#6 – KPIs & Metrics (STSF Core Components)

By David Masover

Hi, welcome to episode six of The Sales Team Success Formula™

The first 10 episodes of the podcast are designed to be like an audiobook version of The Sales Team Success Formula™, but I didn’t actually write the book – I did these podcasts instead!

In other words, if you really want to take a deep dive into exactly what The Sales Team Success Formula™ is, how it works, what the pieces are, and what it’s going to do for you and your team, listen to episodes one through ten.

It’ll take you a couple of hours to get through all ten core content episodes just like an audiobook would, but by the time you’re done, you’re going to have all the details.

You can start with episode one that’s going to give you an overview of the formula and then decide if you want to listen to the rest. 

Here in episode six, we’ll cover KPIs and metrics, how and why so many sales organizations miss the mark here, and what you need to do to approach this subject in a way that will ultimately lead you to what you want – quick, accurate, and empowering insights into your sales team that reflects with consistent execution and high data integrity.

And here is what you will find in the other episodes:

EPISODE 1:  Introducing The Sales Team Success Formula™

EPISODE 2:  Target Client Profiling

EPISODE 3:  Effective Sales Messaging

EPISODE 4:  The Four Level Sales Process™

EPISODE 5:  Personal Sales Plans

EPISODE 6:  KPIs & Metrics

EPISODE 7:  Sales Tools & Tech

EPISODE 8:  Call Reviews

EPISODE 9:  Deal Reviews & Pipeline Reviews

EPISODE 10:  Putting the Formula Into Action

Thanks for your interest in The Sales Team success Formula™ – and here’s to your success!


Hi, David Masover here, host of the podcast and the creator of The Sales Team Success Formula.

We’ve come to a really important point in our journey here. This is episode six of the podcast, and as I’ve mentioned in the earlier episodes, our goal for these first ten or so episodes is to map out the Sales Team Success Formula – first at a high level which we did in episode one, then to spend some time going through the specifics of the formula sequentially and in a way that each piece builds on each other as we go along.

Until this point – in episodes two through five – we’ve been focused on what salespeople should be doing with prospects and customers – who they should be talking to, what they should say, how to navigate a specific opportunity and how to approach all of their opportunities over some chunk of time like a quarter or a year.

And what salespeople do with prospects and customers is hugely important – it’s impossible to overstate that – but as I’ve stressed from the start, two of the biggest mistakes that sales organizations make is that first, they limit sales improvement efforts to just that – what salespeople do with prospects and customers without integrating that into management systems and structures, and second, they don’t make a deliberate effort to understand what exactly it is that salespeople do with prospects and customers at a detailed enough level so that they can properly integrate that work into the management systems – and that’s what we’re going to start exploring right now in this episode and in the next five or so as we dig into the management side of the formula.

Not sure what I mean about not tying management systems to real sales activities?

Let me paint the picture here.

It’s extremely common – I want to say every time but there have surely been exceptions, but it feels like almost every time I start a conversation with a prospect who is in sales or company leadership, they almost always want to start with questions about specific tools, tech, KPIs and metrics – which feels a lot like the kinds of stuff that management should be focused on, right?

So why is this a problem?

I can picture so many prospects who turned into clients telling me in our first conversations how they are almost desperate to know what metrics they should be measuring and tracking to get insight on the team, or what tools they should be using to create better reports about how and what the team is doing.

Well, in the old days, we’d call that putting the cart before the horse – but it is such a common mistake.

The desire makes a lot of sense – if you are in management or leadership your role is to empower the team and the company to generate revenue, and the only way you can really do that effectively is to know what’s going on so that you can try to have an impact on it, right?

And the promise of a few key metrics or some tools that provide insight seems so compelling – because it is – but here’s the thing.

You can’t start with tools and metrics and expect them to work.

That’s just not the point of departure that will get you to the destination you are trying to get to – which is a stronger and more transparent sales organization – one that works well and one where you can see that work and make it all work better or shift the focus as you need to from your position in leadership.

So much has been written about the value of a handful or great metrics – because it’s true, and so many marketing dollars have been spent to show you how powerful so many pieces of new technology are – because they are.

