I’m a numbers guy. I majored in mathematics in college, spent several years at a management consulting firm, and even made it through a year at MIT. So when I heard this week about a sales team that did not want to run their team by the numbers and bail on their KPIs for sales, I was obviously concerned.
The story goes like this: the head of sales set sales metrics for his team. He did all the right things to create a data-driven culture. He shared the goals and results openly and watched his team’s performance against those metrics fly sky high. So what’s the problem? Sales were slow. While activity was up, the head of sales said it turned his team into robots only focusing on the task at hand. They took their eye off the prize of growing the business, and instead of working to close deals, were more narrowly focused on hitting their metrics. His conclusion: running the business by the numbers was a mistake.
Wrong. The mistake here is not in the data-driven approach. He simply set the wrong metrics.
Sales metrics are a powerful thing. For some teams, the metrics are a positive tool to get the team doing what you need them to do. But when they go wrong, you’ll find that your team does only what the metrics ask them to do.
Here are four tips to consider when evaluating your sales metrics.
1. Keep the list short (ideally 3 or 4)
Easy to say, tough to do. Too often when working with my clients, I see the tendency to pile on another metric. But as the saying goes, “chase two rabbits and both escape.” Challenge yourself to keep your list of metrics short. Too many and your team loses focus and fails on them all. Less is more.
2. Make at least one “input” metric
An input metric is something your team can directly and immediately control, like calls made in a day. This is a measure of their effort. Everyone knows that a rep will eventually hit a rough skid and lose several deals in a row. It happens. Make sure you are encouraging and reminding them that your effort level matters, too.
3. Make at least one “output” metric
An output metric is what all the input aims to accomplish, like a deal closed, and the end goal of this employee. These should be focused on the late stages in the sales process. If you have an outbound prospecting team, this could be appointments scheduled. Don’t let them lose focus, like in the example above, by not rewarding them on their outcomes as well.
4. Adapt to your team to determine the final 1-2 metrics
This is where your understanding of the business and your team is key. The greener the team, the more input metrics you need. These reps need more immediate tasks that they can control. They need to focus on getting more at-bats, especially as they ramp up. A good metric here may be talk time or an early stage sales activity, like prospecting calls. On the other side (very experienced sales reps), focus on output metrics. This rep needs to be held accountable for outcomes, and doesn’t need the same level of much micro-management. Look to late stage activities, like trials complete or proposals sent. Make sure the rep has the coaching and support to succeed, but the focus is on delivering revenue.
Before you blame the analytic approach (blasphemy!), pressure test your metrics to see if they pass these four tests. If they don’t, it’s likely you’re just using the wrong tools to get there.
Want an easy way to run your team by the numbers?