Every year, I meet with thousands of sales people and sales managers. Inevitably the conversations focus on sales performance and achieving their goals. We try to help them understand the leverage points in achieving their goals, and how that drives their focus and activities.
We start talking about the “numbers.” No, not quotas, but the leading numbers that indicate whether they are doing enough of the right things, with the right people, at the right time.
In the conversations, we end up talking a lot about pipeline, prospecting, and select activity metrics.
Most are very polite, as we talk about healthy pipeline metrics and key activities, they nod their heads, they acknowledge what I’m talking about. They say they know the importance of understanding the numbers, they will point to reports they get from their CRM systems, showing the “numbers.”
We talk about healthy pipelines, usually someone says, “Our managers say we have to have 3 times coverage (or whatever the manager has said.).”
Here’s where the trouble starts, I ask, “Why? How do you know 3 times coverage is right for you?”
Blank stares, even from the manager that declared 3 times coverage is right.
We dive deeper into the numbers, talking about win rates, average deal size, number of deals required for a healthy pipeline, sales cycle/deal velocity, number of new deals qualified, weekly prospecting activity and so forth.
During this time, people are either nodding their heads politely, but more often, there are a lot of blank stares.
Then I do some sort of exercise. I ask them to look at their own numbers and to identify the one thing that provides them the greatest leverage in achieving their goals. For example, should the focus on prospecting, increasing their win rates, increasing average deal size, decreasing sales cycle?
At that point, panic sets in, people don’t know what to do. They pretend to be busy figuring these things out. There is usually some manager saying “You have to do it all.!” (WRONG!)
All the conversations are the same, even with many managers, we talk the metrics/numbers that are the leading performance metrics, people nod their heads politely, making comments about the numbers. But they really don’t understand them, how they interact, and how/which to leverage to drive their performance.
I realized, that we provide all sorts of reporting about the “numbers” and people’s attainment against those goals. But they don’t really understand what they mean or how to leverage them to their advantage. They look at the monthly reports, if the numbers have gone up, they and their managers are happy, if the numbers have gone down, managers say, “Do more!”
What happens is we present the data, but they don’t really understand what it means, as a result, they don’t own the data/numbers, and struggle figuring out what they should do (this applies to 90+% of sales people and 80+% of sales managers.
Recently, I was talking to a coaching client about this issue. He had seen the same thing with his team. While they talked all the time about the numbers, they really didn’t understand them. His solution is brilliant!
For three months, he had each person on the team developing the numbers and reports for themselves. Prior to that, he gave them a systems generated report. But he realized they would never understand what drove the numbers until they started developing them for themselves.
They had to do the work to figure out their win rates, their average deal sizes, the sales cycles, the healthy pipeline metrics, the number of new opportunities they should qualify every month and so forth.
He coached them through the process, but they had to put together the reports themselves. In doing this, they started understanding what drove the numbers, and how they interacted. While intellectually, they had understood the importance of win rates, they suddenly saw that if they increased their win rates, the number of opportunities required to have a healthy pipeline would decrease, or the number of new opportunities they had to add to the pipeline would decrease, or the number of prospecting calls would decrease.
The magic in helping them understand the numbers was forcing them to figure them out themselves. This process helped them understand what they mean and where they could shift them.
If you think about it, he was leveraging some basic principles in learning. The way we build skills in elementary and secondary education is not by giving students the answers, but by giving them the tools/practice to figure out the answers themselves.
If we want our people to understand the numbers and how to leverage them to drive performance, they have to learn what they mean and how to put them together. We have to give them the skills to think about what they mean.
Some would argue, “that takes too much time, we can just automate the reports that give them the data/answers.”
I can understand that, but if they don’t really understand what the numbers mean and what to do about them, then the time we are saving by giving them the reports is meaningless. They are unable to figure out what to do when presented the numbers.
My own personal experience reinforces this idea. People are often amazed by what I “see” in looking at pipeline reports. They have been looking at the same reports for years, but I can look at virtually any report and begin seeing things they haven’t understood. It’s not because I have any particularly better insight, but it’s because so often, I’ve had to put together the numbers and reports myself. As a result, I intuitively understand how to develop the number, how they each interrelate, and where we can get leverage.
Our tools and reporting systems do a lot to save us time. However, if we don’t really understand what they mean, if we don’t understand how we develop “the numbers,” or how the related to each other, we will never be able to understand the key levers in driving performance.
Do you understand your numbers?