In 1999, the concept of a world controlled by digits was the stuff of science fiction. A reality built upon a matrix of scrolling code was the ultimate, modern dystopia. Just over a decade later, data-powered life is not so far-fetched. IBM estimates that we create 2.5 quintillion bytes of data each day; a baffling feat when we consider that just one trillion bytes converted into pennies would be the size of the Empire State Building.
Unlike those green lines of numbers, however, data control is not limited to a select few. According to an IDC study, the use of predictive analysis yields a median return on investment (ROI) of 145%, almost double the ROI generated without it. In light of such impressive results, it is hardly surprising that Gartner estimates a 60% increase in spending on analytics by 2015.
This means that an understanding of what to measure and how is essential. A factor that is especially important in the sales sector, where numbers and targets are part of everyday life. Silent Edge research shows that 58% of companies only measure according to KPIs and performance against target, but there is confusion about how these KPIs are defined. Here is a quick guide to measuring the right things.
1. Are you lagging or leading?
Roughly speaking indicators can be divided into two camps:
- Lag indicators are a window into the past; an immovable picture of your output that can only be influenced if you can bend space and time.
- Lead indicators, however, are more hopeful and actionable; they provide a measurement that can be used to affect or improve your outcome.
Though the difference between the two is generally accepted, the confusion lies in which indicators fall under which category and this lack of understanding can have a serious impact on performance.
2. Knowing the difference
There is a widespread misperception about what can be defined as a lead indicator. Most inclusions in this category are measurements such as;
- The number of calls it takes to book a meeting.
- The number of meetings it takes to qualify an opportunity.
- How many opportunities it takes to close a deal.
To consider these indicators as actionable is a largely ineffective approach; solving problems like high call-to meeting ratios by doubling calls or hiring more staff is expensive and inefficient. Turning this misperception on its head might feel like time travel but can in fact produce better data.
3. Switching things around
If we see those ineffective calls as an output that cannot be changed, namely a lag indicator, the actionable point changes. Shifting focus onto what happens during the call will produce valuable data that can be used to change the outcome without extra time and people.
- Measuring key behaviours during calls will provide an accurate reflection of performance and help to identify capability gaps that may be impacting call quality.
- Using this data, organisations can improve the output by giving their people the development they need to raise capability levels and enhance the success of calls, effectively achieving more with their existing resources.
- A similar approach can be taken to other indicators traditionally consigned to the realms of lag, including; lengthy sales cycles, unproductive meetings, and failure to close.
While KPIs are the foundation of most sales measurement, focusing on numbers alone means that many organisations are at best scratching the surface and at worst wasting resources. Changing the measurement process might not increase ability to climb walls and freeze time, but it will help to improve performance and capability, which in sales, is almost as good.
By Catherine Luff, Silent Edge