The War Room

KPIs. Why do they exist

We all know them we all hate them.

KPIs absolutely suck in sales.

it is so dumb that things like call counting, talk time and email counting exist because it encourages the wrong behavior so why do companies adhere to these policies.

would love to hear from individual contributors and managers if this has ever helped because I have never heard of this being a good thing.

🧢 Sales Management
📊 Metrics
So leadership will have an easy time tracking when we get put on PIP?
WR Officer
Senior Account Executive
When I pip you pip we pip 🥳
Senior AE
Literally the only justification I have heard is to measure performance. But how do you measure performance when at the end of the day quota is the judgement. 
Enterprise Account Executive
Gotta measure something 

Celebrated Contributor
Sales Evangelist
To define, measure, monitor and evaluate the performance.
Territory Manager
I think to help with reverse engineering. If someone isn’t having success, management can look at KPIs and go from there. KPIs let them know the effort is there (or is not) and the employee just needs coaching in another area (demo, closing, etc.).

KPIs do suck though.
Account Executive
Piggy backing with @Ryscott0317. I think it's head on. Ultimately the only KPI that matters is closed business- but when you break that down there are activities that lead to closed business and that starts with finding business ie the inputs. I think too often KPI's are used in the wrong way as in everyone should make 50 calls per day but like Ryscott mentions when someone is not hitting pipeline or business closed looking under the hood is going to be the first place to look. Is the person actively looking for business, putting in the effort but isn't landing results or is it a time management/effort factor. 
I can't say I love metrics but I do understand why they exist. I justify my good income to the admin work of making sure leadership knows I'm working. 
Hate to say it's part of the gig, butttt it's part of the gig. Best you can hope for is management that understands how to use them as a tool not a micromanagement strategy.
In my experience it is to allow senior management to more accurately forecast. That said, I think some activity KPIs are a poor indicator of forecast. I’ve also experienced KPIs driven by other stakeholders like marketing. 

example: we spent $xxx on this campaign and drove xx leads. How many calls is the sales team making on it?

great way for them to deflect ineffectiveness 
Director of Sales
From leadership: it’s only helpful when we do something meaningful with the data that helps you.

For example - if your deal count is low, I look to the # of meetings ran... if that’s low I look at new prospects added recently. 

We work backwards to root cause analyze and fix the issue at its core. 

Then we get out there and run with you in the real world to get some momentum again. 

I also ask my teams for feedback. If they get no value from it and leadership provides them no logic for doing it then it’s just busy work to track certain things. 

It is a performance based position though much like sports... whats the point of a batting average if you aren’t using the information to make better decisions and push higher levels of performance? 
Senior AE
Great to have the leadership perspective on this. I’d agree that working back to understand if there’s a problem is a great point. When I have had KPIs however it’s just been so management CYA and that data doesn’t get analyzed as you have laid out here
Valued Contributor
Account Representative III
KPI’s if handled correctly in my opinion can be useful. They should be individual goals IMO. Some people suck at cold calling, some people suck at building pipeline etc. figure out what a rep needs to do to succeed as an individual 
So lazy people won't take advantage of the lack of system and actually work
Call me what you want, just sign the damn contract
A lot of companies, especially with more old school leadership do what's called managing by exception. So KPIs allow them to quickly evaluate who is generating the least amount of meetings, converting the most opportunities, etc. Is it lazy? Yep. Does it allow for a lot of problems with small sample sizes? Oh yeah. Is it going anywhere? Nope.
Account Executive
leading indicators can be important, but often just managing metrics becomes promoting the wrong behaviours as OP said. At scale it's one of the few ways leadership can see if things are trending in the right direction.

however sales is not science where 1+1 =2
Account Executive
Because the stats do matter, they just need to be put into context. 
Client Director
Businesses need metrics in order to justify costs....that cost is your Revenue/value to the biz - your employee cost(salary + benefits/perks)....If that number is negative than you must look to KPIs to determine next moves and if the individual is worth keeping.
Notable Contributor
Director of Business Development
To track Important Quality Numbers better
Sales Training & Enablement
I hated KPIs when I was an individual contributor.

In a role where I manage folks and report to someone as well, I think, they are important to help define success and where you're measuring up to them over time. That said, if you're not really tracking them or revising them over time (maybe they're unattainable or focused on the wrong areas?), then it's likely not to be taken seriously.

For individual contributors, I think it's good to show them what success looks like and the why behind this model. I think for any new person starting at a company, it's especially valuable to provide them with this map.
VP Inside Sales
"We UsE PoiNtLeSs KPIs hErE fOr dAtA DrIvEn DeCiSiOn MaKinG hurrrrr"

Edit - they can be vital to an org as long as they're explained and are measuring the correct activities/ promoting the desired behaviours. 
Team Lead
Create measurability for literally anything outside of sales numbers. 
Sales Director
Ok, so I track my team's number of calls, pitches, demos, opps, and deals, plus AOV.

Converting these to ratios gives me a pretty great idea of where they need additional support, and I can organise training accordingly. For example, if their call:pitch is bad, it probably means they're calling the wrong people or at the wrong time. If their opp:deal is bad, they're most likely going to need closing training. 

I don't rely on the numbers blindly, but it gives me a great indication of where their challenges may lie.
Old School Bravo
VP of Sales
There SHOULD be an order of priority, and it should look like this

1.) Results (are they there, cool.  No? then peel back the onion)
2.) Pipeline (are they there, cool.  No? then peel back the onion)
3.) Meetings (are they there, cool.  No? then peel back the onion)
4.) Calls/Emails/etc 

Really the most important things to me are if the seller is hitting results and being a good person.  Results come and go.  But you need a way to drill in and dissect where the gap in performance is coming from.  I don't think most managers care as much about KPIs from team members that are performing (you've probably noticed that).  The reason they encourage them for those that are performing is that it isn't really fair to ask some people on the team to do something and others not.  Also, looking forward, you don't really know when performance is going to crush and when it's going to wane, so it's good to always be filling the pipeline.   It definitely isn't perfect, I will say with my team I ask for a minimum bar of coverage and so that our efforts that the rest of the company relies upon for the business to stay alive is defensible, but when there is a lack of performance there needs to be a self-awareness that pipe, then meetings, then activities are the shield that provides the bridge until you are successful again. 
Weekly KPI's (activity metrics) or Monthly Quota - What is more valuable?
I don't give my sales staff daily call targets or KPIs. Should I?
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