Do you know your own activity ratios? I mean, do you really know them? Every sales rep I’ve ever met knows how they stand relative to quota, down to the penny. And it seems like they have instant recall of their performance, bookings wise, for every single month they’ve ever worked. “Oh yeah, September 2008? Epic! I worked two deals down to the wire and I held off on discounting the second one more than $12.54 per month on the last deal so I could beat quota by 7% instead of 6% for the extra kicker.” They can’t remember their mother’s birthday, but they remember their key performance numbers.
When it comes to sales activity ratios, you’re definitely not going to have the same level of obsession. But I’m here to say you should know your sales activity ratios inside and out as well. Here are three reasons why you should know your them like the back of your hand via your salesforce reporting.
1. Understand Your Sales Funnel
The most common use of activity ratios for a sales rep is to know how many early-stage activities (like a dial, free consultations or prospecting meeting) are typically required to generate a later stage activity (like a demo, software trial or proof of concept). Ratios provide a basic understanding of your personal sales funnel.
Understanding the typical level of activity necessary to go from stage to stage is key to planning out how you’ll meet your goals for each month.
Lets say you need to close 5 deals a month. How many trials does that mean you need to execute? If the trial-to-deal ratio is 2.0, you’ll need to do 10 trials. If your prospect meeting-to-trial ratio is 3.0, you’ll need to book 30 prospecting meetings each month. Ratios help you work backwards to understand what you need to execute to hit your goals.
2. Finding the right balance for your efforts
Not all activities are sequential like the example above. Often times, early prospecting activities are all happening at the same time, across different communication channels. This is especially true for inside sales and appointment setting. The two classic examples of such activities are phone dials and emails. How many dials per month are you making as compared to emails you are sending? These days, there many more communication channels you might be juggling: Twitter, LinkedIn, SMS and more.
You need to know your ratios for comparing these different prospecting activities so you can properly balance your efforts. Know your email-to-call ratio and compare it to the benchmarks in your organization. Compare your ratios to the rest of your team, the rest of your company and especially the high performers in your company. Maybe you are sending too many emails and not spending enough time on the phone. Maybe your peers have unlocked something successful via LinkedIn. Know the ratio of your efforts so you can execute the right tactics, with the right balance.
3. They’ll help find you your next great job
You change jobs occasionally. Its a fact of life. Finding a company that is a good fit is hard to do. You can only learn so much about a company during the interview process. What is it going to be like when you get there?
One way to reduce the surprises about a new job after you have walked in the door is to compare your activity ratios up front. Just as you can benchmark yourself against your current peers at your current job, you can use your activity ratios at your old job to understand how they operate at this potential new job. How much effort do they put into the phones vs. the emails? Are you cranking through lightly researched consultations in bulk or are you doing in depth research in advance?
If you can compare your current ratios to your future employers’, it is one extra factor to help figure out if the new company is going to be a good fit for you, your style and your long term happiness.
How about you? What other ways do you use activity ratios?
Want to make it simple for everyone in your organization to know their activity ratios?