Knowing Your Numbers

0
57 views

Share on LinkedIn

I’m always stunned by the number of sales people and leaders that don’t know their numbers. By that, I mean the numbers that help them understand the leverage points in driving performance.

Some readers will push back, “I know my quota and the revenue I produced…I know what I have to do each month, quarter!”

Those are important numbers, but not very useful in managing performance. They are, ultimately, the numbers we produce by effectively managing performance.

Sadly, most managers just pay attention to those numbers and when they aren’t being achieved their universal strategy for addressing that problem is to “do more.” And the response is more emails, more dials, more meetings, more pipeline (forget quality). And when that doesn’t work, then do more–or find people that will.

But what are the things that drive results? What is the volume/quality of those things that drive results? What are the things that waste our time and resources? What are the leverage points? Where do we have the opportunity to tilt the numbers in our favor?

In conversations with too many sales people and managers, when I start asking those questions, I get blank stares or eye rolls.

Or when I pose the question, “How do you know you are doing the right things, with the right people, at the right time to achieve your goals?”

That’s often met with a shoulder shrug, and the statement, “I’m doing all I can, hopefully it’s enough….”

Our job is to hit our goals–that is make our numbers. We aren’t rewarded for trying hard. But to make our goals, we have to understand what creates the right outcomes.

For example, basic pipeline metrics, basic performance metrics. Recently, I challenged a manager who was struggling to hit his goals. I asked, “What are your healthy pipeline goals?” He struggled with the answer, hoping to escape my inquisition. I think I need about 4 times coverage.

“What causes you to think that?”

Even though we were on Zoom, I could see his discomfort. “What’s your win rate? What’s your average deal value? What’s your sales cycle/deal velocity? What’s the quality/integrity of the deals in your pipeline? What $ volume and deal volume to you need to achieve your goals? What prospecting goals do you have to build your pipeline and maintain the right volume?”

In fairness to this manager, he’s not alone. Very few managers I speak with can answer even a fraction of those questions. But they are some of the critical numbers they need to understand to be able to maximize performance.

They have the data, but they don’t take the time to look at the data and understand what it means.

Going back to this manager, I said, “You actually need about 6-7 times coverage to make your numbers, when I look at your win rates, your sales cycles, your deal values, you need to have at least that—4 times won’t make it.”

The manager, to his credit, pushed back, “How do you know, what did you do to determine that?” The answer was, I was looking at his numbers. I started to show him analysis of his team’s performance, across a number of dimensions, he started asking a lot of questions. I could see the light bulbs going off, all of a sudden he was starting to see performance issues, he started getting insights into what he might do to coach his team to better achieve the goals.

Then we moved into the second part of our conversation. “What are you going to do about this? You clearly need a lot more pipeline.”

His knee jerk reaction was, “We’ve got to do more, particularly prospecting. We need to get our pipeline up to six times coverage.”

He was doing what most managers do, we was reacting to these numbers, doing the math–but not understanding what caused these numbers and how to tilt the numbers in his favor.

We continued the discussion.

“That would mean, your team of 6 people are going to have to find and qualify over 1000 new opportunities in the next 2 months. How are you going to do that? Is that even realistic?”

Fortunately, he was smart enough not to say, “Well that’s marketing and the SDRs job, they need to get me the qualified opportunities.” He recognized it was his responsibility and his problem to solve.

He sighed and responded, “As much as I like to think we should be able to do that, I don’t see a way. We’d struggle to get 50% of that, which would still leave us underperforming?”

I was proud of the progress he made in this short conversation. First, he was focused on achieving his goals, second he was being pragmatic and honest about the reality of closing that gap.

We started brainstorming.

“What if you focus on winning more of the opportunities you have already qualified? What if you focused on finding more opportunities that you can win? Right now your lose the majority of opportunities you chase, what would happen if we could increase your win rate? How can we improve it by 50% in the next 3 months?”

He took up the challenge, he decided to start doing analysis, what caused them to win, when they lost, what were the things that seemed to lead to losing?

He quickly discovered a few things. In the pressure do do more, they were prospecting way outside their ICP. It turned out the win rates within the ICP was very high. It was those deals they were chasing outside the ICP that was killing performance. They were deals they had no business chasing.

He said, “We’re going to narrow our focus on our ICP. We’re going to win or abandon all those deals outside our ICP in the next 15 days. Then we focus on the ICP, most importantly, our prospecting needs to be only in the ICP.”

As a sidenote, his sales team weren’t bad sales people, they were just chasing the wrong deals. They were very good when they focused on the right deals—they just lost their way.

Then he said, “We’ve been chasing a lot of deals that aren’t really qualified. I can see they are stalled, they won’t move. We have to break them loose, but we have to do a better job of qualifying the opportunities where customers are committed to changing.”

He kept going, “There are some things we should be doing better in executing our sales strategies…..”

In a short period of time, he developed an action plan that could be executed in a relatively short period of time. He could see a path to improving his win rate by 50% within 3 months.

We reassessed the pipeline metrics. Improving the win rate by 50% dramatically changed the pipeline dynamics. The volume of opportunities needed for a healthy pipeline decreased tremendously. As a result, the prospecting goals also became more realistic.

He started to see a path to improving performance. He now knew the numbers he should be looking at. He now knew that he had to look under the numbers to understand what caused them and what he could do to shift them to his favor.

We can never maximize our performance, we can never hit or exceed our goals–consistently, unless we understand our numbers, and what drives those numbers.

Do you know your numbers? Do you know what to do about them?

Afterword: It’s important to have a framework to understand your numbers, how they interact, what drives them, and where you get the greatest performance leverage. The Sales Execution Framework, SEF, was designed for this purpose. Dozens of organizations are using this to understand and drive performance. For a free white paper, just shoot me a note.

LEAVE A REPLY

Please enter your comment!
Please enter your name here