The Metrics Sales Leaders Should Be Tracking

As an executive vice president for sales, I spent countless hours reviewing, examining, and analyzing the sales forecast for my company. I required the managers who reported to me to do the same. And that’s what they asked their reps to do, too.  We weren’t alone. Conversations between sales leaders, sales managers, and sales staff frequently focus only on numbers: Did you make them? Will you fall short? How much do you think you can sell in the next quarter?  The result is an inordinate amount of time spent on inspection and reporting of numbers that are, speaking frankly, out of the control of any sales leader.

In a recent study, the Sales Education Foundation and Vantage Point Performance identified 306 different metrics that sales leaders used in their efforts to manage their business. These metrics fell into three broad categories: sales activities (things like the number of accounts assigned per rep, the number of calls made per rep, and percentage of account plans completed), sales objectives(like the number of new customers acquired, the percentage share of customers’ wallet, and percentage of customers retained) and the subsequent business results (revenue growth, gross profit, customer satisfaction).

Even though managers were spending more than 80% of their time focused, as I had been, on the second two categories, the report found that sales management could affect only the first – the sales activities. The other two couldn’t be directly managed since they’re outcomes, not the process by which the outcomes are gained.

Which sales activities should sales leaders be managing?  In their book, Cracking the Sales Management Code, Jason Jordan and Michelle Vazzana break down sales activities into four discrete categories: call management, opportunity management, account management, and territory management. Different organizations might need to focus on one or another of these more intently, depending on both the nature of what they sell and where their organizational weaknesses laySo depending on the needs of your sales organization or team, here’s a way to map the various sales activity metrics to the challenge at hand:

Sales leaders who need to improve call management — that is, the quality of the interaction between individual salespeople and prospects or clients — should focus on such metrics as call plans completed, coaching calls conducted, or even the number of calls that are critiqued and reviewed. Coaching in the area of call management is particularly valuable when the seller need make only a small number of calls to greatly affect the outcome of a given deal. In selling professional services, for example, the ability to create value in one or two interactions with a senior executive often makes or breaks the deal.

Sales leaders who need to improve opportunity management – the ability of their salespeople to vet, pursue, and close a multistage sale — should focus on the number of opportunity plans (outlining the actions required to move through the stages of the sales cycle) completed or the percentage of early-stage opportunities qualified — that is, fully vetted to confirm you are really reaching the right customers, that these customers have the potential to generate a reasonable amount of business for the effort it will take to gain it, and that they are in fact willing to budget sufficient sums to purchase your offering. Identifying bad deals in this way and getting them out of the way early may be the simplest way to increase your odds of success. Most companies I have worked with don’t want their sales teams pursuing every opportunity possible. Instead, they want to put their maximum effort on the opportunities that match some kind of ideal client profile.

Sales leaders who need to improve account management – the ability to enhance the long-term value of a single client – should focus on working with reps to develop and adjust account plans so that they define an overall strategy for the customer. This is also when it would be fruitful for you to spend time creating and monitoring standards for important client-facing activities like establishing peer meetings between your organization and the customer (by, for instance, arranging meetings between your CEO and the client’s CEO) or getting the customer to sit on your organization’s advisory council to provide feedback to your business. I have a high-tech client that tracks the amount of time executives spend each month with a single account that generates $65 million a year. Account management metrics are vital when a substantial portion of your organization’s revenue is concentrated in small number of key customers.

Sales leaders that need to concentrate on territory management – on how you allocate sales reps’ time among all the customers in a given territory — should focus on metrics like the number of customers per rep, number of sales calls made, and even sales calls to different types of customers. By managing the process of selecting, prioritizing, and meeting with target customers you can maximize the use of your sellers’ most precious resource — time.

Many sales leaders have been inadvertently micromanaging through revenue or profit numbers, which is counterproductive. This is your chance to provide your sales team with a new context to succeed in. By closely managing the things you can control, you will give your organization the best chance for success.

Four Principles For Great Sales Forecasts

To say that forecasting is the bane of existence of most sales managers and leaders is a bit of an understatement. For most representatives, the choice between working on the forecast and getting a root canal would lead to a trip to the dentist. And yet, most organizations rely heavily on the “data” that is produced in forecasts to make decisions on everything from budgets to bonuses. I use quotes around the term data, because while the term is appropriate, many a forecast are a “wish-cast.” That is, the data is based on too much hope of what will happen and not enough empirical evidence to be accurate.