But you have to recognize that those things are the second part of the story, not the first – and the big mistake that so many sales organizations make is that they don’t spend enough time on the first part of the story – and because of that, the story doesn’t end well.

OK – so I’ll stop being cryptic here – what is this first part of the story?

Simply put, its what we looked at in the first five episodes of this podcast, it’s what we work on first in The Sales Team Success Formula, it’s that first corner of the triangle we used as a graphic to represent the formula – it’s that detailed look at what salespeople really do in the field.

In other words, if you want to know what to measure and how to measure it, you need to know what’s happening first.

If you want to know what tools to use to get great data about what is happening in the field, you need to know what is happening in the field before you select tools that will actually help.

It’s going into the hardware store and saying what tool should I buy before clarifying what job you are trying to do or what you are trying to build, or asking what you should use to measure something before you know what that something is.

If your goal is to be truly effective, you have to start with a clear and detailed enough understanding of what it is you are working on before tools and metrics have context, and without context, they are just not going to help you.

For example people often ask me what’s the best CRM, or should I use Salesforce or Hubspot or Pipedrive – but you know what – those are not good questions.

The ONLY possible answer to questions like that is “it depends” and you can only know what it depends on if you have a detailed understanding of what your salespeople actually do in the field to get deals.

So if you came to this episode hoping to get the secret KPIs that will turn around your sales team but you skipped over the what salespeople need to do in the field part of this program, please recognize this – you might be making one of the classic sales management and leadership mistakes here.

Now when I take clients through The Sales Team Success Formula, we always start with what the reps do in the field and then we use that to build out the management systems, and that is exactly what you need to do to succeed, and exactly what we are doing in this podcast series – so let’s get into that now.

In this episode and the next, we’ll dig into KPIs and metrics and then tools and tech based on this idea that you can do well with those once you know what your reps do in the field, and I’ll show you how.

Then we’ll take the next step – how knowing what reps do in the field, having the right KPIs and metrics and having the right tools matched up to all of that will help front line sales managers support reps and hold them accountable while maintaining visibility and predictability and the ability to report up with accuracy and insight.

That my friends is the heart of Sales Team Success Formula – that triangle we talked about in the first episode – the integration of reps and what they really do in the field, tools and tech, and management systems into a well oiled and smooth running B2B sales growth machine.

So let’s hop over to that second corner of the triangle now and keep the party going and dig into KPIs and metrics – but I just can’t stress this enough – it’s not one thing. It’s not just what the reps do, what tools you have, what KPIs you measure, what management does to support reps and hold them accountable – it’s all of these things, and more importantly – all of these things working together that can really supercharge your sales organization – so let’s start tying them together now.

Now we’ve agreed in principle that we’ll start this exploration of KPIs and metrics from the place we are in our journey into The Sales Team Success Formula – that we have a solid understanding of what all of our reps are doing in the field to get new business.

That said, we need to make a key distinction before we dig into the details to make sure we approach this topic the right way – we need to make a quick and highly necessary distinction between KPIs and metrics.

These two terms – KPIs and metrics – tend to get used interchangeably but that’s a mistake. Many folks define them many different ways, and too many don’t bother defining them at all – but for the sake of clarity and effectiveness – I’d like to share how I distinguish between the two because I think you will find it to be very useful.

Metrics are simply things you can count. Things like number of dials, minutes of talk time, quantity of revenue, or number of deals. These can be useful as data points or as variables in a ratio, but as I’ve often said, counting and chastising, which is how too many front line sales managers execute their main job function, is not the same thing as supporting and holding your reps accountable. 

When an organization is fixated on metrics as I’ve defined them here, I see it as a red flag. It means that management can’t see past the obvious things that are easily counted but that don’t offer much in the way of insight.

KPIs on the other hand, are something different altogether. You only need to embrace the name to recognize that these measurements should be something different and special. Key Performance Indicators. It’s pretty rare that something you can simply count is going to give you insight into anything deeper than a superficial level of performance.

Want a few quick analogies to drive that point home?

Focusing on metrics rather than KPIs as I’ve defined them here is like being an avid sports fan and only getting the final score of a game or a match. As I’ve seen it, real sports fans of any sport are hungry to know the statistics and the story about what happens on the way to the score.

