Set Sales Performance Goals

Learning Objectives

After this unit, you’ll be able to:

• Identify and explain common sales key performance indicators (KPIs).
• Differentiate between activity and outcome measures.
• Explain how different measures work together.
• Apply best practices when adjusting KPIs throughout the year.

Sales teams are driven by numbers—how much money they need to book, how many opportunities they need to create, and so on. This may seem obvious, but many elements come together to make up a sales team's goals.

The question becomes, how do companies determine these numbers? 

Welcome to the world of sales performance.

Go Beyond Quota with KPIs

The foundation of a strong sales team is made up of clearly defined key performance indicators (KPIs). KPIs are the “what” and “how much” which guide salespeople's behavior. For example, quota is how much money a sales rep is expected to bring into a company in a given year.

Yes, quota typically is the main KPI. But to really ensure a sales team performs, sales operations and sales leadership collaborate to create a full framework of metrics to help sales teams reach their goals. In the end, these KPIs outline how salespeople can meet their quota and make sure the quota itself is realistic. 

Use Activity and Outcome KPIs

This is where activity and outcome measures come in. 

• Activity measures are KPIs that focus on the actions sales people do daily, weekly, monthly, that help drive relationship building and connecting with new customers. Activity measures are designed to lead sales people to achieve outcome measures.
• Outcome measures focus on the end result of these actions, and are usually tied closer to money.

So what are the typical activity and outcome measures?

Activity Measure	Description
Calls Made	The number of outbound calls made per rep, over a set period of time
Emails Sent	The number of emails sent per rep, over a set period of time
Meetings Set	The number of meetings set per rep, over a set period of time
Voicemails	The number of voicemails left per rep, over a set period of time
IP Logins (Attendance)	How often and from which IP addresses your sales team accesses company systems like a sales force automation (SFA) or customer relationship management (CRM) system
Onsite Visits	How many times a sales rep has visited their prospects or clients over a set period of time
Webinar Attendance	How many attendees a sales rep has driven to a particular webinar

Outcomes Measure	Description
Revenue	Money booked
Attainment	How close, as a percentage, a sales rep is to meeting their revenue goal
New Logos	Newly signed customers
Leads Generated	Inquiries as a result of outbound sales activities
Lead Follow-Up Time	How long it takes a sales rep to follow up on a new inquiry
Lead Conversion Rate	What percentage of leads become customers
Retention	What percentage of customers remain customers year over year
Churn	What percentage of renewable revenue is lost each year from lost customers or customer reducing their purchases or subscription
Customer Lifespan	How long (in years) a renewable customer has been with a business

Find the Right Metrics

Let’s take a look at two sales reps. They’re currently tasked to send out 100 emails and both have different approaches. The first sends exactly 100 highly targeted emails (personalized, speaking to their customers’ specific needs)—this takes a few days but they’re able to set up five meetings because of this effort. The second sends an impersonal 1,000-email blast—–it only takes a couple of hours, and they set up one meeting. 

They both met their numbers, but with varying results. If you look at the number of emails sent alone, the second rep seems to be a high performer. When you add how many meetings were set up, however, the first rep had a stronger showing.

Some key sales operations takeaways:

• In this case, it’s obvious the number of emails sent is not a strong enough activity measure if the overall goal is to get more meetings and close more deals.
• The quality of emails and the number of emails sent affect the number of meetings booked.
• These findings should be discussed in the next quarterly business review and a new measure should be added regarding the quality of emails.

So, how do you find the right balance of measures and KPIs? This takes time and iteration.

Iterate

Iteration is key for all KPIs, but the timing varies. 

• Activity measures are easy to adjust throughout the year, so sales operations often reevaluates them to make sure they make sense, like in the example.
• Since a business usually has set revenue goals, results measures such as attainment do not typically shift as much throughout the year.

Along with determining a team’s activity and outcome measures, sales operations professionals need to plan how and when to evaluate the effectiveness of these goals. These iterations should align with your company’s existing processes. For example, if you hold quarterly business reviews, you can use these as opportunities to adjust activity measures and present them to sales leadership.

Make Activity and Outcome Metrics Work Together

When done right, the activity goals you set provide a clear path to achieve the outcomes, which are tied to revenue generation.

If you were to simplify the logic, it would look something like this:

If a sales rep consistently achieves ACTIVITY MEASURE throughout the quarter, they will ultimately achieve OUTCOME MEASURE. 

The key word here is “consistently.”

Try This Exercise

For your company, let’s say emails sent and meetings set are the activities that help close deals and generate revenue. How much revenue should a single sales rep be responsible for in a given month if the following is true?

• Crafting a targeted email can take up to an hour.
• Past performance shows that for every two targeted emails sent, one meeting gets booked.
• The average meeting is 3 hours long.
• Every meeting guarantees a deal.
• The average deal generates $1,000.

We’re not going to quiz you on this. But you can see with this simple exercise the kind of work that’s needed to come up with the right KPIs. You’re taking into account past data, insights from reps who are closing these deals, exercising calculus skills, and more. 

Follow-up question if you tried this out: Did you take into account weekends and cushion for reps so they can take time off for vacation and work-life integration?

OK, with this exercise, by our calculation, every month the rep should be responsible for about 65 emails, which leads to 32 meetings, and thus $32,000 in revenue every month. 

One more question: What happens if your sales teams are consistently shooting past this number?

Can You Go 110%? No.

Motivated salespeople are likely to chase 100% attainment, meeting all of the activity and outcome measures set for them. Hitting 100% can make someone feel as if they’ve made it but there is an opportunity cost here, depending on the goals you set.

For example, if they track toward 100% too early, meaning they’re close to accomplishing all of the goals, you and sales leadership may have set the measures too low. Ultimately, quotas set too low means lost revenue.

The Bar Was Set Too Low, Let’s Just Raise the Numbers!

Hold on there. It’s not that simple. 

If you’re constantly changing the goals, you’re bound to affect morale. Put yourself in the sales rep’s shoes—you might be only a few deals away from achieving what the company defines as success. When those KPIs change, you can feel frustrated. 

Take it even further. What if the new numbers change late in the year and are so far out of reach that you don’t know how you can ever meet them. You may also start considering a new sales job with more stability.

If Change Is Needed, Be Intentional

While it can be indicative of poor planning if a sales team hits their annual goal in the second quarter (Q2), you do want the team to have that feeling of goal attainment and a job well done. So, even though you may be reevaluating these measures every quarter, it pays to be intentional with any changes you’re making to these KPIs.

Consider these tactics to help you.

• Early in planning, identify what activity and outcome measures can be adjusted throughout the year. This way, you have a clear focus on what can be changed easily, and what may require more in-depth planning with sales leadership.
• Before implementing a change in KPIs, try a contest or stretch goals—for example, the rep who converts the most leads by the end of the month wins a trip.
• If you do need to adjust measures based on how the company is performing, pay attention to how you communicate these changes. Know what motivates your sales teams and tie these motivations into your messaging. This is discussed in depth in the Sales Operations Use Case and Best Practices module.

Up Next: More Money

Getting 100% across the board is great, but that’s not enough. In the next unit, we focus on the different kinds of incentives that help drive stellar sales performance.

Resources

• Trailhead: Sales Operations Use Case and Best Practices