The Death of KPIs?

July 14, 2020

“What’s your strategy?” “Can you forecast which deals are going to close this month?”

When you’re new to sales and you hear this, you may immediately think you’ll need to take up fortune telling. Then you learn about metrics.

To some companies, metrics are a God. To those who get them right, metrics are simply the stepping stones to realize a strategy.

When left unchecked or implemented without serious consideration, the consequences are vast.

Remember what happened at Wells Fargo? Wells Fargo’s sales team opened 3.5 million debit and credit cards without customers’ consent in an effort to implement the company’s cross-selling “strategy”.

Sometimes, metrics can hide under the cover of “strategy” and this is where you get surrogation.

Key findings of the investigation were:

  • Extreme pressure due to tracking cross selling daily.
  • Strong financial incentives.
  • A sales culture that permitted low quality sales for the sake of numbers.

Sound familiar? Check your emphasis on metrics and make sure you understand them before they destroy you. Do not rule on arbitrary metrics.

Allow me one more example from a salesperson I know working inside sales at a major startup. If you made enough calls, you got to go home early on Friday. Seems simple right?

Strategy: “Increase sales” Metric: “Make more calls”

What do you think nearly half the sales team did? Power dialed out to states where calls cannot be recorded, while bosses were busy. Went home early on Friday every time, and didn’t reap the benefits of increased activity. Meanwhile the honest, best reps stayed and worked longer focused on both quantity and quality.

This particular person’s experience qualified them to be hired as the highest ranking person on the sales team…they quit within a month. You will lose your best reps fast if you are not doing metrics right.

No single metric is perfect. A great starting point is to have a metric for Quantity, Quality and Efficiency.

Consider this example from Airbnb.

The metrics:

  • Quantity – Number of nights booked
  • Quality – NPS [net promoter score]
  • Efficiency – Number of support tickets per reservation

Nights booked was their North Star metric. In 2012, with the international launch, nights booked were through the roof, but customer support tickets were up 130%.
Rather than sacrificing their quality metric and focusing solely on nights booked, they understood that metrics must compliment each other.

Immediately, efforts were focused on a simple way to fix a majority of support tickets. They added a cancelation button in the reservation confirmation email rather than requiring a customer to interact with an agent.

Nights booked immediately dropped, NPS soared and nights booked recovered in full within one month.

Consider your metrics and whether or not they are a true reflection of your company’s vision.