As we plan for the new year, many managers ask themselves the question, “What should we be measuring?” or “How should we be tracking performance?”
The obvious answer to this is Quota–is there anything else?!? Frankly, most of the organizations I work with have quota attainment as the singular metric that’s used to monitor and assess performance.
Quota is an important output measure. It is a key metric for anyone in sales. But quota is insufficient for managing performance and insufficient to assure the sales team is executing the company strategy and priorities. Additionally, we know quota is a trailing or historical measure. Using quota attainment to manage performance is similar to driving looking only in the rear view mirrors—it won’t get you to where you want to go.
We need to have a richer framework of metrics in place. I like a framework that has a balanced set of measures in four key categories: Business Management, Strategic Initiatives, Operational Management, and Personal Development.
Business Management Goals and Metrics tend to be the classic metrics we are used to. Typically, they are quota or related metrics. Things like sales, orders, perhaps margin, and perhaps customer satisfaction. These are all output measures. They are the end result of what we do every day to achieve our goals. Typically, they occur at the end of a series of activities–we find a deal, qualify it, pursue it, close it. Later we ship the products, collect revenue and, only then, can chalk up that revenue attainment against our quotas. Again, these are important measures but they are trailing or historical measures.
Strategic Initiatives are a set of goals and metrics that assure we are executing the strategies management has put in place. For example, we may have corporate strategies for new customer acquisition, customer retention. or customer growth. We may have initiatives around new product introductions and growth. New market segments, share, or many other things. Sales is responsible for executing the company strategy with the customers. Consequently, we need to establish goals and measures that enable us to tell whether we are doing this or not. For example, if the corporation is investing in major new products that may be the foundation for future growth, we want to make sure that sales people are selling those products. If we don’t establish specific goals and measure around this, a sales person could focus all their time on the products they know and love–ignoring the new products. At the end of the year, they may have made their revenue number with old products, but sold none of the new. They will have failed in their responsibility to execute the company strategy. So it’s important to have goals and metrics in place, to make sure sales executes the company strategies and priorities..
Operational Management Goals and Metrics are things that we measure every day and week. They are the things that tell us whether we are doing the thing that will enable us to achieve our Business Management and Strategic Initiative goals. This is where sales people and managers tend to spend most of their time –but often where we have the poorest metrics. Funnel/pipeline metrics are the cornerstone to operational management metrics. Are we pursuing enough deals, is there good flow or velocity through our pipeline. Activity metrics are another key set of operational metrics we leverage every day. Are we making enough prospecting calls every day or week? Are we finding and qualifying a sufficient number of opportunities? Are we having the right number of meetings with the right customers? These metrics need to be tied to the business management and strategic metrics.
For example, in our company, one of the key operational metrics that each of us has is “number of initial prospecting meetings (these could be by phone) we have with new customers each week.” For example, my personal goal is 8. I know that if I have 8 high quality meetings with the right people, that I will be able to find an qualify enough deals to make our quotas. For example, the conversations I have this week are tied to business I hope to generate in 18-24 months.
Finally, we want to have some Personal Development Goals and Metrics. For example, these may be new skills development. If we have a strategic initiative to open new market segments, then I have to first develop some knowledge about those new segments and skills in selling to customers in those segments.
These 4 areas are tied very closely together. The operational management and personal development goals and metrics lead the strategic and business management areas. If we are not hitting our goals in personal development or operational management, then we have early indicators that we are not likely to achieve the strategic and business management goals. If we are paying attention–we have the time and opportunity can do something about it, getting ourselves back on target for making those strategic and business management goals.
So as we establish personal, team, and organizations goals for the coming year, it’s important that we have a balance across these 4 areas. We can’t just look at the output goals, we have to look at what we are doing today and this week that tell us we are on target to achieve our goals.
Are you making sure you have a balanced set of goals and metrics? If not, next year will be another tough year!
