The good news is you had a great last year. The bad news is you had a great last year. Long time sales representatives are familiar with this situation. The reason is that new quotas are often set based on last year’s production. To make it back to president’s club you need a plan. Business as usual may not be enough this time.
What changes need to be made in order to hit your number?
Know your Companies Key Performance Indicators
Many companies set quotas based on hitting specific Key Performance Indicators or “KPI’s”. KPI’s are quantifiable measures that a company uses to gauge or compare performance. Revenue growth is a common example of a KPI used to design quota.
Leading and Lagging Indicators of success
KPI’s can be further broken down into these two categories. To understand the difference let’s look to a sports icon.
Michael Jordan is arguably the greatest professional basketball player of all time. He won 6 NBA championships and hit countless game winning shots. One of his famous quotes is “I’ve missed more than 9000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.”
Leading Indicators signal future events
Jordan’s willingness to work on leading indicators set him up for success. Like in the sales world, wins often come after many failed attempts. Here are some of the leading success indicators for MJ.
- Hours spent in the gym
- Practice shots taken
- Scouting videos watched
- Time spent reading playbooks
Lagging Indicators follow an event
Michael put in the long hours necessary to create the moments we remember him for. The following would be considered lagging indicators of success for MJ.
- 6 NBA Championships
- 10 scoring titles
- 14 Most Valuable Player Awards
- 2 Slam Dunk Titles
Leading and Lagging Indicators in Sales
Once you understand the difference you can define the indicators in your sales environment. As I mentioned earlier, quotas are often set based on lagging indicators. Some common examples:
- Total revenue growth
- Total Margin
- Number of units sold
- Deals won
- New customers
- Existing client growth
Identify your goals so you know how to make your number. Make sure that you understand how you are being measured. If you are not 100% sure, have a conversation with your manager. Track your progress to ensure you are on the right pace. You can use a KPI dashboard like the one linked here.
If you see that you are falling behind you may need to change some habits. That is where leading indicators come in. Think about the early activities in the sales cycle. Some common examples:
- New leads
- Customer interactions (In person, Phone, email, LinkedIn)
- Appointments set
- Face-to-face visits
- Proposals submit
- Presentations / Product demonstrations
Identify the early activities that you think have the strongest correlation to long term success. Increase the frequency and see what affect it has on your success rate. You can use a tool like the KPI dashboard shown below to draw correlations over time.
Here is an example: Starting in March you increase your number of appointments by 2 a week. Your sales cycle is approximately 1 month. Track your leading and lagging indicators for all of March. Continue tracking in April and compare results. If your sales are growing you may be on to something! Continue to analyze and make adjustments throughout the year.
Understand the effect of Key Performance Indicators on your business. Make the proper adjustments and crush your quota again this year!