Defining Objectives, Creating Strategies,
and Applying KPIs
It’s amazing how rarely there are explicitly and really well-worded sales strategies in practice. The same applies to the marketing strategy, which (if at all available) is independent, but is planned in everything that is analyzed, defined and planned there, to only the one purpose which is to support the achievement of the sales goals.
This makes it all the more important that the sales and marketing objectives as well as the respective strategies are coordinated in detail, support themselves and a very close cooperation takes place.
Only if each individual employee has understood and accepted the strategy, he will align his activities with that. In addition, a written strategy forces more for precise and detailed statements, which also must be coherent and convincing. In particular, the sales management and the company management need to monitor goal achievement, sales efficiency and marketing activities. This only is possible and manageable by using a meaningful sales reporting system.
However, for many companies, sales work is still an area with little transparency, while eg. clear data and daily reports from production, its output and processes are available. Condensed, regularly provided indicators are the prerequisites for identifying incorrect developments and deviations from the targets and to analyze their causes by further analysis. Exactly such sales and marketing-specific metrics and process data are often missing.
Is your sales strategy operationalized?
Sales Strategy Assessment
Often turnover and profitability are the dominant or even sole elements of the sales strategy. Quantitative sales targets are therefore equated with the sales strategy. Learn more>>
Do you already have a REAL sales strategy?
Developing and formulating a sales strategy
including activity planning
Most manufacturers of goods and suppliers of industrial services have business plans. They are commercially and administratively necessary and reflect the planned world of numbers of the company. Learn more>>
Detect Deviations and Counteract them
Individual Sales and Marketing KPI’s
Often, the controlling-defined indicators do not correspond to what sales or marketing need in order to be usable as an early indicator. Learn more>>
Sales Strategy Assessment
Is your sales strategy
Turnover and profitability are often the dominant or even sole elements of the sales strategy. Quantitative sales targets are therefore equated with the sales strategy.
A lack of formulation and/or too little detailed and “practical” sales strategy also leads to a one-dimensional orientation of the sales targets that are therefore focused solely on turnover and volume.
But also supporting elements for achieving sales success are often not sufficiently anchored in sales objectives and success systems. Examples for this are eg.: profitability of the customers won not included, the quality of the advice and service not targeted, customer satisfaction not mentioned, quality of sales pipeline not measured, just to name few missing points.
Analysis of existing sales strategy includes, among other things, the following points:
- Sales strategy derived from the corporate strategy – coordinated with marketing
- Definition of the sales strategy and objectives
- Product/Market segmentation and channel mix, go-to market
- Market positioning, differentiation, competition
- Sales strategy operationalized and translated into sales budget
- Activity planning
- Budgeting and planning
- Processes and organization
- Objective measuring and transparency of target achievement via KPIs
Objective is that the company’s strategy is consistently transformed into a sales strategy which in turn is aligned with the marketing strategy. Operationally, this means that sales and marketing, for example, need concrete agreement which customer segments with which products with which priority should be served. This is the only way to a mutually agreed and coordinated communication and sales campaigns.
Development and Formulation
of a Sales Strategy including
Do You Have a REAL
Most manufacturers of goods and suppliers of industrial services have business plans. They are commercially and administratively necessary and reflect the planned world of numbers of the company. They are based on the management vision as to how the company intends to position itself in the market over the next few years and a general strategy that serves as a policy of action for business areas such as sales.
But what does this mean in detail for the sales employees who have to implement the strategy and achieve the goals? Often it is only the “pushed down” targets regarding revenue and contribution margins derived from the number silos of the business plans – meticulously broken down even to the lowest product level and split between the individual customers. Objectives and the overall strategy are released, but no one knows exactly how the quantitative and qualitative objectives shall be achieved. There are turnover plans (sales plan), however, there are no implementation plans.
Even detailed corporate strategies often give no clues as to how sales could reach the market positions targeted in the strategy. One trusts that sales knows its goals and will already know what to do.
