Take a deep dive into your KPIs – and learn how not to drown in bad leads
This article is relevant for you who work with outbound telemarketing activities and want to learn more about activating your figures for hit rates, contact rates, conversation time, etc. and thereby create better KPIs.
Most of us might know the feeling of swimming in an endless sea of numbers and data without really knowing which way to navigate. We are experts in collecting data – but when it comes to using them correctly, we drown.
Do you work with outbound telemarketing activities and want to learn more about activating your figures for hit rates, contact rates, conversation time, numbers of calls, etc.? Then keep reading!
Here, in Adversus, we have developed software solutions for telemarketing since 2015, which has given us a unique opportunity to dive into our customers' everyday challenges while working with their KPIs. So, if anyone knows something about using data correctly when doing telemarketing, it's us.
The enormous amounts of data we have collected within our software have given us a unique insight into the effect of telemarketing in different ways and how various parameters affect the outcome in a sales process.
We have seen how some telemarketing businesses try to reach the highest hit rate possible without considering making a successful sale that matters. And we have seen companies trying to save seconds while using a predictive dialer, unaware that the seconds saved have caused a higher drop rate, which has caused a loss in some great sales opportunities.
Well, before we get started. There is no such thing as a "one size fits it all" solution when it comes to optimizing your sales or bookings through telemarketing activities. There are simply too many factors that may affect the outcome. And your success rate cannot be controlled by KPIs in itself.
If you want success, then, first of all, you need to have a good product or service. And next, you need to have sales personnel that knows how to communicate your product's value. But diving into your KPIs and learning what's behind the numbers will give you a better understanding of what it takes to optimize your sales.
So. Let's get started.
KPIs – let's have a lot of them! Not.
Before I started working for Adversus, I worked in a medium-sized, well-established, and successful company. Let's call it X. At some point, X hired a new CTO who was excited about the data-driven approach to running the business. He hired a data analyst who knew how to pull some heavy reports, and set up many f KPIs based on benchmarks, and once a week, they gathered the whole team to look at the last week’s performance to see if we had reached our goals.
Everything was running smoothly. Except, none of us knew exactly why the numbers turned out as they did because none of us really understood the mechanism that drove the result. And as time went by and no improvement happened, the KPIs became a joke at the office.
"My KPI is to drink 5 cups of coffee today. I'm already 20 percent over my goal," was a typical sentence at the coffee machine.
Fortunately, the CTO realized at one point that having a lot of data in itself is worthless. You are at square one if you do not understand your data – and activate them the right way. Or worse. You drown.
Get to know your data
So, the first step is to get to know your data, even before you activate them. By understanding your data, you will know how to prioritize what kind of actions you may take. It would help if you also learned how to distinguish between regular insights and the important stuff – the important stuff should be the basis of your KPIs. It is better to narrow down the numbers of KPIs and get to know what drives them than just having a whole list of data you don't understand.
Well. Enough chit-chat for now. Let's dive into some of the most common KPIs at call centers.
Hit rate – definition
If you ask Wikipedia, a hit rate is:
"a metric or measure of business performance traditionally associated with sales. It is defined as the number of sales of a product divided by the number of (…) planned calls (…)."
The hit rate is one of the most valuable tools to look at if you sell stuff. But the hit rate should always be seen in a context. An excellent hit rate for one type of customer is not necessarily a good one for other customers. The higher a hit rate, the better.
Let's take an example. If you are selling men's underwear, then you'll probably discover that more male leads are ready to accept your great offer on "men's underwear on subscription" than female. Now, I’m not saying that you should only call male leads. Just be aware that your hit rate will drop the more female leads you call.
It's more evident that your hit rate will be close to zero if you try to sell dog food to people allergic to dogs (but that's a whole other case).
A hit rate can change during the day!
If you are selling newspaper subscriptions, it's more likely to have a higher hit rate during the late afternoon or in the evening after dinner time.
Be aware that your hit rate should be seen in a context - e.g., by segments (age, gender, social status, education, geography), product (not all products sell the same), and overtime.
It's a good idea to be realistic when you define your hit rate.
What is the difference between using hit rate and contact rate as a KPI?
The hit rate gives you an impression of your "final result" – e.g., how much you sell or how many appointments you have been able to put into the calendars.
The contact rate only gives you an impression of how many leads you have reached from the entire pool of leads called. Therefore, you cannot use the contact rate to measure your goals.
If you, for example, measure your contact rate up against your hit rate, you will get a pretty good indication of either:
The quality of your leads (are you contacting the right people? Have you segmented them correctly?)
