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Building Your Sales Metric Management System In 4 Easy Steps
Guest articles >
Building Your Sales Metric Management System In 4 Easy Steps
by: Lee B. Salz
Every sales manager is searching for revenue from their salesforce, but the
recipe to achieving the revenue target comes from the development of their
unique sales metric management system.
Thinking back to one of the great cult films of the 1980s…Caddyshack. There
is a conversation between Ty Webb (Chevy Chase) and Judge Smails (Ted Knight) in
the locker room after Ty has just finished a round of golf. Judge Smails asks Ty
what he shot that day and Ty responds by telling the Judge that he doesn't keep
score. Puzzled, Judge Smails says, "How do you measure yourself with other
golfers?" Ty responds by saying, "By height."
Obviously, height doesn't tell you anything about a golfer's performance
which is why that dialogue is humorous. Yet, there is nothing funny about a
sales organization that is using meaningless, arbitrary data to assess the
performance of their sales team. Even worse is if the only number tracked,
measured, and monitored is revenue quota attainment.
When I conduct workshops on building a sales metric management system, the
first metric that the group usually mentions for inclusion is revenue. Revenue
is not a metric. It is a result. There is nothing that sales managers can do to
address revenue. They can, however, work with a sales person on specific
activity levels that lead to quota attainment. In essence, the statistical
components of your sales metric management system create a success roadmap for
your sales people. If they are achieving the metrics in the system, they will be
blowing out their revenue targets.
There are four steps to identifying the metrics for inclusion in your sales
metric management system.
- Measurable. If the area of the business you want to measure cannot be
measured statistically, then how will you know whether or not it is working?
This seems like circular logic, but I often hear about "trusting your gut" as a
measurable statistic. Needless to say, gut instinct does not belong in a sales
metric management system. There needs to be a way to track the data easily and
efficiently.
For example, if you wanted to track the number of outbound calls made by your
sales team, but that data was not tracked anywhere, you would not be able to
measure it. Thus, outbound calls would not be part of your sales metric
management system as it is not measurable. Search for other data points that
reflect performance that is measurable. If you find that many of the areas you
want to measure are not measurable, you may need to look at your CRM. It may
need to be reconfigured or replaced altogether.
- Meaningful. Just because you can measure a data point, it doesn't mean
that it belongs in your sales metric management system. Like sports, there is no
end to the data that can be measured in a sales organization. Sportscasters
commonly use a series of statistics to present how well or terribly a player is
performing. Easily, a set of counterpoint data could be presented showing the
opposite point of view.
I recall my time as a sales management executive where on any given day I
could put together a series of data that would support promoting or firing any
member of the sales team including myself. The key is to select the most
critical activities that drive the sales person's success and include those in
your sales metric management system. For each metric, ask yourself what that
data tells you relative to the sales person achieving their revenue goal. The
meaningful ones go in your system while the others are cast aside.
- Goal-oriented. Statistics without goals tell you very little about
performance. Each statistical component of your sales metric management system
needs to have a corresponding goal. When performance discussions take place with
the sales person, their performance versus goal achievement serves as the center-point
of the agenda. This is a significant change from the typical discussions that
are focused on whether or not sales quota was attained.
When setting the goal-levels for your sales metric management system, there
is an important consideration. Thinking back to report cards from school,
students achieved a letter grade based on their performance. A few kids received
an "A" which meant they had delivered stellar performance. However, average
performance reflected a "C" on the report card. If your sales person achieved
the goal for a particular metric, what does that mean? Was their performance
exceptional? Or did they perform at the mere minimum acceptable level to keep
their job?
If you set your goal levels so that they mean A-level performance, you should
expect few of your sales people to hit them. If you set them at the C-level, you
are establishing the baseline for minimum acceptable performance. There isn't a
right or wrong approach between the "A" and "C" philosophies. The key is to
select one, understand its meaning relative to performance, and handle
achievement accordingly.
- Trainable. The final component is to identify the mentoring that can be
provided to a sales person who is not achieving a defined metric in the system.
Since the metrics that you are managing are critical to a sales person's success
(meaningful), deficiencies cannot be left unaddressed. When you identify each
metric for the system, if a sales person is not achieving it, what potential
weaknesses does it expose in their arsenal? As a sales manager, you can then
begin digging to determine the root cause and help the sales person improve.
Just like many think that revenue is a metric, many think that if a sales
person is failing to achieve their revenue quota that they cannot close. It's
possible that closing is the issue. However, if you have your sales metric
management system in place, you may find that closing isn't the issue at all.
Perhaps, the sales person doesn't have enough activity in their pipeline. Or,
that they struggle to move prospects through the buying process. Or, any of
countless other possible deficiencies. Managers who have their sales metric
management system in place can quickly identify the problem area and address it.
Designing your sales metric management system well-positions you to create an
effective sales compensation plan. Remember, your sales compensation plan tells
your sales people where to invest their selling time. Thus, the compensation
plan reinforces your sales metric management system. If you would like my sales
metric management system worksheet, send me an email.
Lee B. Salz is a sales management guru who helps companies hire the right
sales people, on-board them, and focus their sales activity using his sales
architecture® methodology. He is the President of
Sales Architects, the C.E.O.
of Business Expert Webinars and author of “Soar Despite Your Dodo Sales
Manager.” Lee is an online columnist for
Sales and Marketing Management
Magazine, a print columnist for SalesforceXP Magazine, and the host of the
Internet radio show, “Secrets of Business Gurus.” Look for Lee's new book in
February 2009 titled, "The Sales Marriage” where he shares the secrets to hiring
the right sales people. He is a passionate, dynamic speaker and a business
consultant. Lee can be reached at
lsalz@SalesArchitecture.com or 763.416.4321.
Keywords: sales techniques, sales strategy, lost sales, sales management,
sales consulting, sales training, strategic accounts, closing skills
Contributor: Lee B. Salz
Published here on:
Classification: Sales
Website: http://salesarchitecture.com
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