Business Development: KPIs for Business Developers Include More Than New Business
How do we know business development efforts are working? This seems to be the question on the minds of leaders at most firms right now. With the increased investment in hiring business development professionals to build upon marketing efforts, it’s essential to understand the different key performance indicators (KPIs) for business development efforts within accounting firms.
It’s probably most important to start by understanding the importance of tracking activities versus only the outcome of the process. When people think of selling or business development, the immediate thought is to track the revenue generated. While that is an obvious KPI to track, the outcome, or the revenue dollars, are less controllable by the business developer as opposed to the activities someone can do to create opportunities with prospective clients where you can leverage metrics to coach and monitor the individual’s success.
When you just measure the outcome, it’s tough to see the big picture relating to the effort of the business developer as opposed to only the results they are producing. As we all know, selling in the accounting profession can take months or even years to see results from our efforts which is why tracking activities are so important.
At a basic level, KPIs should be measured around business development activities, and outcomes should tie directly to the firm’s sales process. For example:
- Outreach: If your firm is incorporating an outbound approach to business generation, the business development professional will likely have a list of prospective clients they will focus their outreach. KPIs should be set around a weekly or monthly outreach target to create opportunities for the top sales funnel.
- Networking & Partnership Activities: Tracking the number of networking events attended, partnerships formed, or strategic alliances established can provide insights into the business development professional’s ability to build relationships and leverage external opportunities.
- Inbound Lead Conversion: When your firm has a strong inbound lead process, monitoring the number of inbound leads that convert into qualified leads is vital to understand the effectiveness of a business development team member and the effectiveness of the inbound marketing campaign.
- Revenue Growth: This metric indicates the overall financial performance and success of business development efforts. It measures the increase in revenue generated over a specific period, highlighting the effectiveness of strategies and initiatives, and should have a way to distinguish between new business and cross-sold business.
- Niche or Industry Analytics: As firms are becoming more specialized, they should also consider segmenting each of these KPIs to track them specifically for each niche or industry focus within the firm and across the entire firm.
Once your foundational KPIs are in place, you can move into more advanced KPIs that will give you further insight into your business and actionable insights that can help you improve the overall process or make better go-to-market decisions. These include:
- Sales Cycle: When you understand how long it traditionally takes a prospective client to move through the sales process and convert into a client, it helps individuals better manage the timing and follow-up of opportunities and help with forecasting and capacity planning.
- Pipeline Conversion Rate: As a prospective client moves through each stage of the sales process, understanding the corresponding conversion rates can help you uncover weaknesses in your sales process. Let’s say a business development professional converts 50% of leads into qualified prospective clients that eventually request a proposal, but only 5% of those convert into clients. There is likely something happening in the proposal process that is causing this low conversion rate that should be identified and improved. It helps identify bottlenecks and areas for improvement.
- Average Revenue per Client: Calculating the average revenue generated per client helps evaluate the profitability and potential growth opportunities within the existing client base. Increasing this metric indicates successful upselling, cross-selling, or attracting higher-value clients.
- Referral Rate: A high referral rate indicates client satisfaction and trust and the effectiveness of the business development professional’s relationship-building efforts. Monitoring referrals and tracking their conversion into new clients is important.
- Cost of Acquisition: Calculating the cost incurred to acquire new clients provides insights into the efficiency of business development activities. By comparing it with the revenue generated, it helps assess the return on investment and profitability.
As you set up dashboards or other ways to track these metrics, it’s important to include both the individual’s results and KPIs and a bird’s eye view of these metrics at a firm or practice group level. You can use the dashboard containing the individual’s KPIs for coaching and tracking toward goals. Additionally, the dashboard will be beneficial for making firmwide strategic decisions regarding business development strategies and initiatives.
Remember that the specific metrics to measure can vary based on the firm’s goals, target market, and business development strategies. It is important to align these metrics with the firm’s overall objectives to ensure meaningful insights and continuous improvement.
About Ty Hendrickson
Ty Hendrickson is a consultant with Inovautus Consulting. A sales evangelist, she helps accounting firms grow by integrating sales principles that distinguish accountants as trusted advisors. She has more than 10 years of experience leading sales teams and delivering training programs that she uses to empower firms to think outside the box when it comes to growth. She can be reached at [email protected].
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