If you want to produce better sales forecasts, then it is incumbent upon sales leaders to take a different approach. Simply providing routine inspections of the numbers reported up the chain of command and making adjustments based on gut feel is not enough. In order to produce a good forecast, sales leaders need to pay attention to the following principles:

  • Good forecasting requires a good sales strategy. When a map is wrong, it fails to accurately depict the reality of the landscape, and the same is true when a forecast is incorrect. In short, a forecast does not a strategy make. Good sales strategies take into account the outcomes that need to occur in order to move closer to closing business. A good strategy may include a SWOT analysis, or a clear understanding of the customer criteria for decision and how you rank against the criteria, but most importantly, it will direct your tactics and help you determine the logical series of next steps. And if an account is worth occupying space in your sales funnel it deserves the strategic consideration and attention required to move deftly through your pipeline.
  • Good forecasting requires an understanding of your buyer’s behavior.“If you want to learn how sellers ought to sell, learn how buyers buy,” frequently admonished one of my mentors. And if you want to have an accurate forecast, the same holds true. Too many forecasts are simply lists or histories of what the seller has done without taking into consideration what the buyer is doing. The sales process, however, only moves forward when the buyer takes action, so it is incumbent on the sales organization to get very clear on how your buyer is making the decision. What is the process they will use? What stages of the decision cycle are ahead? And what should you be doing differently at each stage.
  • Good forecasting requires a milestone driven pipeline process. Once you are clear about how the client is buying you can apply your pipeline process. Ever looked at a forecast and said, “This account is not in the late stages, it is an early stage opportunity?” The key to being effective here is to make sure your pipeline process addresses the key milestones in your selling environment. Are needs analyses, field studies, or demo’s important milestones that client’s commit to in the sales process? Pre-proposal review meetings? If so include them in the appropriate stages of your pipeline process and manage to the events that lead to the completion of these milestones. Whatever milestones they are, or whatever your unique vernacular calls them, make sure they are embedded in your pipeline process so that they serve as guideposts for where you really are in the pipeline.
  • Good forecasting requires continual improvement. A forecast is a snapshot not a movie. At any given time you need to remember that, done well, forecasting represents a moment in time, and since the landscape is constantly changing, forecasts need to be continually refined. You may experience changes in your business or in the marketplace that indicate that an additional milestone be added to your process. Or perhaps you find that over time, the values you placed on each of the stages in the pipeline need revision because you have more predictive data about closing rates.

With these principles, forecasting can become a strategic endeavor with a positive impact on results versus an inspection exercise that produces an educated guess. The best sales leaders I have worked with use the forecast as a tool to help them manage and lead the business, support strategic decisions, and determine how to allocate resources. Not just another spreadsheet to check the box on. Use these principles to help your sales organization to forecast more effectively and you will have created great value for your company and made your job much easier in the process.

Would Customers Pay for Your Sales Calls?

When I speak to audiences of sales professionals and ask, “How many of you sell value versus price?” everyone raises their hand. But my next question “So how do you do that?” is frequently followed by an uncomfortable silence. Many consider themselves to be value sellers but few are able to articulate what that really means.

In the simple economics 101 definition, value equals benefits minus cost: V=B-C. If you follow the logic of that equation, then, selling value means creating some benefit through the sales process beyond that provided by the product or service itself. My former boss and sales guru Neil Rackham has a simple test for this: He asks, “Would your customer write you a check for the sales call?” That is, did your salespeople do something on the call valuable enough for your customers to pay you for?

If they didn’t, the only way you can profit from your sales operation is by reducing costs. That’s why all my efforts to make sales teams more effective have focused on increasing not just the value of the offering but the value of the sales call itself. To do that I encourage them to move down the continuum from transactional to consultative relationships. Here’s how:

Help clients see issues they hadn’t considered. The best salespeople I’ve worked with do an extraordinary job of this. And they don’t do it simply by lecturing the client about the problems they see. They do it through a process of mutual diagnosis. In these instances, the seller leads a dialogue with the client about her business, offering diagnoses as the conversation progresses.