Your phoners' ability to sell your product (are your phoners skilled enough?)
Are you contacting them at the right time of the day? (e.g., look at the ratio between contact rate and hit rate during the day)
The conclusion is; the ratio between contact rate and hit rate can be advantageous to identify problems in your sales funnel, thereby being a key measure for improving your hit rate.
Is there a difference between the acceptable hit rate doing B2B versus B2C?
No, not really. It all depends on your product or the service you want to sell – and, not least of all, your leads' quality.
What is the reason if a hit rate is dropping?
There can be many answers to this question.
Most common explanations for a dropping hit rate:
You have hired new phoners that are inexperienced and need more training.
The demand for your product is dropping.
There are new competitive products in the market.
The quality of your leads is not what it used to be.
You have changed settings in your dialer system that may affect the hit rate.
What should you do when your hit rate is dropping?
First of all, understand your problem. It is no use to change sales strategy if the main issue improving your sales lies in many newbie phoners needing more training and experience to fulfill the sales goals.
Who is performing well in the sales team? And who underperforms? Identify the ones that need more support and training and give them a helping hand.
If the problem lies within a dropping demand or new competitors, it is time to adjust your sales strategy.
If your leads' quality is not good enough, you can either try to find a new lead provider or try to do some cleaning up, so you don't waste time calling people who will never pick up their phone anyways. You can also consider dividing your sales process into more steps – while cleaning up.
Cleaning up your leads – and divide your sales process into steps
This is not a step-by-step magic guide on how to clean up your lead pool, but it is a good start.
Identify those leads who will never pick up the phone. Run your leads up against blacklists, make a proper duplicate check, and remove all unqualified phone numbers for a start. This is basic cleaning that will improve your ratio between contact rate and hit rate.
Identify your leads and segment them into groups – e.g., segmented by businesses, geography, size, etc. There are different integrational tools you can use if you want to automate that part of the process. It can be a good idea to build separate campaigns for each group and match them with the right phoners.
Consider dividing your sales process into more steps so that some phoners will do the cold calling while others close the sales.
Evaluate your effort by diving into your data and adjusting your process to optimize it further.
Other essential measures you advantageously can dive into and match up against your hit rate are contact time, number of contact attempts, time of the day/week/month, number of answering machines you reach, and much more.
Does your hit rate rise at a specific time of the day, week, or month?
Knowing which time of the day, week, or month you have the highest hit rate, you can use that information to better plan your workflows.
Perhaps your B2B leads are easier to turn into customers at a specific time of the month or year – e.g., at times where the liquidity is high? Or your B2C customers may be easier to get in touch with outside working hours? You'll find an answer to questions like that if you dig into your data.
The ratio between contact time and conversation outcome
A simple measure such as the ratio between contact time and the outcome of a conversation can be beneficial when making your sales strategy. E.g., if you know the chances of closing a sale will double if you let the conversation run for one more minute per call, then you might consider letting your phoners stay on the line a bit longer because it pays off in the long run.
Tendencies in contact rate
It is not unusual that your contact rate will be higher when you get fresh leads. Over time the contact rate will drop as you contact more and more leads – the share of "bad leads" in your pools will simply get bigger over time. You need to consider that when you define your KPIs as well.
Average handling time
It’s essential knowing how much handling time your phoners use. How much time does one phoner need to make a successful sale? Or put another way:
Does your data show any tendencies that indicate you'll get more successes if you use a certain amount of time on each lead?
E.g., it is a fallacy to believe that long conversation time also is the key to success — Vice versa. Short conversations may not have the highest payoff.
Consider the benefit of letting your phoners spend time doing proper research before calling and then compare it to your results. Research time may be a good investment in some cases – especially if your sales process contains more than one step.
If you look at the difference between cold and warm calling, you may find the average handling time for cold leads is much lower than for warm leads.
Some phoners might be good at warming up leads, while others specialize in closing a sale. In that case, the hit rate will be a wrong measure when you compare your phoners, though you can still use your data wisely, e.g., to divide your sales team into more steps, as mentioned above. That way, you'll get the most out of your lead pool and minimize your performance gap.
So let's get back to the whole thing about KPIs
You need to consider all measures when choosing your KPIs. Use your data to define what's essential and narrow it down to a simple set of KPIs that quickly show your progress and are easy to communicate.
Never make the mistake of using the KPIs for a communication purpose only. Unfortunately, that mistake appears when no one knows how to make the right decisions based on the available data. And unfortunately, it happens quite a lot.
Know what your KPIs are based upon, react both if your KPIs are going up and down, have a plan on how to act both ways - and stick to that plan!