Are KPI's still relevant in sales roles?

Looking round the gym this morning I noticed something very peculiar, the lack of wedding rings was alarming to me. I counted forty-five people working out on various equipment in my gym and carefully (and without looking very odd) I counted the amount of wedding rings on my fellow gym goers hand. The answer, three. Including myself, the total is four people out of forty-six, meaning that only 8% of the fitness enthusiasts at my gym are married. So what does this figure tell you? That people who work out between the hours of 6am-7am in the morning are part of the lonely hearts club? Are early morning gym-goers more interested in themselves than a life-partner? Or perhaps more are actually married but they take their jewellery off before they work out? Did I take the age demographic into context? Or more importantly are we getting a true reflection from this ratio of 46:4?

Ratios on their own can be utterly meaningless. You can use the same ratio positively and negatively depending on the point you want to prove. I have seen Managers beat their workers with a stick, metaphorically speaking, because they have not hit a Key Performance Indicator (KPI) or KPI Ratio.

"You have booked 4 New Client Meetings from 150 Calls, this is appalling"

- this was the sentence used to one Consultant during an appraisal meeting I was in, the Consultant was then asked to explain why this was the case!? I was gobsmacked and let me explain to you why. This Consultant had been with the business for less than 6 months, with no prior recruitment experience may I add. This means that every 37.5 times our Consultant picked up the phone they managed to get a meeting with a brand new client - the target amount was about 20:1, roughly less than half of what they achieved. Now I personally not only took the person into account, but the other ratios and facts surrounding it. Actually, they were not only learning a new company, but a new role and more importantly learning about recruitment, which in itself is complex to begin with, not to include the systems and service elements. This new Consultant had managed to convert all four of those meetings, meaning that they had identified the right company, they had questioned them correctly on the original calls and ultimately won the business. This in itself is impressive. As Managers, we always look to improve our staff and help them in areas they are not yet successful in, however taking one ratio and condemning someone is not the right way to do it. So, was this bad management or was it a poor ratio, well in actual fact it is both, but the ratio could be improved on and with additional points could be understood. Behind the ratio was an even more extremely impressive ratio - 4 meetings, 4 new clients. The management needs to be improved, you can't lambaste someone for missing a KPI when the factors haven't been reviewed.

Statistics and KPIs are used by some people to hide their own frailties. One of my other previous Consultants, lets call her Beth, carried out more sales activity than any Consultant I have ever managed, still to this day in fact. This Consultant would make nearly 100 calls a week, she would visit approx. 10 clients per week and dropped marketing (industry term for popping into a client unexpectedly) to about 30 clients a week. Beth was bubbly, Beth was a breath of fresh air, Beth was on fire, yet Beth could never grow her desk. Now you may be questioning whether she was actually any good at 'Sales', the answer was YES. Sales was never an issue for our young and burgeoning Consultant, Beth managed to bring on more new clients than anyone else - so, why did her desk not grow? This was early in my management career and I was striving to find the answer, I reviewed every inch of work she carried out, however every week I was staring at our Financials Board and we were generating the same amount every week! I started calling all of our new clients and all of our existing clients to ask why they were using us on an extremely adhoc basis, when in the meetings they had stated to Beth or myself that they had a lot more business to provide us with. They all came back with the same answer, Beth was lovely, she was thorough when it came to taking all the booking details from the client, she went down on their first day to check they arrived on time, the service was second to none. So what was the issue? One simple answer, the workers. She had done everything correctly, from the start of the sell to taking the vacancy, to the service she delivered, but she fell down at the critical point - her candidates were below par and sub-standard, meaning that other agencies were recruiting top talent and we were supposed to be a prestigious agency. This Consultant had hit every KPI going and then some, but it disguised her major flaw for a short time. Being a recruitment agency without good temporary workers is like being greengrocer with rotten fruit - you can have all the patter in the world but without the product you won't get much repeat business.

