I’m often asked by business owners and sales managers what metrics or numbers that I think they should be tracking.
Of course it’s a given to track sales revenues i.e. sales by customer, average invoice value, frequency of purchase etc. etc. You need to know who your largest customers are by revenue, which accounts have grown, declined, been lost altogether or have been gained in each relevant financial period. You need to be comparing year on year, month on month sales to monitor if you’re tracking to target. Not just to ‘have a look’, but to evaluate what these stats are telling you about the direction of your business.
In addition, you need to be tracking the leading indicators (revenues are generally historical/lagging indicators). Leading indicators are sales activities i.e. what your sales team is doing day in and day out. Are they doing enough of the right activities at the right skill level to generate the required sales in the future? For example if a rep only has R100k in their pipeline at the end of June and your average sales cycle is 3 months, it’s pretty obvious they won’t meet their R150k July sales target unless a large ‘bluebird’ sale swoops in unexpectedly.
I’m generally not a big fan of doing quick calculations to determine “ratios” i.e. closing ratios, lead to proposal ratios etc. etc. The reason being is that I prefer to delve far deeper into the quality of the activities and what the pipeline stats are really telling me. If you take a quick snapshot of “ratios” in a month – it is just that, a quick snapshot of THAT month at a moment in time. Some opportunities you think haven’t closed might close on the first day of the next month. Some that have closed might have been in the pipeline for 12 months already. Some in the pipeline should never have been quoted on in the first place, so those opportunities were not “lost” – they were never even “found”. One massive opportunity might have landed in rep’s lap without any sales effort at all i.e. an inbound bluebird as I’ve mentioned before.
Measuring a pipeline accurately is not that simple – it’s a moving target, related to the length of your sales cycle amongst many other factors. Again, you really have to be close to your team to manage it properly.
So … what to measure?
- Sales interactions. In the form of telephone calls and visits. Both quantity and quality – and again, the latter you can only do by being close enough to each member of your sales team to know exactly what and how they sell/interact with prospects and customers. It’s dependent on their skill to advance the sale through your sales process, not simply how many calls they make. Who is the better seller? The person who makes 5 good calls a week and gets 5 sales? Or the person who makes 50 calls a week and gets 5 sales?
- Pipeline velocity – how long those (qualified) leads, first appointments, quotes and follow ups have been sitting in your pipeline.
- Average sale value – no point in chasing 50 deals of R1k each if you should rather be chasing 5 deals of R10k. Especially for a small sales team under pressure. I’ve just recently refocused a very enthusiastic, hard working junior internal sales rep on looking for sales of a higher value and she is set to make her target shortly for the first time ever.
The truth is though, that just getting reps to report their own numbers for you is pointless if you’re not interrogating their numbers properly. As soon as a rep knows that you just want a piece of paper for the file, that’s all they’ll give you. Often referred to as a call report.
Work with them, get your hands dirty and you’ll soon get the ‘real’ numbers.
Quality will always beat quantity every day of the week. And weekend.