Measuring What Matters
Quit Spinning Your Wheels with the Wrong Sales Metrics
“Just let me sell!”
Most sales and business leaders have likely lost count of the number of times you’ve heard these words. And, being honest, there was a point in your career you likely uttered those words, too.
Now, as a leader tasked with managing through process and measurements, what route will be taken to track the sales team’s progress? There are hundreds of metrics by which sales performance can be measured. But, there is little guidance when it comes to defining which measurements really matter and can be influenced by the top to front-line sales leaders.
83% of Measurements Organizations Manage By, Cannot Be Controlled.
Of the hundreds of sales metrics, some can be influenced, but most cannot be managed—except for a key few (which vary from organization to organization). For example, “lagging indicators” like revenue, gross profit, number of new customers, and account growth are important, but not manageable. They are the result of different sales rep activities. And, to the detriment of individual and organizational success, lagging indicators are what most organizations manage through.
So, what key metrics can you affect? Individual sales activities, “leading indicators”—the down and dirty, daily tactical field activities. Here’s how it ideally works (remember, these will differ by organization):
|Sales Rep Activity
|Example 1||Add 25 ideal, new customers in Q2 2017, verses 12 added in Q2 2016||Research, plan, and schedule 15 ideal, new customer sales calls each month in Q1 2017||30 ideal, new customers added in Q2 2017, versus 12 new Q2 2016|
|Example 2||Grow current customer sales in Q1 2017, by 15% versus Q1 2016||Create specific, individual account plans, that can grow current sales||75% of current customers’ sales are up 12%; 15% are up 14%; and 10% are down|
In both examples above, neither the organization or front-line sales manager or sales rep can control the organizational objectives or sales results. No one can magically create 25 ideal new customers and make them buy. However, the sales reps’ activities can be managed by focusing on activities that can create the desired results. For example:
- Account and call plans
- Number of new and current customer calls
- Co-travel with post call feedback
- One-on-one coaching meetings
- Number of qualified opportunities
- Customer site visits
In our experience with over 150 different sales organizations, this is how the best organizations balance organizational objectives and outcomes, through sales rep activity management.
Step One: Answer these questions:
- What are your organizational goals and objectives? (Revenue; Gross Profit; New Customers; Reorders; Etc.).
- What activities do you want (need) your sales team to perform to achieve these objectives?
- What sales processes are best for your organization?
- What sales role(s) reside within your organization? (Business Development; Account Management; Customer Service; Distribution; Consultative; Transactional; etc.).
Step Two: Create measurement guidelines for goals that are:
- Aligned: Clearly define and organizationally supported objectives
- Understandable: Easy to collect, understand, and share organization-wide
- Undisputable: From top to bottom, nobody can question the measurement results. And in turn, all rewards and recognition can be built on them.
Step Three: Develop a process and plan for holding the sales reps accountable:
Ideally, plans and processes, paired with activity measurement, give the organization and front-line manager information for development coaching, setting and managing expectations, and helping make adjustments when necessary.
- Defined goals for both your organization and your customer’s
- Specific activities throughout the sales process, including milestones
- Internal and external key tools and resources
- Alignment with your CRM system’s opportunity tracking
According to “Cracking the Sales Management Code” by Jordan and Vazzana, organizations that measure and coach their sales reps’ through plans and processes (leading indicators), as well as make adjustments when conditions change, have a close ratio of 53% compared to a 43% close ratio when there is no process (tribal wisdom).
When a sales rep isn’t succeeding, dump the traditional coaching model of “just do more” of everything, and instead, focus on their sales activities. When a sales rep is successful, focusing on their activities gives them a measuring stick for success and repeatability. In either case, your reps’ wish to “just let me sell,” will always come true.