If you cannot measure you cannot manage but if you measure the wrong things you will manage the wrong things.
In a previous newsletter we wrote an article “Pipeline or a pipedream – they may be in your pipeline, but are you in theirs?” Distilling this to our key message is; when measuring progress in selling situations, what matters is where you are in the prospect’s buying cycle not where you are in your selling cycle. Sorry to be blunt but; it does not matter where you think you are, only the prospect’s view matters in this regard – they actually KNOW where they are which is of course also where you need to be! A key role therefore for sales people is influencing the prospect’s buying process but this is a topic for another day.
If you accept the premise that position within the prospect’s buying cycle is what matters then you must build your performance measurement system around it. You must measure the progress being made by your company and your proposal as the prospect moves towards the point of decision. Once you are using metrics that tell you where you are in the prospect’s buying cycle you have the means to proactively change the outcome and manage your performance.
I have seen many useless metrics in my time but by applying the following three simple rules you will avoid the trap of meaningless metrics:
- They must measure progress (forward movement) not just activity
- Rather than just measuring how busy people are they must measure productivity
- If you consider a sales process has; inputs, outputs and outcomes, your metrics should mainly focus on measuring the outcomes if you really want to know where you are positioned.
Consider some examples of common metrics:
- The number of times a tele-sales person picks up the phone. Were they able to gather useful business information, or were they chatting with a mate (because they think you want to see them on the phone)? This is just measuring activity and is only an input to the process – it tells us little of any value. Consider instead measuring how many meetings resulted from the calling that then led to a follow up action – you are now measuring; productivity, progress and position.
- The number of meetings attended. Again, this is still just measuring activity so for it to become useful you need to measure the outcomes from the meetings rather than how many there were; e.g. how many led to a follow up action. Also ask yourself; how much time and expense did the trip consume and did the prospect gain a positive impression of us and our capabilities? If the meeting leaves the prospect underwhelmed, it has probably done more harm than good.
- The number of proposals sent out. This is very useful if the prospects wanted the proposals but if they were triggered by an arbitrary stage in your selling cycle it is usually a waste of time and will probably do more harm than good. You need to ask yourself “Does the proposal address a time-bound need that the prospect has and does it present a value-based solution which would trigger them to act?”
You will observe an emerging trend here that for metrics to be of value they must shine a light on where you are going rather than just providing a dialogue on where you have been. Consider the simple test that good metrics will inform you about your; productivity, progress and position.
Feel free to contact us for a more detailed discussion.
Characteristics of useful metrics
- Be qualitative not just quantitative e.g. the number of calls made should be replaced by the number of qualified appointments (that meet pre-determined criteria for an appointment) created from the calling activity.
- Inform you as to the likely outcome from the current event
- Provide a contiguous journey through the prospect’s buying cycle
- Deliver accurate information about timings such as; when the decision will be made
- Provide you with a reliable forecast of future business
- Provide information on useful conversion ratios e.g. meetings leading to a next action, or conversations : appointments : proposals : orders (CAPO)
- Be based on a company designated system rather than the whim of an individual sales person
- Inform you about your; productivity, progress and position
- Give you early indication when things are not going to plan.
If your current approach to metrics isn’t helping you to manage performance why not try some of these ideas for a fresh approach. Happy to talk on the phone if you have anything specific to discuss.