So much time and resources are lost by organisations recording sales metrics which do nothing to impact and improve sales performance. Sales managers and teams get caught up in unnecessary and time-consuming admin, reporting metrics just because that’s what they think they should be doing.
Sales metrics are essential to understanding and improving sales performance, the challenge lies in knowing which measures to use and how to go about using those measures to improve performance.
So, if you want to really improve sales performance, then it’s time to re-evaluate your sales metrics.
What are Sales Metrics?
Sales metrics are those measures – which can be recorded at individual, team or organisational level – that record some element of sales performance. The purpose of sales metrics being, firstly, to help understand how well we are performing but, ultimately to drive performance improvement.
Research by the Sales Education Foundation and Vantage Point Performance in which thousands of data points from sales leaders were collected, identified 306 distinct metrics as being core to sales management. That’s 306! It doesn’t take a genius to work out that 306 sales metrics might be too many.
This research is the basis of a book I recommend every Sales Leader and aspiring Sales Leader reads; Cracking the Sales Management Code by Jordan & Vazzana (Jordan is a founding partner of Vantage Point Performance). With the 306 distinct metrics identified, Vazanna et al set about trying to understand them – looking for patterns and commonalities. Their findings offer a framework which enables us to understand and categorise sales metrics in such a way that we can use them to actually drive sales performance. They concluded that all 306 distinct metrics could be classified into one of the following 3 categories:
- Sales Activities – Those metrics relating to field-level activities, performed by either sales people or sales managers. For example; number of sales calls made or number of hours spent coaching sales people. These metrics are directly manageable.
- Business Results – Top-level metrics that are influenced not only by sales, but many other departments and external factors. Examples include, gross profit or revenue growth.
- Sales Objectives -The metrics that bridge the gap between Sales Activities and Business Results. Examples include; number of new customers obtained and customer retention. These are not directly manageable, but are impacted by directly manageable Sales Activities and, in turn, can impact Business Results.
The Role of the Sales Manager
The key differentiation between the 3 categories lies in how manageable they are – activities can be managed, but outcomes cannot and both Sales Objectives and Business Results are outcomes.
Sales Activities are the only category of metrics which can be directly managed. For example; a sales team increasing the number of sales calls they make each week is a Sales Activity that can be measured. This Sales Activity might help meet a Sales Objective to increase, for example; the number of opportunities and this, in turn, may well impact the Business Result of revenue growth but if we just try to increase number of opportunities, or increase revenue growth without any thought as to the actions which can drive this change, we are unlikely to be successful. And yet, all too often businesses attempt to drive performance change using Business Results metrics alone – how many team/company meetings have you sat through where senior leaders have presented “disappointing” Business Results, accompanied by a rousing speech, designed to inspire sales people into action? This rarely, if ever, delivers the desired results.
The Sales Manager is the key. The enabler, the catalyst for change, the one who can turn Sales Activity into Sales Objectives and Business Results.
Metrics will drive sales performance only when they are directly related to the activities sales people undertake. This is why Sales Activity metrics are so important. Many Sales Managers shy away from Sales Activity metrics, fearful that they will be viewed as micromanagers, or untrusting of their team but they are critical if you want to deliver performance improvement. The ability of the Sales Manager to coach their team to greater performance will determine how successful the team is.
What to Measure?
Business Results and Sales Objectives are both incredibly valuable metrics and hugely important in providing the wider picture and in forming a top-down model to drive Sales Activities. But lengthy reports take time and resource to produce and to digest. Revisit the metrics you’re using – perhaps you have too many, perhaps you don’t have enough. The metrics you use must be the right measures and they should ultimately drive action.
For the Sales Manager, don’t just record Sales Activity metrics and hope that the results alone will be enough to spark action – use these metrics to identify skill gaps and weaknesses and use coaching techniques to help your sales people achieve greater performance (for more on coaching, take a look at our free Coaching for Sales Leaders workshop). After all, if performance improvement is not the ultimate aim of a sales metric, then what is the point in using time and resource to measure it?
In my next blog, I’ll delve deeper into the role of the Sales Manager and what they can do to drive sales performance improvement.