KPIs, Key Performance Indicators, are the basis at which you measure the success of your business. For some, it’s “What is the Revenue?”, for others, it’s “What is the Profit?”, or even just something as basic as “How many calls did I make today?”. KPIs can be very powerful if managed appropriately.
The first step is to determine what metrics you want to create a better focus around. From the sales perspective, things like new client meetings, quotes sent, deals closed, and client satisfaction are all important, but which are the most important? You don’t want to try to implement 100 KPIs and expect your employees to grasp what the priorities truly are. To illicit change, I think 5-10 is the right number. Below are the five that I have implemented and have found give the best picture of the health of the sales team and pipeline.
1. Total Approved Sales
This one is the most basic to track. Literally, how much business has been closed? I monitor this week-to-week, especially for a company that the completion of the project does not happen immediately after the contract is signed. You want to know on a week-to-week basis how well you are doing so you can better forecast production needs. IE, if someone closes above average three weeks in a row you know you need to scale up the production side of the business to be able to keep up with the workflow. Just as much as if someone sells below the average, you know that you need to scale back production. It is also a good gauge on how well your sales team is doing and tracking it week to week allows you to see trends and head off issues before it gets too impactful to the business.
2. Jobs Quoted
Tracking how many jobs are being quoted each week gives you a twofold overview. First, it shows you the activity level of your sales team. Are they going out and doing their jobs? Secondly, it is a crucial component to understanding your WinRate. If you know you quoted 10 jobs, and you won 4, you know you have a 40% WinRate. This helps you determine that if you need to sell 8 jobs a week to grow your business, you need to quote on average 20 jobs a week to reach that level based on a 40% success rate. Again, tracking this week to week is a great way to stay on top of your pipeline!
3. Amount Quoted
So you finally have your sales guys hitting the quoted work target, but your sales are not climbing. What you may have missed is the amount they are quoting. If your average client is worth $15,000,you don’t want your sales guys sending out a bunch of $5,000 quotes to make sure they are hitting their job-quoted target. This KPI can also be used to grow revenues without growing your headcount. If you push to see an increase in average jobs quoted, you can do the same amount of projects, but bring in more business. Setting a priority on raising the average jobs quoted, will force your sales team to raise their standards on projects they are willing to spend time going after. It is not always more comfortable to handle larger clients, but a small increase in average jobs quoted could equate to a substantial increase in revenue. Here is where I track not only the total amount quoted for the week, but also track what the average per job is. IE, if you quoted 10 jobs worth $160,000 in revenue, your average project quoted is $16,000.
4. Jobs Completed
This is fewer sales and more production, but it plays a vital role in overall business success. Let’s say your sales guys are closing deals, quoting like crazy people, and increasing the average job they are going after, but you don’t realize you’re only getting half the work done each week that is needed. Not only are you leaving money on the table, but also your lead times will grow to a level that will deter new clients and piss off existing ones. Conversely, if your team is knocking projects out faster than sales are coming in, this creates a massive issue, especially with the current workforce concerns. You cannot afford to have your skilled labor force sitting idle because sales are not where they need to be. Simply tracking how many jobs are being won and how many are being completed each week gives you a good handle on the workflow of the business, and will allow you to see if you need to ramp up production or crack the whip on sales to keep up with production.
5. Total Amount Collected
This is a simple Key Performance Indicator similar to Total Approved Sales. How much money are you collecting every week? This allows you for budgeting and forecast better. It allows you to see how much is collected compared to how much has been approved. This plays the most significant role in projects that have draws along the way, instead of the full amount paid in upon completion. IE, if you have 100,000 in sales, but have only collected $65,000, you know that there is money out there to be collected, which allows you to plan for cash flow purposes. Inversely, if you have $100,000 in sales and have received $94,000, you know that you need to close some deals to get the pipeline filled back up again.
As mentioned above, there are dozens of KPIs you can create and track, but you want to keep it simple to implement, easy to monitor and make sure it evokes the proper activities from the employees responsible for those metrics.
If you think you are missing the boat on how to make any of this happen for your business, please shoot me an email! Mike@WinRateConsulting.com
If you want to learn more about my process and how I work with clients check out this blog post where I break it down in more detail. https://winrateconsulting.com/2019/02/how-i-work-with-clients/