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SALES

Find the Right Metrics for Your Sales Team by Frank V. Cespedes and Bob Marsh

AUGUST 22, 2017

“What gets measured gets managed” is a longstanding business aphorism. But today’s

sales technologies enable companies to measure almost anything, which leads many

managers to try to measure everything. As a consequence, managers don’t have a NO THANKS, I WANT TO CONTINUE READING. 

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clear sense of what is really driving sales in their business, while salespeople, who are

inundated with dozens of metrics, get lost in the day-to-day noise. The result is poor

management of what matters.

The challenge, of course, is to decide on the right metrics. Consider the results of a

survey of key performance indicators (KPIs) being used by more than 800 sales teams

across industries. Wins are the most common metric used across sales roles and

industries. On average, firms measure closed deals and rep production against quota

monthly, which isn’t surprising. Selling is a performance art, and “making the

number” should be the goal of any sales organization, but a closed deal is an outcome

and a lagging indicator; it can’t be used by the salesperson or sales manager to

improve future outcomes.

This is why leading indicators such as demos, web registrations, calls, or C-suite-level

meetings are often more instructive. Instead of reviewing historical results, which are

beyond a rep’s control, they offer real-time feedback on whether salespeople are

spending their time and efforts in the best way. Leading indicators are within a rep’s

control. If salespeople are behind on a key indicator, for example, they and their

managers can change behavior to increase the probability of success.

Deconstruct Your Sales Funnel

In order to improve sales outcomes and clarify the relevant sales KPIs in your

business, you need to deconstruct your sales funnel.

Here’s a typical flow of activities:

Prospecting: cold calls, email, phone, LinkedIn, etc.

Qualifying: initial conversations aimed at separating the merely interested from the NO THANKS, I WANT TO CONTINUE READING. 

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actual prospects and determining who is a qualified opportunity

Advancing opportunities: discussions with qualified opportunities to communicate

the value of your product to the right contacts

Closing: final steps in negotiating and winning the business

Post-sale: service, order fulfillment, possible customization, and onboarding activities

to ensure the client is successful

Every company is different, but every business has a sales conversion funnel. Some

funnels are relatively short and simple, while others are long and complex. Knowing

what type of funnel applies in your business is essential to clarifying key metrics and

performance management practices, including sales incentives.

Consider one SaaS company that sells a menu display and advertising platform to

restaurants, which is a big but fragmented market. The challenge for reps is that,

because restaurants all have different budgeting processes, they must be there at the

right time to close that sale. Once a sale is closed, the firm incurs low marginal costs in

setting up and maintaining a customer on its platform. In this situation, it makes

sense to “feed the funnel” and provide reps with incentives, through proper metrics,

to make frequent and repeated calls.

By contrast, consider another SaaS firm that sells a subscription software product that

provides big productivity and environmental benefits if the customer is willing to

alter some traditional workflow processes and use the software at sufficient scale.

This is a more protracted buying and selling process, where ongoing customer

education and onboarding is crucial. Awareness and initial enthusiasm from a

prospect on the capacity to adopt new software can be deceptive and expensive for NO THANKS, I WANT TO CONTINUE READING. 

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this firm. Here, simply “feeding the funnel” is a mistake: Lead generation is less

important than pursuing the right leads. Moreover, this SaaS firm’s profit margins are

mainly in contract renewals and ancillary services it can provide if it gets the right

scale and usage in the initial sale. Here, management must ensure that sales reps vet

the top part of the funnel carefully so that they don’t spend months chasing the

wrong prospects, while providing reps with the means and an incentive to manage

that long selling cycle and renewal process.

The experience of Paycor, a payroll processing company, is a useful example. Like

many firms, its frontline sales managers were typically former top-producing

salespeople, many of whom were managing other salespeople for the first time. In

making that transition, they tended to focus on what they knew best: helping to close

a deal. But after closely examining the selling cycle, it became apparent that the best

time to work with their reps to influence the sale was earlier in the funnel. Sales

managers used the leading indicators to drive a 55% increase in relevant new-

business meetings and a corresponding 50% reduction in onboarding time.

Make Performance Reviews Count

Finding the right metrics isn’t the end of the story. Selling is about behaviors, not just

analyses, and making sure that salespeople align their behaviors with those metrics is

an ongoing process. Performance reviews can help, if they’re done right.

Unfortunately, reviews are typically underutilized levers for influencing behavior in

most organizations. Busy sales managers tend to treat them as cursory, after-the-fact

discussions about quota attainment and compensation, not coaching about going-

forward behaviors. The result is that, too often, “feedback” from managers is really a

sermon whose message is “get better and sell more.” Like most sermons, this may

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work when you’re preaching to the already converted, but it’s too abstract if you’re

not. Clarifying leading indicators can make a difference, because the salesperson then

knows the behaviors they need to change in order to improve performance.

Many sales managers begin conversations with reps by asking well-intentioned but

generalized questions like, “What’s closing this month and how can we make those

deals happen faster?” In response, reps focus on the next 30 days and the required

onboarding of new customers, and then neglect important activities that happen in

between. This is one reason why sales output is so variable — strong sales months

followed by catch-up prospecting during the lean times — in so many organizations.

After deconstructing the funnel, however, managers can use different talking points

that allocate attention and resources toward those activities. For example: “Sofia, you

are making lots of calls and scheduling many meetings, but you’re calling on too

many small firms and your qualification criteria have you chasing many prospects

that are highly unlikely to close. Let’s fix your account prioritization.”

Or: “Arjun, you are behind peers in setting meetings with VP-level prospects, and we

know those contacts increase our win rate substantially. Let’s talk about the

organization of your prospects and what we can do to get the right access.”

Among other things, conversations like these — especially when reflected in

accessible reports and personalized scorecards — empower reps to know where they

stand and where to focus. They allow sales managers to provide feedback about

behaviors, not just intentions. Beyond individual coaching, moreover, relevant

leading indicators can also spur more systemic means for generating proactive selling

behaviors: incentives to schedule new-business meetings with the right contacts or to

pitch bolt-on products that amortize onboarding time and increase renewal rates.

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These steps are within a company’s internal circle of influence, not in the less

controllable external market environment. But exercising that influence requires

managers who know what metrics count and who can then translate data into

relevant selling behaviors. Those managers are not just discussing quotas and after-

the-fact outcomes; they are truly managing sales performance.

Frank Cespedes is a Senior Lecturer at Harvard Business School and author of Aligning Strategy and Sales (Harvard Business Review Press).

Bob Marsh is the Founder and CEO of LevelEleven. He has over 20 years of sales experience and works with companies to help build data-driven sales

organizations.

This article is about SALES

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