In business, just as in your everyday life, your plans and goals have to remain flexible. You must monitor and review them regularly, updating your plan to adapt to new developments. For example, if a positive advancement goal was met a year earlier than expected, the plan will need to be revised upwards to sustain that growth.
The establishment of Key Performance Indicators (KPI) for your business to track where you are on your plan is essential for ensuring continuity of your goals. Continuous comparison of your current sales with your goal allows you to predict and consider the specific actions to take to ensure that your target is within reach.
The concept of KPI can also be modified to forecast success. This Key Predictive Indicator, pioneered by Paul Shrimpling of Remarkable Practice, allows for prediction of increased sales and profit. In the realm of sales measurement, if you follow the process leading to a sale, you may find that:
- 20% of the potential clients that you market to ask for a brochure or a presentation
- 35% of prospects that receive a sales presentation or are sent brochures ask for a quote
- 60% of quotes that are accepted lead to a sale, and that
- 80% of sales leads come from referrals
Most businesses have reliable methods of measuring the first three statistics, so for many, these indicators have predictive abilities. By considering what actions must be taken to increase each statistic by perhaps 10%, you can estimate the specific timeline and resources required to increase sales to a result of 66% of quotes leading to sales, 38.5% of prospects that receive a sales presentation ask for a quote, and 22% of potential clients asking for more information, i.e. an increase in sales from 4.2 to 5.59 per 100 leads. How much profit would that 1.39% increase in sales conversion produce? Such calculations using Key Predictive Indicators allow an entrepreneur to estimate growth and evolve their predictions for their company.
This specific example is limited by the inability to measure the number of sales resulting from referrals, meaning that the sales estimates drawn are not necessarily accurate. These sales predictions are easily rendered more reliable and obtainable by increasing the number of KPI’s, thus the process of establishing and monitoring a method for asking for referrals is particularly useful to a company. A referral monitoring system, particularly one that records the number of referrals received for each request and predicts the likely sales outcome, allows a business to further understand their own strengths and estimate success.
Usage of these statistics places success within reach!