Or try this – focusing on metrics rather than KPIs as I’ve defined them above is like being an investor and making a decision about a stock by only knowing the price rather than other numerical and non-numerical indicators to help you understand the prospective investment.

Price, score, revenue – of course these things are important, but if you want to know how to get there, or how to improve those numbers, or how to improve the performance that leads to those numbers, you need to do better than just counting things that are easy to identity.

This is not to say that KPIs need to be complicated, but the sad truth is that most companies approach KPIs in a vacuum. As we’ve discussed and as I’ve seen so many times, the question gets asked “what should we be measuring” when the winning practice is to first understand what needs to happen to get results before deciding what to measure.

If that hasn’t been nailed down first, then you might as well just do a Google search for articles on the best KPIs and choose a few at random to track because they sound like they make sense.

So now that we have explored a typical flawed approach to KPIs and metrics at the philosophical level and the difference between KPIs and metrics, here’s the specific disconnect around KPIs and metrics as it applies to this Sales Team Success Formula that we are working through right now.

If the processes that you are trying to track are not consistently executed, then what good are the metrics the come out of them?

For example, as we discussed in Episode four on The Four Level Sales Process, if your reps have different ideas about what needs to happen in one stage of your sales process before moving on to the next, what good is a conversation ratio statistic between the two?

In other words, if John moves from stage one to stage two of your Level One only defined sales process based on one set of criteria – or based on no real defined set of criteria, which is also far too common, and Mary has a different set of criteria, how can looking at the movement of an opportunity through the pipeline from both of them yield any useful insights?

In short, it can’t.

The good news for you, dear listener, is that by starting with what the reps really do and need to do as we mapped it out with the target client profile, messaging, sales process, and personal sales plans – and we co-create all of that with all of the reps and managers to ensure buy-in across the entire team as we did in the “what should reps be doing” section of this program, we know that John and Mary define and execute the elements of the process the same way which allows us to do all kinds of great things with respect to management including establishing KPIs that actually have some meaning.

This practice of co-creating clarity around execution will also help us with selecting tools, analyzing performance, predicting revenue, defining strategy and much more – and we’ll get to a lot of that later in the podcast and in ur tour of The Sales Team Success Formula – but for the moment let’s stay focused on the KPIs themselves for now and build up from there.

So with all of that said, what are the right KPIs for you to be measuring?

The right KPIs and metrics are going to be different for every sales team, but here are some of the common ones that make sense because they can help show you how things are going and if they are improving or in need of improvement, especially when you measure them over time:

So you might want to be looking at things like:

1) Average deal size

2) Winning percentage or what is sometimes called the close won rate

3) Average time to close from previous stages

4) Average number of days in pipeline

5) New opportunities created per month, both the number and the value

6) Average monthly pipeline size, per rep and across your organizaton

Notice that while some of these are based on activities, these KPIs are not reflections of the counted of activities. That’s metrics, and metrics like that can be used within KPIs, but metrics are not KPIs – but we covered that.

So consider these as a point of departure, but more importantly, consider what it is that YOU need to know and HOW you can get that information easily and with integrity.

We’ll discuss the easy-to-get part in relation to tools in the next episode, but the key takeaway is this:

The integrity of the raw data used to fuel these metrics and KPIs is based on the work we did to establish clarity and buy in around execution and expectations with respect to the process.

Without that, no KPI or metric is ever going to help you, because it’s not a reflection of anything meaningful enough to matter much.

OK – so that’s a drop the mic moment, but before we finish out this episode and the exploration of this topic, at least for now – there is one more thought here around KPIs that I’d like to share with you.

While I am not a fan of favorites, or best, or that one thing – there is one set of KPIs that I have found to be extremely powerful for determining and optimizing the health of your sales organization, overall sales effort effectiveness, and your pipeline.

What is this magic KPI?

I mentioned it in some of the earlier episodes, it’s…

The conversation rate and velocity between different stages of a well-defined pipeline.

Let’s break that down – this is not a simple as it seems, but it’s a LOT more simple  – in fact it is only possible, if you have done the kind of process work we discussed in the section on The Four Level Sales Process.

