Do you ever wonder if your salespeople are focusing their efforts on the behaviors that will yield maximum sales results? Are your sales managers coaching around the activities that truly matter?
Established research from organizations like CSO Insights and Vantage Point Performance has concluded that to achieve desired sales results, sales leaders must manage and motivate the activities that precede them. While that sounds like a logical conclusion, there’s real revenue risk in not addressing this issue. In fact, Vantage Point’s research shows that a poor-performing front-line sales manager generates $3.5 million less in sales than a good sales manager. But what metrics should sales managers focus on that will result in those desired results? Calls? Demos? Deal size? Building pipeline? Meeting with VPs? This was the KPI question that I kept hearing from our customers.
Using Data to Clarify and Coach
We’ve learned that it’s easy to overcomplicate a metrics-driven approach. With modern technology, you are empowered to measure anything — which often results in trying to measure everything. The net result is people look at a lot of numbers and graphs, but don’t know how to digest the information or what to do with it.
For this reason, we recommend that sales leaders take a step back and clearly identify the critical activity metrics they want their salespeople to stay focused on and that sales managers can truly manage around. The ideal mix is three leading indicators and one lagging indicator. For a sales development team the lagging indicator is typically creating qualified sales opportunities. For a sales team, the lagging indicator would be closing business. The leading indicators are the controllable daily activities that are focused on delivering those results.
What the Research Tells Us
The “2017 Sales KPI Report” offers some helpful guidance for sales leaders who are asking how to get their teams focused on what truly matters. The funny thing about data is that it often doesn’t reveal a magical new insight; it more commonly gives you confidence that your instincts are correct.
Here is a summary of the report’s findings:
Seventy-nine percent of the companies studied have inside sales and sales development teams.
A KPI-based approach is used across all company sizes, with an even distribution between companies with under 250 employees and those with over 250 employees. (Many large enterprises were included, with 29% of companies studied having over 1,000 employees.)
Sales teams at technology firms have most rapidly adopted a KPI-based approach (47% of companies studied). They also tend to be the most progressive-minded, with an “inputs drives outputs” mentality.
Highly competitive industries, including finance, insurance, media, and telecommunications, are included in the research (combined they represent 37% of companies studied). These industries tend to have less differentiation in their product offerings and therefore require rigorous management of their sales team to outexecute their competitors.
Meetings are the most common and consistently used KPI across all selling roles.
Monthly-goal time frames are the most commonly used across all sales KPIs; however, weekly goals are more common for the most popular KPIs — calls, meetings, and creating opportunities.
As you can see in the report, sales is still a cascading set of controllable behaviors that lead to a defined outcome — closing a deal. That’s why the most effective sales metrics to manage around (regardless of time frame or sales role) are elegantly simple: call people, talk to people, uncover sales opportunities, move those opportunities forward, send quotes and proposals, and close the business.
By reverse-engineering your sales process, you can calculate what controllable steps and activities need to happen, and how often, to achieve and beat quota. Then set those expectations for sales reps and empower them with personalized scorecards to track their progress. This enables your sales managers to monitor and correct performance in real time, coach individual reps in a common way, speed up the onboarding process, and clearly identify when a key metric is falling behind so they can refocus and rally the team.
Back to the Basics
“That’s why the most effective sales metrics to manage around...are elegantly simple: call people, talk to people, uncover sales opportunities, move those opportunities forward, send quotes and proposals, and close the business.”