A popular way to measure your business is to measure inputs, things you do, or activities. For example, if you are in the semi-conductor business and you want to produce 10 million high quality chips a month, you measure how many wafers are cut per hour, how many wet etchings you did per day, or how many molecular beam epitaxies you did in a week. We all know that the more you make per time period, the higher the quality the output will be, right? Supervisors watch closely as their employees process more and more wafers, faster and faster. “You can do one more!”
“Oh sir…it’s only wafer thin”
But what is really happening as managers and their staff seek ever more output? Those being measured find ways to get the task done faster; and this usually has ramifications down the line. As quantity is increased, a corresponding offset in quality must take place. Putting the right measures in place is critical for any business. Otherwise, you are motivating your employees to prioritize the wrong behavior.
Moving along to the front office, can we come to the same conclusions about measuring the wrong things? Let’s take a look at a how measuring “how many things you do” can potentially mask the real problem in the sales and marketing organization (aligning need to value). Many companies struggle with providing their Closers well-documented, high-quality leads.
Highly qualified leads are what Closers look for, and most of them realize they can effectively process only so many a month. In other words, a Closer can do the math: if you give them, say, 5 high quality leads a month (and I mean like a 70-80% close rate), they can calculate confidence that they are going to hit their personal financial goals (I’m not suggesting this is a formula – every business is different).
But what actually happens? There has been this theory floating around for years that you need a wide funnel. Sure, you will always have more leads than you close because no one bats a thousand. But with easier access to names and numbers than ever before, there is this belief-system that we can simply generate huge numbers of low quality leads and somehow we can locate the good ones and close them. How’s that workin’ for ya?
“If you give them 5000 low quality leads a month (like 0-.0005% close rate) your Closers will completely ignore them.”
What happens when you measure your sales team along the dimension of how many calls they make per day to existing customers? Unless you can demonstrate some correlation (and I would need data and sources) between increased outbound dial tempo and closed deals, here is what I would do if I were your inside sales rep. I would wake up early each day, identify prospects in a time zone West of me, call them well before their start of business, and leave a message (or not).
Why would I do this? Because then I can get more calls done in a day without interruptions from customers who have not been segmented into appropriate needs-based buckets; and who would only waste my time. If no one answers the phone, I’ve hit my metric, got my carrot and avoided the stick. Unfortunately, the business (and me) will ultimately suffer because we will not be getting the sales we could be getting.
Sales is about systems; it’s not about personalities. Rah, Rah, Rah is not a sustainable business model and attempting to change people into personalities they are not is infinitely impossible. You just can’t manage the variability of humans and expect to make improvements to your business over time. All you will get is more variables input into your system every year as the humans turn over. What you need is a selling system; because systems can be improved. And counting outbound dials is not a system; nor is it a valuable metric.
Systems understand the interdependence between steps; which means each plays a role as a supplier and/or customer within a process. If the quality of one step is lowered, the subsequent step will suffer as it must transform the work item it receives; at the expense of time and money. In the case of sales, that kind of expense
almost makes a customer you do get, not worth it from a lifetime value perspective (click here if you’d like to learn more about that).
This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. I’ve been compensated to contribute to this program, but the opinions expressed in this post are my own and don’t necessarily represent IBM’s positions, strategies or opinions.