Citius, Altius, Fortius
There is a management maxim that is especially appropriate to metrics: citius, altius, fortius. With the Beijing Olympics spectacularly just finished, it seems especially appropriate because it is the Olympic motto: faster, higher, stronger.
But as a sales manager you need to know one more thing: faster, higher and stronger than what?
In other words, you need baseline and continuous metrics.
Imagine you’re a high school track coach (hey, Olympians have to start somewhere). You have eager and talented kids on your team, and despite all the pep talks that the endeavor is about more than just winning, their eyes and faces are much brighter when they do win. And be honest, you feel better about your efforts and theirs when they win.
So you put the sprinters through the usual paces: lots of wind sprints for speed, much longer runs for endurance, weight training for strength, and you offer the usual bromides about getting plenty of rest. But they’re not winning. So you double down and have them do more of all of these regimens; their losing streak continues, your workout routines become even more grueling; they start complaining and some may even drop out. Your “coaching” is reduced to simply imploring (or yelling): “Run faster! Try harder!” Nobody is having fun.
So far the only information you’ve had available are results: final race times and whether each sprinter won or lost. Now imagine you have one more thing: metrics.
Split times show you that one sprinter, Steve, is slow coming out of the starting blocks, lags the first quarter, overcompensates with too quick middle quarters and is out of gas by the final quarter. Another comes out of the blocks very quickly, peaks early and then hangs on. Profiles of each kid’s practices and races over the past two months are available and you can see changes when you suggest certain things: “Steve, I want you to concentrate on lifting your knees half and inch higher throughout the entire first half, then just don’t think anymore and run through the tape at the end.” You see slight changes in the profile. Steve comes in second in his next two races rather than last; you have another idea of what to modify based on his new split time profiles. You also notice his weight seems a little light for his height.
In our annual Sales Performance Optimization report, we’ve been tracking over 100 metrics for several years. The data is useful for Chief Sales Officers to see how their teams compare with peers and because it is normalized over more than 1,000 companies—but we also must offer performance ranges because in most instances, other than questions around quota and quota attainment, turnover rates and compensation—all results—actual performance metrics are scarce.
The information these lagging results indicators provide relegate these CSOs and their managers to much the same level of coaching/imploring as above: “Run faster! Try harder!”
Given that robust analytic tools are becoming increasingly accessible to firms of all sizes, we added a question specifically on metrics to our 2008 Sales Performance Optimization survey: How would you assess your organization’s ability to provide sales managers with timely/accurate sales performance metrics? The options were Needs Improvement, Meets Expectations, Exceeds Expectations, and Do Not Know.
Recently we combined a second new question asking respondents to assess their sales management’s ability to: proactively identify which sales reps need extra coaching/mentoring. The same options for answers were available. As you will see, key to this question is being proactive and this, in turn, requires leading rather than lagging indicators.
We then compared performance figures for companies that Need Improvement (N) in both these areas versus companies that reported they Exceed Expectations (E) in these two areas. With more than 1400 companies responding to our 2008 survey, Needs companies outnumber Exceeds companies 4:1.
Quota attainment was ten percent better at 61% (E) to 55% (N). Overall organizational quota attainment also was better: 87% for all other firms compared with 92% for those with appropriate metrics. Two other telling performance measures are reflected in the charts below.
Companies that exceed expectations in providing their sales managers with timely/accurate sales performance metrics show greater sales rep retention and greater forecast accuracy.
As can be seen, voluntary turnover for E firms is a third lower than for N firms and involuntary turnover is less than half. This would certainly be reflective of managers identifying and coaching/mentoring at risk reps earlier (proactively), rather than simply putting them on a 90-day performance improvement plan (i.e., the necessary timeframe to legally document firing a rep).
Win rates of forecast deals also favor Exceeds firms over Needs firms. E firms significantly outdistance N firms in four other areas: 1) Level of process implementation; 2) Customer’s perceived level of relationship; 3) Rate of CRM adoption; and 4) Rate of consistent use of sales methodology.
Getting the Numbers You Need to Manage
If your CRM system is not providing you actionable performance operating metrics (i.e., leading indicators) then you need to augment it with a resource that will. Today, there are both SaaS applications you can connect or on-premise solutions that will access your data and deliver the appropriate analysis—assuming you have an underlying and consistently implemented sales process.
With timely, accurate, individualized, consistent and relevant metrics you can provide the feedback and coaching needed to enable your reps to complete sales cycles faster; take average deal sizes and margins higher; present and close stronger.