The Hidden Power Of Your Sales Metrics

Sales is all about the number – the sales target that is. So it is ironic that many salespeople don’t have the sales metrics that they need to plan for and manage their success.  The result is a crisis in confidence about meeting the sales target.

Metrics are essential to the debate about sales performance. Quite simply there are conversations that managers and their teams cannot have if they don’t have the metrics that are needed to determine success.

In this insight we use metrics provided by 400 sellers completing the Sales Pitstop diagnostic to show how these metrics have a major influence on confidence in meeting target.  However, before we do that, we will start by outlining how key metrics are essential to determining what makes a good week, or month for the salesperson.

 

What Makes A Good Month?

In the diagram below you will see the actual statistics from salespeople on the number of sales meetings and sales leads per month.  Is this a good month? A month in which each salesperson received a total of 17 leads to work with and had 9 meetings (face-to-face, or online) with new prospects/potential customers.

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Well, before you decide you’re probably going to do a short calculation – calculating how many meetings a week that would be (approximately 2 per week), or one meeting every 2.3 days.  When the figures are expressed in this way many managers lift an eyebrow – the number appears low.

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A clarification question quickly follows – ‘that is meetings with new prospects, right?’  In other words it does not include ‘meetings with existing customers and people that the salesperson has been calling on for months, or years’.  The answer is yes, this number refers to ‘new prospects’. This fact normally makes managers feel a little better.

Next the manager’s mind tends to move in a very logical and quite predictable manner to the nub of the issue. Whether 1 meeting every 2.3 days is ‘good’ or ‘bad’ depends on whether it is sufficient in order to meet target given the salesperson’s conversion rates.  With that in mind let’s look at the data provided by sellers on their conversion rates – the ratio of sales success.

 

The Ratio Of Sales Success

Below is a very important diagram.  It shows the number of opportunities, meetings and leads required to generate one sale (again based on a sample of 400 sellers who completed The Sales Pitstop).

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Generating one sales order requires 2 opportunities (or 2.4 to be precise), 5 meetings (face to face and online) and 13 leads – that is at least how salespeople see it. Importantly, these stats are for new customers or prospects (as opposed to repeat customers).

In other words if the seller wants to win 10 new orders, he needs to meet 50 new customers/prospect.  That is going to require 130 new leads.  With these numbers, suddenly the requirements of the salesperson’s success become clear.

This ratio is arguably the most important sales metric – it is the ratio of inputs to outputs, activity to effectiveness, effort to results (or reward).  It reveals the fundamental building blocks or DNA of the sale.

The ratio is the algebra underpinning how one sells. It measures Productivity, Effectiveness, Excellence and Success in selling – a lot for one ratio you may feel.  This ratio empowers the salesperson and the sales manager. It provides fuel for the sales performance debate.

 

So, what is your 2:5:13?

How many opportunities, meetings and leads do you need to generate one order?

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This ratio is either calculated or assumed by every sales manager and salesperson. It underpins everything from where they spend their time to the size of sales territories, or sales teams.  All too often however it is not based on accurate and up-to-date information.  That hinders managers and the performance of their teams.

 

Why The Ratio Matters

Salespeople are entitled to know their metrics, so too are their managers.  Each seller has to know how many leads or meetings are needed a month to meet target/quota – how else will they know if they are on course to meet target.

Failing to provide the metrics and to create a positive environment for them to be discussed will limit sales performance.  Here is an analogy:

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This ratio for the seller is as important to the salesperson as:

  • Vital signs are to a doctor
  • Key ratios are to an accountant
  • Km/hr and RPM dials are to a racing driver
  • The odds are to a bookmaker.

Despite it’s importance many sales people must apply their intuition to their numbers, often using patchy information with poor historical records. They don’t have the data because the systems used don’t generate the right information. So the question is can you create this sales metric dashboard view for the various members of your team?

 

The Seller’s Vital Statistics

Below are vital statistics in respect of the complex sale in respect of one large organization (taken from a real world Sales Pitstop report).  This infographic provides a powerful view of the salesperson’s actual role – a ‘to-the-point’ way of re-writing his, or her job description:

Predictable sales performance

One of the good things about analyzing the requirements of meeting target in this way is that it demonstrates the requirements of success for the organization, as well as the salesperson. In particular it shows the ‘interconnected-ness’ of all aspects of the sales success, including lead generation and delivery and customer service. But there is another important benefit – more predictable revenue performance and increased confidence regarding target.

 

Confidence In Meeting Target

Managers are striving for increased visibility, predictability and control in respect of sales.  The goal is more ‘predictable revenue performance’ (1).  This has to be a top priority given rates of confidence in meeting target based on data from a recent sample of 400 B2B sellers across 42 countries*:

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This is a frightening statistic – what it is really saying is ‘toss a coin’ –  the chances of meeting target are just less than 50:50.  Our research suggests that this poor level of confidence is directly related to visibility of key sales metrics, including activity levels and conversion rates.

 

Predictable Revenue Performance

Ironically more predictable revenue performance is achieved by fretting less about the BIG number (that is the sales target) and more about the smaller numbers that make it up.

Predictable sales performance

This is a message that has logical appeal to a sales manager.  For example one Director recently told her team of 60 sellers that she expected 3 quality meetings with new prospects each week and at least a 50% closing rate over the year (that was their historic track record).  As long as this happened the overall sales target would be well met.

In a change from the traditional top-down approach to the number she signalled a revised approach; ‘I want our sales organization to measure and manage the input and then trust in the output’.

‘Yes the targets are ambitious, but we can do this… instead of panicking about how BIG the overall sales target is – we want managers to realize how small the activity number is – the 3 per week…’ she concluded.

There is real power in the seller’s hidden metrics.  The numbers are scary only if you don’t have them!

sales metrics

 

Source:  Responses to a sample of 400 Sales Pitstop diagnostic responses.

* One of the things that The Sales Performance Pitstop does really well is to address confidence levels in a candid and open manner – not just confidence in meeting target but also in terms of many other complex dimensions of sales performance and strategy.

 

(1)  Want to read more about Predictable Revenue Performance?  There is a  book of the same title written by Aaron Ross and Marylou Tyler.