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What are some examples of good KPIs (key performance indicators) to track?
Our company just implemented an ERP / business intelligence system that tracks KPIs across all departments. I work in the sales department and I'm wondering what KPIs would be good for us to track other than the usual revenue, opportunity, and lead nurturing numbers. What KPIs does your company track? Are there other KPIs in other departments that I should be aware of? How else can our sales department make better use of our ERP system?
Best Answer
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- Eric Britten
I hope I can do justice to the second question after that opener.
Now that you have a "story" from each department. You can:
1- Compile these into an overall story for the organization. An Executive Summary. You can quantify performance and in essence compare "apples" (the finance team) to "oranges" (IT).
2- Then backtrack to identify areas of opportunity within departments or see patterns in the organization as a whole.
Once this is complete you have a quantified/fact based picture of the organization that can be used to:
1 - Support better decision making across the organization
2 - Focus planning and resources more effectively
3 - Increase efficiency and reduce costs within the organization
4 - Eliminate redundancy
The list goes on.
Many times it is easier to gather the data than it is to take action it. This is where many of these types of projects fail.
Great feedback, Eric. I appreciate your idea about the numbers telling a story. Sometimes we get so consumed in the numbers that we forget their meaning.
Alvin, before deciding on departmental KPI's you might want to think about overall business performance KPI's. Only then can you ensure that any subsequent departmental KPIs are aligned with your overall business objectives.
If you do it the other way round you are in danger of shooting yourselves in the foot.
As an example, you may have an objective such as '''increase customer satisfaction levels to 85%+by year end''. Meanwhile someone in the contact centre has decided one of their KPIs is to handle 20 calls per hour.
This may be great for new business sales, but may have a negative impact on customers who have been with you for years and have proven their worth.
Chances are sat levels will deteriorate not improve.
So their should be a hierarchy or pyramid of KPIs to make sure everyone is motivated and moving in the same direction.
As a guide to top level KPIs, in my mind there will be a mix of financials - revenue,margins etc, but also customer focused ones such as customer satisfaction & loyalty levels by major segments.Retention rates, new customer acquisition rates etc.
Regards and good luck
Jeremy
Sales KPIs are a very interesting topic in our business right now. We are trying to figure out how KPIs can help our sales team better target future prospects. For example, when we look at traditional metrics such as bookings and pipeline opportunity and cut those numbers by vertical industry or company size, are we able to identify specific market segments that our salespeople should spend more time on? We are seeing some interesting results but only because we are a large enterprise and have a sufficient amount of data to provide real insights.
Alvin, in my practice I often rely on re-use of KPIs/Dashboards/Scorecards and would just like to refer you to a great resource I often find myself going to: KPIlibrary.com. There is a good chance you’d be able to find best-fit KPIs to your particular business needs.
The site provides searching across over 4,000 KPI’s by either industry (from Aviation to Retail) or business processes (from project ratios to supply chain).
Hope that helps.
Pretty sure this post is past expiration, but I can’t help myself from adding my .02 because this subject is so near and dear to my heart. Let me keep it simple. For complex, expensive, enterprise sales, the KPIs for Sales or the Sales VP should be:
1. Average Sales Price
2. Sales Cycle Time
3. Opportunity to Deal Conversion Rate
4. Sales Efficiency
5. Selling Costs
Here’s a more thorough write up on this subject: http://blog.getmyroi.com/p/vp-of-sales-responsibility.html Also, we’ve developed an Application, for which we just launched the beta, that uses some of these ideas to help salespeople sell value. Check it out www.getmyroi.com
Alvin,
whatever information you collect here or elsewhere, more general approach can be also helpful. Ask yourself, do you want to measure
a. Raw numbers (like number of products sold)
b. Change % (a % change in a metric -say revenue- compared to last month, last year etc)
c. Progress (project oriented KPIs, like Completed %, but can also be Actual/Budget %)
What is very important is that you should bring every KPI in context. Quantity of 100 pieces sold this month is not so informative. BUT, if you provide information about Quantity last month, same month last year, if you compare it to budgeted value and make forecest what will happen if nothing change - you will begin to add value to your ERP system.
Finally, be aware that you have to choose proper data visualization for whatever you want to show, (nominal values, comparisons, corelations, etc.).
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Related Activity
Alvin: I'll take your first question. Yes, each department should have its own KPI's as they should reflect the performance of that specific department so the department can watch them on a weekly or other shorter term basis and make changes as undesirable variation is indicated. For instance, sales might track things like: average sale, average margin per sale, sales per sales representative, lost accounts, etc. A/R might track: total receivables, receivables over 30, 60 or 90 days, average overdue receivable, average account aging, per cent of receivables that are over terms, etc. The KPI's should reflect whatever that department's priorities are based upon their goals, annual operating plan, or short or long term strategies. KPI's, if possible, should not just count things - they should tell some sort of story, so ratios and per centages often make better KPI's than just the number of things in some category.