Key Performance Indicators for Highly Effective Salespeople

Date: 21 November 2013

Prepared by: Mark Thomas


Executive Summary

Key performance indicators ("KPIs") are a major driver of individual behaviour in an organisation.  Appropriate, well defined and well-articulated KPIs help good people to become highly effective, whereas inappropriate and poorly defined KPIs lead to ineffective outcomes.  In my experience, too often the KPIs for salespeople are short-sighted and therefore inappropriate for long term growth of the business.  In this paper I provide what I believe to be the KPIs that develop highly effective salespeople.


Unlike many roles in an organisation, the role of the salesperson appears that it can be objectively quantified, usually in terms of sales achieved. Consequently, in most organisations, the performance of the salesperson is objectively managed using business growth as the sole metric.

I argue that the performance of the salesperson cannot be assessed purely in terms of business growth as there are other factors at play that are outside the permit of the salesperson that have an impact on current growth; such as the brand of the business. In addition, the actions of the salesperson today also will have an impact on the brand and its ability to generate future sales.

I therefore argue that some subjectivity must be introduced into the management of the salesperson to make them effective. In this paper, I identify nine key performance indicators for effective salespeople.

The Effective Salesperson

It is important to define what I mean by the term "effective salesperson", as it is easy to be misinterpreted. In most firms the role of the salesperson is to generate growth of the business through sales! In these firms, salespeople who generated sales consistently would be regarded as effective. Whilst I do not disagree, I believe sales growth in the current period only is part of the role of the salesperson. I believe that the role of the effective salesperson is to achieve growth of the business in the current period through sales that are consistent with the brand of the business AND also to lay the groundwork for sales that, are consistent with the development of the brand, in future periods.

Nine Key Performance Indicators for Effective Salespeople

In order of importance, the nine key performance indicators (KPIs) for effective salespeople that I have identified are:

  • Business growth;
  • Numbers of requests for proposals received;
  • Number of successful requests for proposals submitted;
  • Business plan;
  • Feedback from clients and staff;
  • Contribution to team and company;
  • Cost measurement per acquisition;
  • Market acceptance of new products and services; and
  • Peer review.

These KPIs are explained below.

1.  Business Growth. While obvious, often this KPI is poorly defined. Growth isn't about growing the revenue of the business solely. It has another objective. That objective is to reduce the volatility in revenue. Therefore, over time, effective salespeople will grow revenue from diversified sources thereby reducing revenue volatility.

Whilst a salesperson might be highly successful at growing the business, if this growth is from a single client, it is possible that this growth might make the business highly exposed to the prospects of that client, and therefore increasing the volatility of business revenue rather than reducing it. The same goes for products. If the sales force sells only one product, then the business becomes increasingly exposed to the fortunes of that product. In addition, it is important to have a realistic expectation as to what is achievable given the status of the business and the status of the industry and market. For example, in a declining market, maintaining the business might be an outstanding achievement. Moreover, there also needs to be a reasonable timeframe for measuring success that is appropriate for the product status and the industry. There is no point having unrealistic expectations or setting performance hurdles that are too easy to achieve. When working with clients I suggest that the Business Growth KPI include, as appropriate:

  • Share of target growth of the business;
  • Target number of new clients;
  • Target increased measure from new clients;
  • Target total revenue from new clients;
  • Target increased measure from existing clients;
  • Target total new revenue from existing clients;
  • Target client diversity measure;
  • Target product diversity measure; and
  • Timeframe(s) to achieve these objectives.

2.  Number of Request for Proposals Received. The purpose of this indicator is it is a measure of salesperson activity and brand recognition, which reflects both marketing activity and salesperson activity.

3. Number of Successful Request for Proposals Submitted. Obviously, a more important indicator of sales success than the previous item. However, it is important that this item be considered after the number of proposal requests received, because the development of future sales opportunities must be rewarded equally with current sales successes. Whilst it is possible to be highly efficient and be successful with a single proposal request, this salesperson either is enjoying the benefits of the hard work of their predecessor or they are enjoying today's sales success at the cost of tomorrow's sales opportunities. For a business to survive in the short term and grow into the future there needs to be sales in the immediate and short terms and activity that generates sales opportunities in the future. To ensure there is a balance between present sales and future opportunities I recommend that proposal success be assessed after proposal requests.

4.  Business Plan. The objective with this KPI is to ensure that the business is appropriately resourced for the potential growth of the business. Effective salespeople will have a good understanding of what they expect to achieve in future sales periods.

Generally, the long term objective for most businesses is profitable growth. Whilst the daily costs of running the business is outside the control of the salesperson, their forecasts for sales growth directly impacts resource planning for the business and consequently has an impact on the cost structure of the business. If the sales forecasts are overly optimistic, the business might resource in expectation of growth that doesn't materialise; or conversely, if the sales forecasts are overly pessimistic, the business might be under resourced and be unable to manage the achieved growth. The challenge with forecasting is it is impossible to accurately know what the future holds. I recommend that clients have a realistic expectation for growth and interrogate the sales forecasts that go into the business plan, and routinely compare actual sales success with forecast success.

5.  Feedback from Clients and Staff. At what price is growth achieved? To achieve long term sustainable growth the business must have good relationships with its stakeholders, including clients (obviously), and staff. The more consistent the client experience is with the brand of the business, the stronger will be the development of the brand and hence the business. Sales techniques that are inconsistent with the brand, while they may be effective in the short term, will undermine the brand and future sales potential. To measure the alignment between salespeople and the brand I recommend that businesses seek feedback from clients.

