# 4 – Focus on Lagging Indicators
“Note to Executives – Stop Fixating on Revenue”
That statement might sound interesting coming from a Sales Consulting firm, but it is true. So many times when we talk to CEOs, Owners and Sales Leaders and the only metrics they look at are Revenue and Gross Profit. Don’t get me wrong, those are extremely important, but you can’t change them. It is like looking at the scoreboard after the game. Instead, put some focus around “leading indicators” which can give you clues about success or failure before it’s too late to make adjustments. It’s more like calling timeouts during the game to discuss what is working or not working, then making adjustments.
We recommend “the Big 3” of measurement:
- Activity – Are we getting enough “at bats” to reach our goal? This could be meetings, demos, new qualified opportunities, quotes or other items that leads to sales.
- Close rate – Are we effective at converting activity into business? This is typically a percentage of quotes, proposals or new opportunities that close.
- Deal Size – Are they the right deals? Reps could be active and closing deals like crazy, but if they are chasing small deals, they won’t make their number.
Determine what your “Big 3” will be, set goals for your reps around those metrics, then hold them accountable to those goals. If they consistently hit them, the revenue will follow. We have seen this minor shift in focus lead to increased activity and better predictions on revenue and cash flow.
Need help in identifying your “Big 3”, give Judd Anderson a call at 952.226.3381 or email email@example.com. Visit our website at www.pivotaladvisors.com.