Help clients examine issues they thought were benign, but aren’t. When I interview clients about their sales relationships, they frequently tell me that they greatly value the ability of their reps to help them make a case for change. They do that by helping clients see the effect of a problem on the organization. A seller may help a client to see that a morale problem, for instance, which right now is only causing modest employee turnover, is having a tremendously negative impact on recruitment and productivity that will eventually become highly problematic. Again, this is not done through lecturing, but rather through the course of conversations in which seller and buyer explore the impact of a given situation together to determine the implications for the business.

Help clients see opportunities they’d missed. Sales-training programs rightly focus on finding clients’ “pain points.” But great salespeople also know there’s value in pointing out successes waiting to be exploited. Surely, creating value in the sales process is as much about raising the bar as it is about solving problems. In fact, untapped opportunity may be even more important as organizations seek to grow in this perpetually tough economic environment. Jointly discovering such opportunities through the course of back-and-forth conversation makes it less likely that a client will react defensively to something he perhaps should have already known and more likely that he will embrace both the opportunities — and the messenger that helped to uncover them.

Help clients address problems with solutions they hadn’t considered. Of course, at some point your, products and services have to come into the picture. When they do, the best sellers position them, not as a series of features and benefits, but as solutions that address the expressed needs of the client. Positioning products and services as a solution is not a new idea by any stretch, but the key to creating value is to do so in a way that the client has not considered. I bought a new air-conditioning system last year. I hadn’t considered upgrading the heat pump in my system. But with the help of the representative, I came to realize that the new system wouldn’t lower my winter heating bills without one. The power of the a-ha moment here can’t be understated when the client says, “I hadn’t thought about it that way!” Few clients will know everything your offering can do or all its potential applications, so finding a way to uniquely address their expressed need is a powerful thing indeed.

Help clients connect with additional support resources. As the old saying goes, “When you sell hammers, every problem looks like a nail.” But you can’t win ‘em all; not every client will actually be a good match with what you’re offering right now. Still, that doesn’t mean that you can’t create additional value for them. Perhaps you can provide connections to others in your organization that could help a client think through a complex issue, or make referrals to outsiders who can get her what she truly needs. You’ll still get the credit for helping the client — and this can help both of you over time.

At the end of the day, selling is about improving the client’s condition with your organization’s products and services. The sales professionals who understand how to do that — who help buyers find real value through the selling process using these methods — sell more and command a premium for their offerings.

The Keys To Sales Leadership

Scott discusses the challenge of being a sales leader. He shares seven keys that separate the average sales leader from the best sales leaders. They are:

  1. Create useful successful metrics that create progress.
  2. Provide visionary leadership.
  3. Develop talent and coach relentlessly.
  4. Pay close attention to selling roles.
  5. Focus on creating value in the sales process.
  6. Forecast with an understanding of where the customer is in the buying process.
  7. Motivate by using recognition and reward.

Play

Make Your Sales Vision Come To Life

In my previous Harvard Business Review blog I have written about sales leadership being the toughest of the functional leadership roles. No other position demands such a disparate set of competencies, ranging from financial management and forecasting, to inspiring and motivating a geographically dispersed team.

In my blog about the keys to sales leadership, I noted that visionary leadership is particularly important in the sales function. While working with sales leaders over the last two decades, I have found six areas of strength in the best of them:

1. Driving for results is the top priority. Nearly every sales leader I have had the opportunity to work with has had a relentless focus on achieving “the number.” That is, the revenue number for their team or organization. A vital component of the vision for a sales organization is the achievement of the top (and often, bottom) line growth objective.

2. Coaching and developing others is the cultural norm. These leaders posses a clear perspective on the importance of onboarding and inculcating new members of the team, as well as developing their existing talent. This vision includes a recognition that sales is one of the few disciplines in which professionals gain the majority of their knowledge and experience from peers and managers. There are few college degrees in sales.

3. Strategy is the name of the game. A strategy comes to life during the interaction between an organization and its clients. Most often, this happens with the sales organization in the acquisition and management of clients. As a result, the actions of everyone in the sales organization need to be carefully aligned to support that strategy. And the vision for the sales organization must express that strategy clearly.

