Do you have the wrong KPIs?

“Revenue is the only metric that matters.” Somebody actually wrote that in a recent blog post. If that’s how he manages his team, I’m glad I’m not one of his reps.

Sure, revenue is our goal in sales. Beating our numbers is our passion and getting to Club is our reward. But in terms of sales metrics, revenue is a lagging indicator. We can measure revenue, but we can’t manage it. We can, however, measure and manage the key sales activities and behaviors that drive revenue. And since referral activities drive the most revenue, referral success metrics are the KPIs that matter most.

(Image attribution: djvstock)

The Referral Success Metrics That Matter

If you’re like most CROs, you’re tracking the wrong referral sales metrics and spinning your wheels. 

For example, Craig was a veteran sales leader with only one referral KPI, and it was the wrong one: the number of prospect meetings his reps conducted. Meetings are an important activity metric, but your team will never fill their pipelines with hot referral leads if they skip the first step: asking for referrals.

It may seem obvious, but if you don’t ask, you don’t get. At least not at scale.

Other sales leaders measure reps on calls made and emails sent. So, guess how reps choose to spend their sales prospecting time? Pestering strangers with cold calls, cold emails, and cold social media outreach.

Some sales leaders do measure reps based on referral results, but referral activities are the referral metrics that matter. These include:

  • Referral Introductions Requested: How many people have your reps asked for referrals?
  • Referrals Received: How many prospects have been referred?
  • Meetings Scheduled: How many meetings are on the calendar with referred prospects?
  • Meetings Conducted: How many of those meetings have been completed?
  • Referral Conversion Rate: How many deals have been closed from referrals?
  • Referral Revenue Contribution: What percentage of your total revenue comes from referred customers? (Formula: Revenue from referred customers / Total revenue)

These metrics collectively provide insights into the health, efficiency, and growth potential of your referral program, enabling you to refine and optimize your approach.

(Image attribution: jawedgfx)

Set Referral Success Metrics, Watch Your Revenue Soar

Revenue isn’t the only metric that matters. Set referral success metrics around sales activities you can measure and manage. Then adjust your KPIs to match. Set revenue goals for each person. Your veterans expect their goals to increase year-over-year, so there should be no surprises. Now it’s time to set KPIs for referral activities and referral results.

Invite me to connect with you on LinkedIn so we can stay in touch. Let me know you’ve read my blog.

(Featured image attribution: antstang699431)

(This post was originally published on September 20, 2018 and updated November 7, 2024.)