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Less than 10% of ALL Australian businesses have Key Performance Indicators. That is pretty incredible when you think about it.
It is even more staggering that managers typically only look at the actual sales (the closing of the business) as the KPI. Obviously, this is an important stat – BUT it is simply a lagging indicator.
When it comes to Registered Training Organisations the figure mirrors the Australian trend with less than 10% having KPIs. This means less than 500 RTO’s are managing their business by measurable indicators. It is no surprise however that the most successful training businesses have clearly identifiable KPIs that they constantly review.
When we talk about a lagging indicator, as an example, if you have no sales closing today, it indicates that your team has not been performing for a far longer period of time. By the time you’re at the point of no business, you’re already well into trouble.
So, as sales leaders, do you create leading indicators or rely on lagging indicators?
This is where Infinity Sales Training and Consultancy Services can assist your RTO or business. Is your business one of the 90% that is NOT measuring their business properly?
The answer is Key Performance Indicators (KPIs). When developing your KPIs it is important to remember they need to be leading indicators that bring about a desired goal. In sales, they need to ensure you have a healthy pipeline and future business. Importantly, they will provide an unbiased form of measurement that allows you a glimpse into your future – often before it is too late to change the process or to solve any issues with your team.
The principal step in determining which KPIs to gauge (and how to measure them correctly) is to understand the sales pipeline.**
By devising KPIs around the pipeline (and not the forecast) will allow you to accurately forecast future business success. You will intimately know how your team is currently performing AND what obstructions may lie ahead.
A proper appreciation of the sales forecast provides a forward planning tool for budgetary purposes and measuring KPIs around lead conversion success – for example cost per lead. This will help you accurately predict your revenues and budget appropriately.
Here are some KPIs every RTO should be measuring:
Leading indicators: (FUNNEL)
- Number of qualified leads in the pipeline
- Sales cycle length
- Total length of time to qualify a new prospect
- Qualified to proposal ratios
- New client meetings
- Incoming phone calls
- Website traffic
- Number of follow up meetings that have a sales progression
- Cold lead to qualified ratios with conversion rates
- Lost sales
Lagging indicators: (FORECAST)
- Proposal to closed ratio
- Average customer spend
- Number of sales
- Annual quota
- New vs. existing client sales
- Average client growth year over year or month over month
- Client retention rates
- • Acquisition cost
- • Sales lost
- Net profit ratio
Having KPIs is the first (and most important step) HOWEVER, Key Performance Indicators are only useful if they are measured and closely monitored. You will need to pay close attention to any small trends—both positive and negative so tyou can act on these and not react because of them.
We have found greater success has occurred when the whole team is included in the process. This will help them to understand the types of behaviors that are important and will ensure that you spot any lags in performance early and can course correct quickly. A mentoring session each week is also a good idea.
Infinity Sales Training and Consultancy Services can assist in conducting a staff workshop that will allow the staff to feel empowered and involved.
Let’s face it, no RTO likes to be blind sided by poor sales, and there is no reason to not see what is coming!
If your business success is important to you, then having clear, objective and meaningful KPIs is essential.
** There is a difference between a sales pipeline and a forecast. The pipeline is ALL opportunities that have commenced where the forecast are qualified opportunities that are expected to close in a defined period.
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