The 4 Steps to Determining Your Sales Funnel KPIs and How to Communicate Them to Your Team

February 21, 2019

Communicating goals is about more than just keeping your team apprised of the numbers. It’s about keeping them up-to-date on the right numbers. When everyone on your team is rowing the same direction, you can minimize opportunity loss, maximize your sales pipeline, and optimize team performance. All it takes is some planning.

Let's walk through the four steps you can follow you to define your sales funnel, goals, and KPIs, and then strategies for communicating performance to those KPIs effectively so your team can reach sales goals faster than ever.

4 Steps to Define Your Funnel and Sales KPIs

1. Work backwards to determine funnel stages.

To set effective goals and KPIs for your sales team, you have to know your sales funnel forwards and backwards. If you’re not sure exactly how your sales funnel is structured, it’s easy to figure out: just start at the end and work back to the top.

Most businesses consider “Closed-Won” to be the final stage of their sales funnel (even if you follow up later for upselling or cross-selling opportunities). From there, ask yourself, “Which stage or activity preceded this one?” over and over until you get to the top of the funnel—typically the handoff point with your marketing team.

As you continue, your sales funnel should come together looking something like this:

To determine your sales funnel goals you'll want to work backwards from the bottom of your sales funnel to the top of your sales funnel.

Closed-Won ← Proposal ← Trial ← Opportunity ← Demo ← SQL ← MQL

Or, viewed from beginning to end:

MQL → SQL → Demo → Opportunity → Trial → Proposal → Closed-Won

Once you know the stages of your sales funnel, you can begin collecting data for each of them.

2. Collect data to get the lay of the land.

Before setting any sales goals, you need to know your baselines. First, figure out where the data for each stage lives—this could be your CRM, accounting software, spreadsheets, etc. Keep in mind that some stages may have associated data in multiple places.

From there, make sure you are tracking conversion rates for each funnel stage. Your conversion rate tells you whether you have a funnel “leak” at that stage that’s causing you to lose potential revenue.

Generally speaking, most of the other metrics you can track for each stage of your funnel are used to help identify the root cause of a funnel leak and resolve it. However, you should also be tracking company-wide metrics like revenue, sales forecasts, CAC, LTV, etc. Not sure what else to track? Check out our top 10 sales KPIs.

Once you have all of your metrics set up, take some time to gather data and establish your baselines for each one. Three to four weeks’ worth should be enough to get you started.

3. Establish your sales goals and KPIs.

Now that you have your baselines and know where you’re starting, you can start to determine where you want to go and how you want to get there. In other words, you can establish your goals and sales KPIs.

Make sure you set a goal for each stage in your funnel—even if the goal is just to maintain your existing conversion rate. The SMART goals setting framework is an excellent resource as you begin defining your sales goals. While you want to aim high, it’s important to make sure your goals are still attainable; you can always set stretch goals if needed.

From here, you can start establishing your key performance indicators. As you’re choosing KPIs, focus on those that will have the greatest impact on company goals. In many cases, your conversion rates will be your KPIs. However, depending on the needs of your company, your sales team, and any funnel leaks you’re facing, other metrics may better harness your team’s focus and keep them on the right path.

While there are many metrics your team will want to track, try to limit your KPIs to about ten. Not every metric will be a true indicator of sales performance, and you don’t want to overwhelm yourself or your team with data overload. Instead, keep your focus on the numbers that matter most.

Need more help with your sales funnel goals? Learn more about setting goals for the top of the sales funnel, middle of the sales funnel, and bottom of the sales funnel on our blog.

4. Assign KPI ownership.

Sales KPIs are most powerful when they’re owned—that is, when one person is “on the hook” for making sure the goal gets achieved.

The best approach to assigning ownership over metrics is to give them to the individual who has the most influence over it, whether by their own work or by directing the efforts of their team. For example, your SDR team lead is likely best equipped to own the MQL:SQL KPI. They can then support their team to improve qualification questions, set specific activity goals, or even work alongside the marketing team to improve that conversion rate.

Not only should every sales KPI have an owner assigned to it, every individual sales rep should have at least one KPI that they’re responsible for. Most organizations will consider quota to be each rep’s primary KPI, however, depending on the needs of the team or the individual, other KPIs can be added, such as win rate, average deal size, etc.

Communicate KPIs with a Sales Dashboard

Communicate KPIs with a Sales Dashboard

After doing all the work of defining your sales funnel, collecting data, setting goals, and assigning KPIs, the worst thing you can do is never speak of them again. On the contrary, you should be talking about your goals and KPIs every single day. They should underscore every strategy, initiative, and activity that your team undertakes.

One of the best ways to make sure that data stays top-of-mind with your team is to literally put it in front of them on an openly-shared sales dashboard that they can’t miss. You can be confident that putting a sales leaderboard on display will light a motivational fire under your sales reps—no one will want to see their name at the bottom of the chart.

Individual sales dashboards can also be incredibly empowering as reps are able to see their own stats, so they can see for themselves where they need to improve. A business intelligence solution like Grow can make this dream a reality for your team.

No matter how you present data to your team, the most important thing is to talk about it, to show through your words and actions that you care about the real results you see. Their focus and efforts will naturally align with the objectives you present, and as you rally them around the KPIs that matter most, you’ll be more empowered to reach your goals.

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