Once you have mapped your sales process down to the third level as described in that previous section on The Four-Level Sales Process – this is how you can make this work for you.

Conceptually it is very simple. As a quick reminder, when we created the Four-Level Sales Process levels one and two represented the major steps in the pipeline and the elements needed to be completed in each step before moving on to the next. Level three was about how to do each of the second level elements most effectively.

We also created it through a co-creation process with the full sales team so that not only was there agreement and clarity, but also buy in around these steps.

You simply cannot manage your process/pipeline effectively until you have this kind of clarity, agreement, buy in, and consistent execution, so be sure that this is solid before considering this powerful KPI.

Once you do have clarity, agreement, buy in, and consistent execution around the first three levels of your sales process, one of the most powerful KPIs you can use is to measure the conversion rate between the different level one stages and in addition, the velocity of all of that over time.

Many sales organizations believe that they do this – measuring conversion between steps in the pipeline – but without real and detailed clarity, agreement, and buy in around the second and third levels of the sales process – which I almost never seen in a sales organization before working on this deliberately with them – the numbers are meaningless.

How can conversion have meaning if different reps move between stages based on different criteria?

But when there is this agreement, imagine the power of measuring conversion between individual stages or sets of stages over time.

As you look at the ratios between any two stages – sequential or otherwise – you can ask yourself – what could we be doing differently early in the process to improve the conversion between these two steps?

That’s a powerful management question to be asking, and this is much easier to get your head around than how can we increase conversion from lead to closed deal. Asking this question about stages rather than the entire pipeline is incremental and finite – fewer moving parts that are clearly defined – and much easier to manage.

Later in the program we’ll discuss how the front line manager will be doing call reviews and deal reviews with reps, which is a great place to uncover what’s working for one or some of them that can then be disseminated to the group for total team improvement, factors that can have a huge impact on increasing those inter-stage conversion ratios across the team.

But for now – do you want to know how powerful this KPI can be? Let’s use a simple example to illustrate.

Let’s say you have a five stage sales process and you convert at 50% between each stage. Of course this never happens all nice and neat just like this, but let’s make it simple for illustration purposes.

So you start with 1000 leads at stage one

At stage two you would have 500

At stage 3 you would have 250

At stage 4 you would have 125

And at stage 5 you would have 62.5 – or about 63 closed deals from 1000 leads

But what if you found a way to increase the conversation rate between each stage by just 10% to 60%? Again, overly simplified, but for illustration purposes…

You have the same 1000 leads at stage one.

But at stage two you would have 600

At stage 3 you would have 360

At stage 4 you would have 216

And at stage 5 you would have 129.6 – or about 130 closed deals from 1000 leads, compared to 63 with the 50% between stages conversation ratio

So with a 10% improvement in conversations between each stage of a well mapped and managed sales process, you have more than doubled conversions from about 6% to about 13%, and because each stage is made of the level two items that are clearly identified and agreed on, and the level three best practices are shared and discussed with the team with the oversight and guidance from the front line sales manager – something we’ll go into deep detail about in a few episodes – it’s not so hard to imagine that the level of attention to your sales process that the Sales Team Success Formula facilitates can get you there, or even further in a pretty short amount of time.

Hows that for a KPI with impact!

At the end of the day, you’ll have to choose the handful of KPIs that matter to you and the metrics that drive them – we’ll talk in the next section about how tools can help with that – but the key takeaways is this.

This is the first episode in the management section of the program, and as you can see, the work that we did with the reps to map their work by co-creating it with buy in is a big driver of success in the management and effectiveness part of the program.

So if this is starting to sound pretty good to you, that’s great. Let’s keep going, because there is more where this came from.

You have mapped the work of the sales team and are capturing the measurements to keep tabs on the health and drive improvements for the whole team. We’ll talk next, in the next episode, about how tools can help with that.

See you there.

In the meantime, if you’d like to find out what the formula can do for you and your team, head over to my website at www dot sales team success formula dot com and sign up for a one-on-one consultation and assessment with me and let’s talk about whether this program is your best next move for B2B sales growth and scalability.