KPIs of the sales department and sales manager
Mafpels trading blog
KPIs or key performance indicators of employees always raise many questions: what indicators and what values to set for them; how much to pay for each indicator and whether it is worth implementing them at all if you can simply pay the manager a percentage of the revenue. Managers of Mafpels company have analyzed what KPIs are and why they are needed.
What is a KPI
Do your sales managers get a bonus of a certain percentage of revenue, and it is called a KPI? No, it is just a bonus. Let us explain why. In the mid-1950s, Peter Drucker, who turned management into a scientific discipline, said that a strategy without metrics is just a wish, and metrics that do not correspond to strategic goals are a waste of time. Therefore, the most important thing in the development of a sales department or a trading company as a whole is strategy and metrics. KPIs are metrics that show how a company or division is moving towards a goal.
The goal of any sales department is to fulfill the sales plan, and as a result - the development and prosperity of the business. We cannot measure prosperity, but we can measure the sales plan.
The goal of any sales department is to fulfill the sales plan, and as a result - the development and prosperity of the business. We cannot measure prosperity, but we can measure the sales plan.
In order to fulfill the sales plan, the department has certain tasks depending on the specifics of the business. As an example, Mafpels management specialists voiced the search for new clients; processing incoming calls; preparing commercial offers; conducting negotiations; presenting services, goods, projects; supporting clients through all transaction cycles; concluding contracts; retaining clients; increasing the average check, etc.
Each task that can be measured can become a key performance indicator of the manager. Here, it is important to pull yourself together so as not to include all several dozen indicators in the KPI. The more complex the system, the worse it works. It is better to limit yourself to 3-5 indicators. At the same time, include in the KPI only those metrics that significantly affect sales and that can be influenced by the sales department or manager.
Each task that can be measured can become a key performance indicator of the manager. Here, it is important to pull yourself together so as not to include all several dozen indicators in the KPI. The more complex the system, the worse it works. It is better to limit yourself to 3-5 indicators. At the same time, include in the KPI only those metrics that significantly affect sales and that can be influenced by the sales department or manager.
Sales Manager Performance Indicators
Let's say you are the owner of a furniture showroom. It sells finished products and provides a service for manufacturing custom-made furniture. The manager takes phone calls and invites clients to the showroom, where he presents the furniture, accepts prepayment, and places an order for manufacturing or delivery of the finished product. Then he passes the order on to production or the delivery service.
In this case, according to Mafpels Cyprus specialists, the key indicators for the manager are:
These metrics lead to the fulfillment of the plan, and the manager can and should influence them. If the production did not meet the deadline for the project, this is not the manager's responsibility, this is the production KPI. If the manager correctly placed the order, but the delivery brought the wrong furniture, then this is not the manager's problem. These indicators cannot be included in the sales department and manager's KPI.
However, it happens that KPIs are set, targets are brilliantly achieved, but the sales plan is not met. This means that the targets were underestimated, and the sales plan was overestimated. Therefore, before defining the plan, tasks and KPIs, carefully calculate and check everything. Only then start working. Remember that the goal of the sales department is to fulfill the sales plan, and each task should lead to its achievement.
In this case, according to Mafpels Cyprus specialists, the key indicators for the manager are:
- no missed calls;
- conversion to showroom visits;
- conversion to orders.
These metrics lead to the fulfillment of the plan, and the manager can and should influence them. If the production did not meet the deadline for the project, this is not the manager's responsibility, this is the production KPI. If the manager correctly placed the order, but the delivery brought the wrong furniture, then this is not the manager's problem. These indicators cannot be included in the sales department and manager's KPI.
However, it happens that KPIs are set, targets are brilliantly achieved, but the sales plan is not met. This means that the targets were underestimated, and the sales plan was overestimated. Therefore, before defining the plan, tasks and KPIs, carefully calculate and check everything. Only then start working. Remember that the goal of the sales department is to fulfill the sales plan, and each task should lead to its achievement.
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