I've seen plenty of sellers regularly miss on their KPIs, but still reach or exceed quota, so why have more than 1 KPI (quota attainment)?
Quota attainment & revenue will always the most important outcomes of any sales organization. However, the most mature sales organizations can align on a set of KPIs that will serve as leading indicators to success.
It’s not to say that consistency hitting KPIs will guarantee achievement of revenue goals 100% of the time, and similarly it’s not to say you cannot meet or exceed revenue goals if you miss KPIs. Sometime all it takes is you being in the right place at the right time with one lucky well-timed deal to hit your quota.
However, if your goal is to be a consistent Top Performer across a longer time horizon (years, decades, your career), well constructed KPIs should serve as a benchmark and enable you/your teams to take more complex goals, like revenue (which relies on a series of coordinated outcomes to achieve) and breaks them into the repeatable inputs that are in your control.
By clearly defining & measuring the behaviors, frequencies, and competencies that combined will result in success, and controlling those aspects you can control, then on average you will be able to be able to predictably and repeatedly out perform your targets.
KPIs drive the behavior you expect to see from your Sales team. Quota attainment is typically the primary focus for Sales teams, how you achieve those results can alter the direction of your business.
Quota from New Logos vs Expansion customers, will impact your future revenue streams differently. Selling a core product vs cross-selling additional products can drive customer retention and ultimately impact churn down the road. Landing a monthly contract vs multi-year commitment allows you to invest more confidently for the future.
Identify what's most important for your business and hold your sellers accountable to them.
Revenue alone should not be the only KPI for your Sellers.
If targets are reached you want to ensure that it will stay that way. So pipeline is very important as well. If pipeline is in good health, you are in a good spot. If not you need to ensure that the activity levels are up. Also, you want to be aware of an upcoming gap in the future. Therefore you need indicators alerting you ahead of time.
Good question. I have seen these people in my time as a leader as well. However, not all sellers fall in to this bucket, so KPIs should be in place to support the rest of the team and encourage consistent behaviors. I have seen sellers that are more junior in their sales career or new to a business ask for KPIs (reflective of the top sales performers within the team) so that they can add more structure to their day/week and help them formulate a plan that will eventually get them to a positive quota outcome.
Love this question, too. It's true. There are a few reasons:
You will always have outliers in a sales org. Sometimes a rep has a windfall and reaches quota without hitting KPIs, I've seen it. But the point of KPIs is the make success repeatable.
It gives your managers a tool kit to help coach and manage performance.
How do you eat an entire elephant? One bite at a time. Each KPI is a "bite" and we do best when faced with a big task (annual quota) to break it down to as small of pieces as we can.
Very interesting question — and one that brings up a few more!
Quota attainment is a KPI that is directly meaningful to a seller—if she can hit her KPI of quota attainment year after year, that will be meaningful to her personally!
However, quota attainment isn’t a helpful KPI to the company by itself — we could find out that the above seller is selling bad deals — selling deals that have low margins, high churn rates, and more…
This is why it’s important to have a several KPIs that are developed to the needs of the business—and to the needs of the seller. Otherwise, it’s like judging someone’s safe driving ability solely by whether or not they drive the speed limit. Many people drive the speed limit, but are looking at their phone, or are ignoring their turn signals, etc. It’s one KPI that will help inform whether a driver is safe, but it’s not the only way of determining whether a driver is safe.
I think any KPI that is not integrated into the quota and comp structure for any AE by and large is misguided. If you want AEs to focus on specific behaviors then build it into their comp plan and prioritize quota relief over increased commission payments if you have to choose. There are only two exceptions to this in my mind: any KPIs (pipe coverage, onsite meetings, etc.) where you can establish a direct connection to the health of those metrics and their ability to close more revenue OR behavior changes you might want to see mid year, in which case you can use SPIFFs as a tool to align incentives to the behavior changes you want to see. And for any behaviors where the KPIs or SPIFFs are not baked into their quota, be sure to have dashboards that accurately reflect what is happening and commit to communicating regularly progress each AE is making against them. They will otherwise be lost or forgotten about as quota relief and commission always reigns supreme.
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