Enterprises worth their salt typically use a set of standard key performance indicators (KPIs) to evaluate progress, but there are limits to the effectiveness of these measures in improving or predicting future performance. According to Harvard Business Review, the top KPIs in sales include average annual quota and quota attainment average. The former describes the dollar value of the quota, averaged across quarters, and the latter describes the percentage of time quotas were achieved across an organization or team.
While these KPIs do provide a backward-looking snapshot of a salesperson’s performance, they do nothing to help the salesperson or manager understand the everyday behaviors that are responsible for the outcomes. But what if managers could understand which daily activities are correlated with successful outcomes, intervene earlier for employees who are falling behind, and encourage employees to adopt best practices to improve individual sales performance?
That’s where people analytics comes in. It’s the missing link between real-time work behaviors and quarter-end lagging indicators such as KPI metrics. Ultimately, predicting outcomes and improving productivity allows companies to course-correct before quarterly results come in.
People analytics, an emerging big data technology, draws on aggregated, anonymized data from email, calendar, and other company-specified datasets, to help employees and executives understand how time is invested, and if it’s paying off with increased sales. Put simply, the data helps managers recognize why some employees are not meeting their KPIs and how to best coach them towards improvement. In the absence of these data, managers cannot provide fact-based coaching toward practices that bolster sales within their own organizations.
Imagine, for example, that an underperforming salesperson misses his quota target for the quarter. What options does a manager have? She can coach him based on her observations or experience, or she can reprimand or dismiss him. The latter options aren’t particularly enticing, especially given the high price of attrition.
But there are limits to observations and experience in coaching employees. Without actual data around how the salesperson spends his time or communicates with clients, managers are left to inference, self-reporting, and past experience that might not translate to the employee’s current circumstances. Equipped with real-time, company-generated data, managers can coach employees around specific behaviors that are proven to work within their own organization.
Here’s how people analytics metrics can be paired with standard KPIs to drive sales and improve coaching.
According to data garnered through people analytics, salespeople who consistently meet their quota spend 25 percent more time with customers than underperforming salespeople. This in and of itself isn’t particularly earth-shattering. We assume that when salespeople invest quality time building a relationship with and understanding their customers, it pays off. But by looking at the data over time, we see an interesting trend around when top salespeople invest that time.
High performers invest most of their time with customers at the beginning of the quarter and taper communications by the end, as their internal communications ramp up. Investing time at the start of the quarter allows them to build foundational trust and understanding and facilitate necessary internal communications after that customer rapport is established. This trend was repeated across industries and geographies. Also, customers who received significant attention from a salesperson at the beginning of the quarter spent more overall.