Defining a Performance Metric

Defining a Performance Metric


Incentive design step
This article is referenced by our incentive design guide as step #2.

The following choices are available to you to measure sales performance:
  • Measure using revenue
  • Measure using profit
  • Measure using a score

The simplest choice is to measure performance using revenue. Most organizations set goals based on revenue, so this is the most commonly used setting (and it also requires the least amount of configuration).

However, some organizations may want to use another performance metric because they:
  • Want to authorize their representatives to grant significant discounts, affecting profit
  • Want to reward completion of events (ex: qualify lead, setup appointment, etc.)
  • Want to promote specific products more than others (ex: revenue from specific products is considered more valuable than others)

We'll walk you through all three options.

Measure total revenue
Choose total revenue as a performance metric for the following scenarios:
  • You want to promote high revenue
  • You want to minimize the amount of configuration
  • You know that different products have similar margin percentages
  • You are NOT worried about steep discounts causing commission overpayments over low-margin revenue
  • You do NOT want to "boost" specific products (ex: revenue multiplier)
  • You are NOT measuring events (ex: qualify lead, setup appointment, etc.)

Configuration requirements
There are no special requirements to use revenue as a performance metric. All you need to do is make sure your transactions include an amount (or a product ID and quantity) - learn more here.

Measure total profit
Choose profit as a performance metric for the following scenarios:
  • You want to promote higher margins
  • You are willing to provide a bit more configuration
  • You know that different products have significantly different margin percentages
  • You want to handle steep discounts causing commission overpayments over low-margin revenue
  • You are NOT measuring events (ex: qualify lead, setup appointment, etc.)

Configuration requirements
In order to compute profit, you will need to provide one of the following:
  1. Profit information in sales transactions                                                   OR
  2. Product margin configuration in the web application, allowing us to compute a profit for each transaction - learn more here

Measure using scoring
Choose scoring as a performance metric for the following scenarios:
  • You feel that neither revenue nor profit captures sales performance
  • You are willing to provide more configuration (scoring rules)
  • You are measuring events (ex: qualify lead, setup appointment, etc.)
  • You want to use revenue - but also want to "boost" specific products (ex: revenue multiplier)
  • You want to use profit - but also want to "boost" specific products (ex: profit multiplier)

    • Configuration requirements
    In order to compute a score, you will need to provide scoring rules in the web application (learn more here).


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