4. Working as a team makes the whole is greater than the sum of the parts. I have seen few selling efforts succeed on the hard work of a sales professional alone (though in fairness I have seen some.) More often than not there is a team of support professionals from marketing, product development, and service that have helped to make for a successful client experience. Sales professionals are frequently in a position of leading that team, which requires cross-functional collaboration to be a part of that vision.

5. Motivating to action is the objective. A sales leader’s vision ought to inspire and create confidence in order to achieve the organizational goals. By its nature a powerful vision expresses a hopeful future about what your organization will be. That envisioned future state ought to provide a level of excitement about where you are headed and inspire people to carry out the actions required to achieve it. Further, as a sales leader, you are the message, so your behaviors must show that you are the exemplar of these characteristics.

6. Effective communication is the foundation. A terrific vision for a sales leader that is not well-communicated will lie fallow. This is more than just eloquent speaking ability – it has everything to do with conveying value. Not just talking about a vision, but also listening, and asking questions that provoke interest and uncover needs.

Visionary leadership is frequently discussed in theoretical or fuzzy terms. When sales teams in particular look to their leaders, they expect vision in practical, sometimes even tactical terms. They want that vision to be clear and unequivocal, and to be guided by that vision. Using these guidelines to help you craft a vision for your sales organization or team, you can create a pithy and concise vision that compels them to action.

Three Elements of Great Communication, According to Aristotle

In my nearly 20 years of work in organization development, I’ve never heard anyone say that a leader communicated too much or too well. On the contrary, the most common improvement suggestion I’ve seen offered up on the thousands of 360 evaluations I’ve reviewed over the years is that it would be better if the subject in question learned to communicate more effectively.

What makes someone a good communicator? There’s no mystery here, not since Aristotle identified the three critical elements — ethos, pathos, and logos. — thousands of years ago.

Ethos is essentially your credibility — that is, the reason people should believe what you’re saying. In writing this blog I made an effort to demonstrate my ethos in the introduction, and here I’ll just add that I have a degree in communication studies (emphasis in rhetoric for those who want the details) for good measure. In some cases, ethos comes merely from your rank within an organization. More commonly, though, today’s leaders build ethos most effectively by demonstrating technical expertise in a specific area (which helps convince people that you know what you’re talking about), and by displaying strong levels of integrity and character (which convinces them that you’re not going to lie to them even though, since you know more than they do, you might get away with it).

Pathos is making an emotional connection — essentially, the reason people believe that what you’re saying will matter to them. I’ve written here before about the importance and the power of making emotional bonds (more ethos?) and why I believe this to be a critical area of competence for present-day leaders. Giving people your undivided attention, taking an active interest in your team members’ career development, and being enthusiastic about both the organization’s progress and the individuals who enable it are ways that leaders do this well. At the end of the day, pathos has the greatest influence on followers’ perception of their leader’s effectiveness as a communicator.

But all the authority and empathy in the world won’t really help you if people don’t understand what you’re talking about or how you came to your conclusions. Logos is your mode for appealing to others’ sense of reason, ergo the term logic. Employing strengths in strategic thinking, problem solving, and analytical skills are how today’s leaders express logical ideas in clear and compelling enough terms to influence outcomes. While some people can get by on gut feel, as Steve Jobs famously tried to convince us he did, most leaders are required to provide some kind of analysis to make clear their decisions. This is where many leaders feel on the firmest ground — when assembling and analyzing data to address organizational problems. A caveat, though — assembling facts is not the same as presenting them clearly (here talking in complete sentences helps a lot), or marshaling them expressly to demonstrate the merits of a course of action. Facts do not speak for themselves, which is sad, since it would save so much time if they did. Effective leaders know the effort and time spent making explicit the connections they’re drawing from the data to the analysis to their conclusion are well worth it.

These three elements of communication reinforce one another. You may rely heavily on data and analysis (logos) to make a point and in so doing create a perception of expertise and authority on a topic (ethos). And while all three are necessary to excellent communication, improving your ability to do any one of them will help you become a better communicator and so a better leader. Combining them is the path to achieving the greatest success.