Every business would place its employees amongst a list of the firm's most important assets. Yet how often is this assessed? Leaving aside the legal requirements to provide an appropriate working environment for employees it is important to consider the relationship that salespeople have with the employees of the firm. Effective salespeople recognise that whilst they are the people who make the sale there is a team of people behind them who have assisted them, sometimes directly and sometimes indirectly, in getting to the point where they are able to make that sale. Hence, effective salespeople are supportive of the wider team. Whereas ineffective salespeople believe that all credit belongs to them and all failings belong to others. Such attitudes are detrimental to the long term sustainable growth of the business because it will lead to increasing turnover of employees that support the sales effort, with its associated increase in direct costs (ie hiring and salaries) and indirect costs (ie loss of firm knowledge and future business leaders). To measure the alignment between salespeople and the team I recommend that businesses seek feedback on the salespeople from employees.

6.  Contribution to Team and Company. "No man is an island, entire of itself; every man is a piece of the continent, a part of the main"[1]. Picking up from the previous point, the effective salesperson will contribute to the team, the business, and the brand in ways other than through generating sales. Often, this contribution is described as the person being a "team player". Examples of contributions to the team and company include; mentoring, assisting other members of the sales team, providing constructive feedback, suggesting process enhancements or product or service innovations, and providing education on the market / clients etc. Typically, these contributions demonstrate leadership qualities in the individual. There needs to be a balance though. The salesperson can be distracted from sales generating activities by being too much of a team player; and conversely, through being entirely sales focused does not develop leadership qualities that will assist the firm to grow into the future.

7.  Cost Measurement per Acquisition. To achieve long term profitable growth, the new revenue generated per sale, on average, must be greater than the cost of generating that sale, on average. If the costs to generate new sales is greater than the revenue achieved through the sale the business will go into decline and the business will be best served by ceasing all sales activities. So new sales should be profitable, on average, but not in every case. There will be situations, such as entering a new market or adopting a new sales strategy, where it may be appropriate to make sales that are unprofitable. Such sales tactics are called "loss leading". Loss leading, generally, is a business decision and is out of the control of the salesperson. Whereas day-to-day decisions about the sales activities that are undertaken are within the control of the salesperson. Such decisions may include; store location, stock levels, entertainment expenditure, presentation quality, travel, and gifts. Often, firms will reward successful salespeople with large expense budgets because the revenue generated by new sales "papers over the cracks in the walls"; ie the revenue greatly exceeds the costs of generating that revenue. When I see this attitude with clients I remind them that: capital is very hard to raise and very easy to spend; and that clients can be irrational longer than you can remain solvent[2]. My points are; firstly that there needs to be a balance between the objective of business growth and the cost to achieve that objective; secondly, that spending big to win new clients erodes precious capital that is very hard to replace; and thirdly that prospects don't always convert into clients in your timeframe.

8.  Market Acceptance of New Products and Services. If the salesperson is effective, as I have defined the effective salesperson, then they will have laid the groundwork for future sales that are consistent with the development of the brand. Such sales are not limited to existing products and services, but include future products and services. To lay the groundwork for future sales requires strong relationships with clients and sales techniques that are consistent with the brand. Many salespeople that I would define as ineffective would argue that their relationships with their clients are what drive future sales of new products and services. To me, these salespeople are ineffective, not because of their great relationships and sales success, but because through their myopic perspective of sales they are limiting the future success of the business. The clients of these salespeople will purchase from their particular salesperson because of their personal relationship with that person. In effect, clients are buying from the individual rather than the company. The problem for the business from this situation is two-fold. Firstly, one day the salesperson will be poached by a competing firm, along with their clients; and secondly, the salesperson is unable to leverage their skills across a broader client base, limiting their ability to generate new revenue from new clients.

9.  Peer Review. How well is the salesperson respected by their peers both inside the company and outside? Effective salespeople will be well regarded by peers across the industry, whereas ineffective salespeople will have detractors.


The effective salesperson generates sales in the current period and lays the groundwork for sales in future periods by delivering a customer experience that is consistent with the brand. To create effective salespeople requires that they be assessed against subjective measures in addition to the traditional objective measure of sales generated. In this paper I have identified nine key performance indicators for effective salespeople. For more insights on creating effective salespeople contact Inspirational Leaders at This email address is being protected from spambots. You need JavaScript enabled to view it..


Inspirational Leaders

At Inspirational Leaders we help individuals & organisations to become inspirational. We work intensively with:

  • Entrepreneurs; to give them focus to help them realise their dream;
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About the Author

Mark Thomas, SF Fin, MHKSI, MAppFin, GDipFinPlanning, GradDipAppFin, BE. Since the 1990's, Mark has built businesses and careers. More recently, Mark has actively pursued opportunities to help businesses and individuals to gain focus, communicate their message, and achieve their goals. Mark's current area of focus is developing newly established firms and firms that have had better times. In his career, Mark has worked in many roles, including; futures trader, portfolio manager, relationship management, and more recently business leadership. Prior to entering the finance industry Mark enjoyed a career as a Chemical Engineer. Mark is a regular speaker at industry events, a lecturer, a mentor, and is actively involved with several industry bodies.

[1] "For Whom the Bell Tolls" by John Donne.

[2] With apologies to John Maynard Keynes and A. Gary Shilling.