Key Performance Indicators

Kevin Price Talks With Lin Fisher on The Price Of Business About Using Key Performance Indicators as Part Of a Cohesive Communications Strategy

[Kevin Price]:  Welcome back to the Price of Business.  I am your host Kevin Price talking to you about you and your business.  We’ll be talking to Lin Fisher.  He works there with Walter Rogers over there at Baker Communications.  You’re pinch hitting today, which is appropriate since we are in the first week or two of opening season in baseball.  How are you sir?

[Lin Fisher]:  I doing great Kevin.  Always great to be with you.

[KP]:  Good to have you on.  First of all, real quickly, what’s up with you guys there at Baker Communicaitions? 

[LF]:  We’re continuing to deliver incredible services and great results for our clients and today we’re going to be talking about key performance indicators, which is actually the glue of the sales communications strategy. 

[KP]:  Yeah, I saw a great article by Walter Rogers to that effect.  You can find that at our sister website, HoustonBusinessDaily.com.  Make sure you check that out.  “Key Performance Indicators:  The Glue Of Your Communications Strategy.”  I like that.

[LF]:  yeah, exactly.  You know what’s interesting Kevin…Most people don’t really understand how to leverage key performance indicators or what we call KPIs.  That’s because it’s sort of this very culturally based, misunderstood lever.  Really there are a couple of key issues that you want to make sure are in place when using key performance indicators.  But before we get into that I want to just ask you a couple of quick questions.  Number one:  Do you get measured today in your current role? 

[KP]:  Yes. 

[LF]:  Great.  You know what?  We all get measured at some level.  Let me ask this question.  Do you like being measured. 

[KP]:  [laughing] Are you talking about my wife, or my career performance?

[LF]:  Everybody’s got a boss right?

[KP]:  You forgot to take out the trash three times this week.  Oh no!  The whole measure deal…of course.  Probably the strongest measurement is that my show’s the longest running one on CNN650.  That’s a measure right there. 

[LF]:  Absolutely, and you know what?  What a good measurement will do is give you an understanding of where you are in the path to success.  Key performance indicators very much like, Did you take the trash out?  How often did you take it out?  If you don’t take it out on time, your house starts to stink.  That’s very, very similar to pretty much most sales organizations.  If you don’t do the right activities at the right time then you’re likely not going to see success.  Most sale managers have measurements right?  They have the old, did you make quota?  How many calls did you make?  Those are great indicators of results but they’re not really leading indicators that lead you into the success or failure of that ultimate goal which is to close business.  What we like to do as a first way to establish KPIs is to make sure that you’re aligning your KPIs from the executive team down to the sales maker—

[KP]:  Hey, hey excuse me Lin.  Before you jump into that let’s talk about exactly a kind of simple definition of KPIs, of such indicators.

[LF]:  Sure.  A key performance indicator is a measurement that is going to give you an indication to your ultimate success.  It’s not going to be something that is too broad or too specific.  It’s going to be something that’s meaningful to the activity base of what your sales team is doing. 

[KP]:  Okay.

[LF]:  As an example of that, a good key performance indicator would be the number of calls that are made into a particular account over the course of time and the amount of business being pulled out based on that activity.  Key performance indicators will define the success of your organization. 

[KP]:  Okay, very good.

[LF]:  Going back to alignment, the first mistake that most managers make is that they don’t align their executive’s need for information down to their team’s activity base.  Making sure that you have good alignment between what’s expected at the top level of the organization will help you as a midlevel manager understand what you need to measure as a base of activity so that all the measurements are rolling out properly to all the people that are concerned with the metrics.  Once you get an alignment of those indicators then basically…Let me give you an example of one particular statement of measurement that we all tend to gravitate to which is the 80/20 rule right?  It normally says that 80% of your sales rep’s production is usually generated by 20% of their activity in an account.  That number is…That is a great goal or a great understanding, but it doesn’t really give me any tangible, actionable items right there.  A better way to measure that would be to understand the number of calls that are being made, but actually measure the number of connections that are created from that activity.  So the connect rate is really, really important as a KPI, because that connect rate ultimately leads to closed business.  If you don’t have connection or dialogue with a customer how can you sell anything?  That is one example of a KPI. 

[KP]:  Very good.  Very good.  Let’s talk about how they play an important role in your business operations, developing your business plans and those types of things.

[LF]:  Sure.  So the whole idea around the title of our discussion here was really about using this KPI as the glue for your sales communications strategy.  So part of that communication process is very culturally based.  When you’re a sales manager working to maximize results you’re going to be looking at certain things like…I’ll give you the top ten KPIs that we look at, which is lead conversion ratios, lead response time, pipeline to new targets, year over year pipeline trending, time per sales per stage, average revenue per sale, and account share ratio, account profitability, and year over year sales as a trend and some win/loss trends.  Now I just threw a lot of stuff at you, but the reality is that each one of these KPIs will give you a basis for communication.  Most managers, sales managers have a challenging time because they don’t have an objective base to communicate with their sales team about what’s happening in their pipeline.  When you set up these KPIs, and these KPIs can be different for every organization, every culture, but what’s incredibly important to the communications strategy is that a manager’s key role is to enable their sales team to get to that sale quicker, and to get to that sale more effectively.  If a manager doesn’t have objective criteria to help a sales person understand where they are in the over all game, they can’t really be a propellant be part of the solution to get them to that closure.  When we look at these types of KPIs and how the manager’s using them to clearly spell them out for the team, if the team doesn’t understand what’s being measured how it’s being measured and how it’s being leveraged, then the sales team is disconnected from what the rest of the organization is looking at as far as success.  That sales manager needs to take a quick sidestep and say okay, if these are the KPIs then I need to clearly communicate that to the sales team and then have dialogue around that so that as we see the number, as an example, the amount of time it takes to get from the propose stage to the closure stage, if we see that that time frame is taking 30-40% longer for one particular rep than the rest of the reps on the team then we know we have an opportunity to coach.  This is the basis for the communication plan, because now you’re going to work with that rep and say “Look Kevin, I know you’ve been working real hard, but this particular deal has taken you an average of 30% longer than the rest of the team.  What’s your strategy or tactic here in this part of the process?  Maybe I can help you.”

[KP]:  Lin, gotta wrap up the segment.  Thanks for being with us.  I want people to read the rest of the article.  Very detailed, very thorough, very important information on helping your business with these important indicators.  I tell you right now, you’ve got to continuously be quantifying what you’re doing and not just merely, hopefully moving along in the right direction.  These indicators help you in that direction.  BakerCommunications.com is the website.  Again, BakerCommunications.com and the phone number Lin?

[LF]:  713-627-7700.

[KP]:  One more time.

[LF]:  713-627-7700.

[KP]:  Lin Fisher.  He’s in today for Walter Rogers of Baker Communications.  Very important information.  Again I want to encourage you to check them out at BakerCommunications.com.  Make sure you check out that article at our sister website, HoustonBusinessDaily.com where you get the best in business news and information.  Make sure you go…you know what?  You don’t need to go daily. 

All you need is one of our newsletters that will come to you weekly.  So when you go and visit for Walter Roger’s article go ahead and subscribe and you can get great articles by guys like George Connelly and our many other Price of Business contributors.  This is the Price of Business.  You’re listening to CNN650