Unfortunately this can work in a backwards manner also. My worst phrase used in any appraisal when I haven't hit my own personal targets is;

"imagine what you could have done if you hit them"

I have experienced this several times in my past, I have been sat in a meeting with my managers or directors and had unbelievable praise - one even saying that I was the best Sales/Recruitment Consultant they had ever had the pleasure of working for them (I don't mind sharing this point). I had converted more new clients than anyone else, my branch had hit budget set by directors every week and we had beaten prior years figures considerably. So, I increased and hit every financial target set to me. Yet, I did not achieve the amount of Sales Calls that was required, so, my favourite saying came out. Was it taken into account all the additional work that goes into bringing on a new client? Was it taken into account that with bringing more money than was forecast and required by the company owners that I would be carrying out additional duties? Was there understanding that maybe my calls or meetings lasted longer in order to convert the amount I did? Honestly, no it wasn't. My managers wanted more, they always want more and can I blame them? Not at all. I am demanding too and want all of my teams to strive to be the best they can be, to stretch themselves and to understand if they tweaked a few areas of their work their output could improve further. I am by no means under any illusion that I can't improve, because I can, everyone can. But believe me, it is still demoralising to hear that phrase when you have worked so hard to achieve fantastic results.

On the path of self-improvement I was fortunate enough to manage a Consultant that billed a ridiculous amount of money each and every year. I became her manager and joined her when she was two thirds of the way to billing over ￡400k in one year. Once again I was fairly fresh on the management scene so thought I could help and improve her. There is still a part of me that thinks to this day if she would have listened to me a little bit maybe she would have made a bit more. But, in truth I was wrong, I had a very successful consultant who didn't always hit her targets, who turned up late to work and didn't always strive to hit her targets - did any of the Senior Management team care? Not a jot and why should they. They had a billing machine. Like I said above we can all improve, but I needed to learn how to handle such a good Consultant within a complicated scenario. KPIs need to be reviewed to each individual.

Flexibility in KPIs is massive. Having fluidity and being able to adapt to your work should be considered by employers. Unfortunately for a Manager it is not always their choice, sometimes they are governed by "the powers that be". I personally believe that Directors, Owners, CEOs and everyone in an extremely superior role should understand every role in depth of their business - that is not to say that they should be able to do it, that is a different point entirely. However, they should understand the issues surrounding their workers every day. If you are in a multi-level organisation where you have Directors, Area Managers, Branch Managers then the "shop-floor workforce", the communication should work both ways. Branch Managers should be able to set their teams KPIs to each individual, taking into account everything that is happening in that week. Holidays, sickness, peak periods of business, quiet periods, dealing with an unexpected increase in work volume from one area. If you work in Sales KPIs are fundamental and help keep focus on what needs to be achieved, the ratios that sit alongside these help you understand the areas in which improvement is needed or where someone is excelling. This isn't to say that everyone shouldn't aim high, but give them a focus that is realistic.

If you call something a target you have to remember that from a young age we are all trained to hit them. The word target invokes images of archery, a bulls-eye on a dart board or a goal in football - you aim to hit it. Now a 'minimum requirement' will no doubt make you aim to beat that figure, after all who wants to report into their Manager that they have hit the minimum every week? Not every individual has drive to achieve their own figures, they need help and guidance. This may come to a shock to some, as people think of Sales Consultants having oodles of confidence, drive and determination (dare I add arrogance?). The point is Sales now has a diverse range of people working in it and the service side is as important as the sell itself (refer to greengrocer example above). The better the service the more people will recommend you and your next sell becomes easier. From experience as Manager of Salespeople you need to give focus for your employees and help them understand the importance of ratios. Some are better on the phone, some are better face-to-face, therefore adjusting the KPIs accordingly will help get the best results. The argument here is having a disgruntled team because Jess has less calls to make than Danny, or Becky has to get more meetings than Ben. The keyword in that sentence is team, if everyone in the team understands where peoples strengths lie then they know they have to be the best they possibly can be. It is not an unfair advantage to some, it will instill healthy competition. If I know Suzie is fantastic on the phone and my boss decides to give her more calls, but knows I am the guru of the client meeting and I have to do double she has too, then bet your bottom dollar if I see her picking up the phone constantly I am doing everything in my power to get out the door and in front of prospective clients, after all I am Mr Competitive and want to beat Suzie in every way possible. Guess what, in order for me to get my meetings I will have to pick up the phone - so without even thinking of it I am making as many calls (if not more) than Suzie.

If we go back to the gym scenario, then we could easily make one sweeping statement about why these people are not married, or we could find out more about the people involved, taking the information over a course of a few months and then we would find that there may be a correlation or that it was just a simple co-incidence or anomaly from one morning. Don't ever assume you have fact from one indicator, after all it is just that, an indication.

So if you are looking to increase your workers output then put guidelines in place, set minimum requirements and understand every angle of what you are asking them to do. One number being low does not mean someone is bad, it might mean they need to do less to be more successful than others.