Our Numbers Aren’t Laws Of Physics!

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We tend to think of the Laws Of Physics as fundamental truths about how things behave.* For example, F=M x V (Force is equal to Mass times Velocity). We always calculate force using this formula, it is universal. These Laws represent fundamental behaviors of objects and very predictable properties.

Somehow, we seem to treat many of the numbers we use in sales and marketing as “fundamental and unchangeable truths.” We accept them, we accept the mathematical relationship, and all our behaviors are driven by those relationships.

We have all sorts of metrics we look at: Pipeline coverage, win rates, average transaction value, sales cycle, prospect to qualify ratios–treating each as fixed, developing our numbers and strategies based on the math.

The SaaS world has developed their on special version of these fundamental productivity numbers, creating a litany of acronyms: CLV, CAC, ARPU, MRR, ARR, ACV, Churn and on and on. We even create ratios of ratios attributing great value to those.

And we have all sorts of marketing metrics including, Visits, click through rates, response rates, download rates, dials, connects, meetings, MQLs, SQLs, SALs, ABCDEFGs…..

As managers, we track all sorts of things, including, % of People at Quota, MTD/QTD, YTD Quota Attainment, CPOD, Voluntary/Involuntary Attrition, Ramp to Productivity, as well as all the previous numbers.

I don’t want to diminish the importance of many of these metrics, they are important in tracking performance and helping us identify problem/opportunity areas.

But the problem is that we accept these numbers, particularly the ratios, as given and unchangeable. They become, perhaps, the “Unchangeable Laws of Selling/Marketing.”

As a result, the usual answer to driving growth or higher levels of performance, is simply doing more. If we want to grow sales, if we want to grow marketing leads, the answer is to do more–because, after all, the ratios are fixed, unchangeable–laws of selling and marketing.

Managing to the numbers this way, works until it doesn’t, but takes no talent or insight. All you need to do is open the calculator on your phone, or pull of your shoes and socks, counting on your fingers and toes.

Yet this is how most managers and sales people manage to the numbers!

Imagine if we started challenging these laws of sales and marketing. What if we increased our average transaction value? What if we reduce our sales cycle? What if we increase our win rate? What if we increased the relevance of our marketing outreach? What if we reduced voluntary and involuntary attrition?

Thinking about these basic numbers and relationships, figuring out how to tilt them in our favor drives tremendously different views of what is possible, and how to better hit our goals.

As we do this, we then think, “How do we make this happen?” This forces us to look at the fundamentals of what drive performance, and how do we do the things that help us most effectively improve performance.

Our jobs as managers is not to accept the numbers and ratios as “given,” hoping to achieve our goals by driving volumes. We are responsible for understanding what drives these results and what might we do to change them, tilting things in our favor.

The Laws of Sales/Marketing are not fixed, they aren’t laws at all, just arithmetic calculations.

What are you doing to drive performance? What are you doing to understand what is driving the results you and your people produce? How are you tilting the numbers in your favor?

Afterword: Some will recognize this post as a variant of the effectiveness/efficiency discussion. Too often, we focus on efficiency, where we need to first focus on effectiveness.

*The physicists or similarly minded people will correctly claim the laws of physics aren’t absolutely absolute…please grant me some literary license.

Republished with author's permission from original post.

Categories: BlogPerformance Metrics

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