As a sales leader, it is important to have a good balance between leading and managing. Leading is inspiring your team to do their best. It is the practice of building momentum, teamwork, trust, and supporting their efforts for success in every way that you can. Leading is shining the light on what might be a dark or unknown path and getting others to follow you with trust that the path will lead to ultimate success.
Managing on the other is hand is ensuring that your team is following the expectations you set for them. Your job as an effective sales leader is to manage the expectations. To ensure that the salesperson is focused on the right activities, following the sales process, and is in alignment with the team and company goals. As part of this, I would always build in time to focus on my team’s metrics and managing the numbers.
Before I get into what the metrics are, let me elaborate on why they are important. Numbers don’t lie. As a sales leader, you will have a good “gut” feeling on how an individual contributor is performing based on your daily interactions with that team member. You have good conversations with them. You listen to their updates on deals. They tell you what they are working on and they show enthusiasm. Overall they seem focused on the right things. Your gut in turn tells you that the employee is doing good and that they should be successful.
This is one side of the coin that provides you with a subjective sense of how well your team member is doing. In order to have a complete and balanced view, you must look at the other side of the coin, which provides an objective sense of their performance. You must be frequently reviewing the metrics. By doing this you can see how the numbers stack up with your feelings and judgment on a specific team member, or team. I mentioned earlier that the numbers don’t lie. They also don’t always paint a complete picture either, which is why you must have a blend of both subjective and objective information to make a solid evaluation. This will allow you to improve decision-making on any proposed changes that will bolster performance.
Now let’s talk about managing the metrics. As a best practice, each week take the time to evaluate your team’s metrics. Do this on a consistent basis. Doing this consistently will allow you to establish a “trained eye” that will help you detect trends with certain individual contributors and teams. I would make time each Friday morning to do this and after a couple of months, you will be amazed at what the metrics (the data) can tell you. It will become very interesting when you might have thought an employee was focused on all the right things, only to see that they may be missing the mark in a lot of areas. The ongoing review of the metrics on a weekly basis is a must. It allows for small, corrective actions that may be needed in order for the team to stay on track with its ultimate goals. Small, gradual corrections are effective.
Here are a handful of metrics that I would review on a weekly basis that helped my team become #1 in the company. There are plenty of more, but these will get you started. And if these are already on the list, ask yourself when was the last time you dug deep into these? Take the time to review and refresh! Some of the best metrics and key performance indicators are:
- Aging pipeline- This shows the number of days/months an opportunity has been sitting in a particular stage. If you see an opportunity that is 250 days old, it poses the following questions: Is this a real opportunity? Why hasn’t it advanced in stage? Why hasn’t it closed? When was the last activity on it? What is the hold-up? Should it even be in the pipeline? Did we miss the mark with building excitement around our products and value proposition and this deal is dead?
- Lead-to-close conversion- This shows when a salesperson gets a lead, what happened with it? If you see a lot of leads get “closed-out,” it should beg the question of why this is happening. Are they really low-quality or unqualified leads? Or is the salesperson missing the mark with jumping on those leads in a responsive manner, or are they not doing the things that they should be doing to convert that lead into an opportunity and eventually closing it?
- New pipeline/opportunities added- I would love to review how many opportunities a salesperson added this week, this month, and this quarter. Were they opportunities that they found themselves from their very own hunting efforts, or were they Marketing generated leads that were given to them? If the number of new opportunities was zero, or was very light, it would indicate that the employee may need to spend more time prospecting, or that they simply are not good at prospecting and we need to help them with this. This particular metric is extremely important. When barely any new opportunities are being created, that spells trouble. It is your job as a leader and the salesperson’s job to CONSTANTLY be generating new pipeline. There are no excuses. If you believe in what you sell, if you have a burning desire to be successful, you will always find a way to find new opportunities. If this doesn’t happen, then I question why that employee is with us.
- Pipeline by month/quarter- This tells you how many deals you have in the works for a given month or quarter as well as “coverage.” Coverage is ensuring that your team has enough pipeline to successfully achieve its assigned quota for the month. As a sales manager, I would target at least a 4.5X coverage ratio or more. Meaning, if the monthly quota was $800,000, I needed to see at least $3,600,000 in the pipeline. Now here is the more important piece- if I saw that we had the $3.6M or even more, I asked myself, “but is it real?” This would now lead me to further inspect the deals we were forecasting and what needed to be done to ensure a close within the given time period that we were targeting. Remember that you need to be looking out for the future too. If you are about to blow it out this quarter, did you look at the next quarter, and what lies ahead? A great sales leader should always be planning ahead for the next two quarters.
- Expected Close Dates- If you are using a CRM system such as Salesforce.com, then you have close dates on your opportunities. I would look at the close dates and here is what I would often find: most of the close dates are on the last day of the month! This would lead me to ask my reps what was driving the sale to be closed on March 31st? Nine times out of ten, I would hear, “Oh shoot, I need to move that.” This would drive me nuts because as sales leaders we must rely on our team and we make decisions and forecasts based on this information. If your team is letting you down in this area, they need to understand its importance and adjust their close dates accordingly. I would also mention that more importantly, if a close date was felonious, then what is the real expected close date, and what is driving that decision timeframe. At this point, you will really get into the weeds of the deal and truly understand where the opportunity lies.
- Sales by product and by a salesperson- This is a good indicator of our “hot items” that we were selling more of than any of our other products. It shed light on what we could potentially do to boost the sales of the other products that weren’t selling as well. It may very well be a comfort or training issue. Salespeople sell what they are most comfortable with selling.
- Closed lost opportunities- We love the wins but in my opinion, the losses are more important. Why did we lose that $400,000 deal? Do we see the same salesperson(s) losing these deals? Or is it a particular product that we seem to be losing when we compete? What were the reasons for the loss? Do we know why and have we learned from it so that we can prevent the same thing from happening again next month?
- Number of activities & events- This is a key metric when reviewing performance. If there is one thing that I have always relied on to become successful, it is activity. If a salesperson has high activity and a slew of meetings on a weekly basis, the cards are in their favor that they will perform and achieve their target. I would frequently look at the activity charts and then further inspect the activity. Being a big Salesforce.com guy, I would dig into the opportunities and review the activity (the actual correspondence) being sent to customers. I looked at the quality and the messaging. If I saw high activity that was comprised of mainly phone calls and voicemails (i.e. “LVM”), I would talk with the rep and ask them who they were calling and what kind of message was being left. Making calls and sending emails is key, but looking at the number of meetings and conference calls a rep has is just as important. Calls and emails should lead to meetings (events) and those events should lead us to advance the opportunity to a close. Keeping an eye on volume and understanding how much activity is needed on a daily basis is a must.
- Average deal size- I love this one. If you are selling multiple products and if those products can compliment each other, are your salespeople “bundling” these products and delivering a complete value proposition by selling them all, or are they only selling one product? Are they focused on the big “money-makers,” the quota-busters, or are they more comfortable being more transactional and going for the quicker sales resulting in smaller deals, but more of them? Great salespeople will have a balance. They have their eyes on the “whales,” and they also have their eyes on the singles and doubles that keep the cash register ringing.
The above are just a few of my favorite metrics. The list goes on and I am sure that there are plenty of other good ones. The point is, get into the habit of blocking off time each week to dig into the metrics and KPI’s. These numbers will provide you with an objective perspective on performance that can be coupled with your “gut” and subjective sense on your team to paint a complete picture. Most importantly, the metrics allow for course corrections so that you can stay on track with your team’s goals. You want to have these corrections- they are a good thing, but you first must know about them so you can take action.
-Happy Selling!