Still in many companies, the concept of sales strategy is always used as a definition of turnover or market share targets. But with this approach efficient marketing and sales work is not possible. Important questions remain unanswered such as:
- Which products should be pushed forward, which ones are kept?
- Which customer segments should be addressed and pushed?
- Which revenue significance they should have?
- How many and from which market segments new customers should be acquired?
- Which sales and marketing capacities should be used for this purpose?
- How products or services should be positioned in relation to the individual customer segments and markets to achieve the objectives?
- Which marketing measures with what effort are necessary to achieve the sales targets?
Without having these and many other points defined in advance by a clear and detailed cross-functional sales & marketing strategy and without the strategy being “vaccinated” by all those employees affected, a large part of the sales staff and marketers only run around with their intuitive and locally coloured strategies (i.e. without a clear plan and concept). Achieving the strategic objectives is then rather a coincidence.
Example analytical tools for the sales strategy:
- Portfolio Analysis
- Analysis of competition
- Life cycle analysis
- Strategic success factors
- Customer satisfaction
- Trend analysis
Only if the individual salesperson, internal sales team member and marketing employee do understand, accept and make the strategy his own, they will align their activities according to the strategy.
The existence of a sales strategy is not everything, however. So that it produces effect, it must also include the right statements and measures. In doing so, the differentiation against the marketing strategy is not always easy. The following aspects however, should be included:
- Objectives for products, customers and market segments (often the interface to the marketing strategy)
- Objectives for existing and new customers and for the main sales processes
- Definition of planned success rates (KPI’s)
- Definition of the necessary sales activities to achieve the goal (number of contacts, quotes, etc.)
- Input from supporting marketing measures (customer events, trade fairs, sales promotion measures, Email campaigns, print advertising, etc.)
- Organizational assigning of objectives and activities (who is responsible for what and when).
- activity planning by sales area, key account, customer segment
- Qualification measures
The best sales strategy objectives do not make sense if they are not translated into activities. Simply put, “You can’t manage objectives, but just the activities. ”
The activity planning therefore is an important element for operational implementation of the sales strategy. For each stage of the process, the necessary activities have to be planned and then made measurable by appropriate KPI’s (e.g. attracting x new customers by y promotions. KPI = Number of planned versus scored new customers in the planned period).
Only structuring sales processes is not enough. Process execution also needs to be measured and evaluated.
Individual Sales and
The term KPI stands for Key Performance Indicator and refers to metrics that make the activities and target achievements in the company comprehensible and tangible in numbers.
KPIs are suitable to ensure the success of the sales and marketing strategy and review performance of activities. KPIs enable management and controlling to analyze the processes within the company and monitor them consistently This makes processes and measures customizable and optimizable.
Typical questions include:
- Which of the objective-critical sales activities will (have been) actually performed?
- How efficient does sales work in the individual sales processes?
- Which objectives exist for each process step and what is the result?
- How probable is the objective achievement and what is still missing to achieve the targets?
- How and at what intervals are results measured and what happens then?
Often the controlling defined indicators do not correspond to what the sales or marketing needs to be usable as an early indicator. So are almost all KPI’s in sales related to the past. As a result, problems are only put on the table when the company is already affected by the consequences.
This problem also often arises in the context of new customer generation and pipeline management, where there are little or no indicators of possible and probable new business.
With a customer and market-specific sales monitoring system the user posses an all-encompassing information tool for all sales, customer, competitive and market situations. Sales metrics finally are forming the sales targets for each sales process.
Such as the following key figures for the sales areas should be reported monthly or quarterly to perform success analysis:
- Number of calls “per salesman”
- Number of calls per customer
- Number of new customers
- Ratio of quotations to orders
- Measuring Results
- Value of open orders/pipeline
- Number of lost customers
- Contribution margin per customer
- Contribution margin per product
- Average order size
The customized metrics system should be built individually, and in terms of overall and individual targets, such as an integrated metrics system called “Sales Balanced Scorecard,” which incorporates multiple perspectives meaningfully weighted.