sales Analytics toolbox.

Heresy? Maybe. But let’s be frank, that information is probably already available, via traditional legacy systems—even if those are only in the form of ERP reports, or spreadsheets.

What you really want to know are those compelling Sales Analytics insights that existing systems don’t give you. Or which give them to you too late in order to take corrective action.

Such as?

Well, how about these KPIs, to start with:

* How discounts given—and margins achieved—differ from salesperson to salesperson.

* How discounts given—and margins achieved—differ from customer to customer.

* Time take to convert a lead to an order—by customer, by salesperson, and as an overall average.

* Average order size by customer and by salesperson.

* Pipeline generation by type of marketing activity.

And so on, and so on.

In short, Sales Analytics expressed in the form of dashboard KPIs can powerfully illuminate not just broader trends in the marketplace, but also ‘outliers’ worthy of further investigation—salespeople who achieve revenue targets, but give away too much margin in the form of discounts, for instance. Or customers with a high ‘cost to serve’. Or marketing activities which generate lots of leads, but not leads that turn into orders.

And isn’t that information which you want to know?

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