Activities vs Results: The Argument for Sales KPIs

Whether you’re talking about activities vs. results (also known as leading vs. lagging), one thing is for sure, sales key performance indicators (KPIs) run the show. Without them, sales efforts can go unnoticed, but even more dangerous, they can go unchanged and unimproved. But are all KPIs equally important for your business?

No, not all KPIs are created equal and to think in that manner would likely be detrimental to your sales team and their morale. Choosing the right sales KPIs for your business is literally the first step to uncovering success. And the first step to choosing a KPI is understanding the main differences between activities-oriented (leading) and results-oriented (lagging) KPIs.

Activities

Activities-based KPIs deal with the actions or inputs that occur before a sale is ever closed. All activities don’t always lead to sales deals, but you can be assured that a certain amount will. What are some popular examples of activities?

• Calls – arguably the most popular activity-based KPI at many sales organizations, the number of calls a rep has with prospects or even customers daily, weekly, or monthly is an easy metric to measure given the abundance of call tracking technology.

• Emails – Same as calls, the number of emails a rep sends out can often indicate sales performance or a lack thereof.

• Talk Time – a deeper KPI than calls, talk time measures the amount of time spent in a conversation with a prospect or customer, whether in a single call or the sum of all conversations.

• Meetings Booked & Run – There should be specific meetings happening at each stage of the sales funnel. Tracking these activities will be helpful to understand the velocity of your sales funnel.

Results

Results-based KPIs consist of any metrics tied directly to financial or acquisition goals. Results are also known as ‘lagging’ KPIs because they are outputs can only be measured after activities and sales strategies have been put in place. Here are some important examples:

• Sales – the lifeblood of every company, sales is an easy results-based metric to measure, but much more difficult to improve or influence. It’s the benchmark that every executive or investor analyzes with scrutiny.

• Share of Wallet – an often backseat metric to customer satisfaction, share of wallet deals with the amount of money a consumer spends on your product or service against the total amount spent on similar products or services by other brands. This is more difficult to measure than sales, but retaining customers costs up to 7 times less than acquiring new customers, so it’s definitely a metric that should be utilized.

• New Customers – unlike share of wallet, this metric is directly tied to new customer acquisition. Like overall sales, this is a highly coveted metric that often gets more attention than customer retention.

Now you know the difference between KPIs, but what’s more important for your business? If your main goals and responsibilities are to report to and appease executives or board of directors, then focusing your efforts on bottom-line, lagging KPIs is the best bet.

But as the VP of Sales at Skaled, I learned that the most effective way to implement KPIs is a hybrid approach. Activities influence results, so focusing on executing a strategy where your salespeople are always aware of their input and not only their output, provides motivation and a clear view of any changes that need to be made to positively affect the bottom line.