Traditional sales incentives only reward for the destination
Let’s put modesty aside for two seconds. As sales leaders, there is very little we don’t already know about our own sales process.
Our knowledge of what is necessary to succeed runs deep. We’ve shaped our team so they drive that success. We have laboured over sales incentives that reward our reps for bringing home the bacon. So, we are all set, right?
Well, sort of … We know what it takes to successfully navigate the sales process. In the same way, we understand what the right activities are at each stage of the deal lifecycle. However, we seem to struggle to effectively drive our reps using these ‘best sales practice’ metrics.
The result is our sales reps get lost along the way. Their deals wither and are unhealthy because they haven’t covered the basics. We are failing to capitalise on the opportunity that is in front of us.
Modern sales leaders manage using journey-based sales incentives
Modern sales leaders have developed an alternative way of thinking about sales incentives. They are focused on motivating and driving the steps that make up the most efficient sales journey. They manage by metrics that span the sales process. And it’s an approach that is driving significant results.
Let us expand a little…
Tracking, motivating and rewarding the Key Performance Indicators (KPIs) that span the sales journey is vital. It is only through these KPIs that we can be sure of the healthy progress of our deals.
‘Leading’ vs ‘Lagging’ Sales KPIs
Here’s where understanding the difference between ‘Lagging’ & ‘Leading’ KPIs is important.
Traditional sales leaders manage by Lagging KPIs alone (e.g. “the number or value of deals closed”). These are the indicators that tell us what has happened. They are the final output of our efforts. These KPIs are always rear-facing. They’re easy to measure but very difficult to directly improve.
In additional to this traditional approach, many forward-thinking sales leaders are now directing their teams using Leading KPIs (e.g. “number of calls made”, “number of meetings booked”). These indicators are forward facing and give a true insight into the health of our deals.
Rather than tracking end results alone, modern sales leaders measure the steps necessary to reach our destination. These are the steps that have the biggest impact on us successfully achieving the outcome we desire.
To influence the performance of your sales team, you need to carefully track, motivate and incentivise your teams to achieve both. See them as part of an equation where action (leading) equals results (lagging).
The benefits of using ‘Leading’ Sales KPIs
They’re more immediate than ‘Lagging’ indicators: For example, say your target for the next six months is £100K. By keeping an eye on Leading KPIs such as regular contribution to your pipeline, you will have a better idea of whether you’re on track to meet your target or not.
They serve as great coaching prompts: Asking a sales rep to sell more is a bit like asking a striker in a football match to score more goals. They know that’s the aim of the game and the result that is desired. But they don’t always know the best route to get there. Instead, teach them the steps necessary to reach their goal. Leading indicators will allow you to showcase the exact activities necessary to accomplish your Lagging targets.
Drive your team to better results:
Here are 3 things you should consider tracking, motivating and rewarding if you’re looking to drive increased sales performance:
- Leading as well as Lagging KPIs
- Time based KPIs: Track not just the actions (e.g. “how many calls did I make”) behind your outcomes but how often these occur (e.g. “I need to make 10 calls per day every day”). To work out exactly what sort of timeframe you should be expecting to see, analyse the behaviours of your top reps. What cadence of work do they have? Once you work out what magic number they swear by, promote this level of activity across the rest of your team.
- Negative behaviours: If what you’re seeking is absolute clarity, don’t stop at behaviours leading to positive outcomes. Track the habits that constantly trip up your progress (e.g., track how often close dates are pushed out. Getting a tighter grip on this would improve forecast accuracy, would it not?). Only by identifying what’s damaging for our businesses can we protect ourselves from it.
Where do I start?
Reward the journey, not just the destination:
Typically, sales reps are measured and incentivised purely on end results; like how many deals they closed this month. Thus, they don’t always cover the basics or operate with the cadence you desire. But, if you want to improve performance right across your team, start motivating your reps to achieve against leading KPIs.
You are already sitting on the only resources you need to bust your quarter, your team and your CRM tool. All you need to do is motivate and incentivise the sales journey as well as the destination.
The sheer volume of behaviours, indicators and data can be daunting at best. To put your mind at ease, we have put together a checklist of Leading KPIs you should think about tracking to ensure your team is on the right path to bust the quarter.