Let's talk about KPIs
Updated: Oct 5, 2022
In any business, whether a small start-up or a large multinational, there comes a time when managers want to get a credible picture of performance to improve it. Key Performance Indicators are indicators that serve this purpose - including in the areas of sales and business development. In this article, we explore which KPIs are worth implementing and how they can drive revenue growth for IP firms.
Key Performance Indicators
A KPI is a measurable value that shows how effectively a company is working toward its goals. Companies look at different KPIs to see how effectively they are achieving those goals. Higher-level KPIs show the performance of the entire company or business. At the same time, lower-level indicators provide insight into the effectiveness of smaller departments or divisions (e.g., marketing, customer service, sales, IT, etc.).
A KPI can only be as valuable as the activity or process it measures. That's why it's vital to consider your own processes first when establishing a set of indicators for sales (or other IP firm-related activities). There are many examples of real estate sales, e-commerce, and traditional B2B services in the online space, but these do not always translatable to intellectual property businesses.
What are the key IP firm business development KPIs?
You should start building your KPI system backwards, as this is the best way to see what activity is required in what quantity to make a sale.
● Initial contacts: From this KPI and the closures index, you can calculate the effectiveness of your employees. A common misconception is that the higher the number, the better. It depends on individual skills as well as the speed of the market. It can even vary within a team.
● Lead qualification: Naturally, not all contacts will lead to more extended, productive conversations. However, one of the keys to effective selling is to eliminate from the funnel those companies that will certainly not be, or currently are not, customers. Proper qualification begins before the first contact, but essential details are not known until after the intro.
● Number of closed deals: It indicates the end of the process, i.e., how many deals were closed in a given period. This KPI should be continuously monitored at both individual and team levels.
● Sales cycle length: The cycle length indicates how long it takes a customer to go from initial contact to closing. This is influenced by many variables, including service type, location, and even the customers' size - because while smaller companies decide faster, it can take up to several years to win a deal with a multinational company. In the B2B services market, such as intellectual property services, be prepared for a longer sales cycle. This KPI is also critical for revenue planning and setting expectations for the sales team.
The entire sales process can then be broken down further depending on the type of service, which helps management better understand where there are weaknesses that need to be improved. For example, this could be the number of companies that drop out after adequate qualification, an indicator that can be reinforced by inadequate pricing or presentation.
KPIs are the core of a sales process, but don't let them overtake every action and decision - sometimes, it's also worth relying on intuition.