As sales and marketing organisations have become more advanced and often complex, sales measurement goes beyond the traditional reports that companies have become familiar with.
As a CEO, you are most likely reviewing the revenue report daily. What revenues have been generated by the sales organisation? You may also be looking at the pipeline report and/or forward forecast from existing customers to get some transparency or a view forward. These are mainstay executive reports, but are they all the reporting important for sales management? The answer is No.
The needs of the executive in business reporting do not translate into what a sales manager requires to effectively manage a sales team; however, many sales managers attempt to operate on that same reporting structure. Yes, the revenue is important, as is the pipeline report, but you cannot manage sales teams based on that information alone. The information in those business reports will not allow effective decision-making to drive growth in a sales organisation.
As CEO, you may not want to get deeply involved in the reporting, but you need to understand what is being reported and what action is taken from then on. It affects your revenue reporting, so you need transparency. The sales manager makes decisions based on the data, so you need to know what and how those decisions are being made.
Questions need to be asked about what they measure and, importantly, how frequently they monitor that information. That will lead you to understand their decision-making process. Sales managers often have too little or go to the other extreme of too many reports. Too little means they are making situational decisions that are often delayed in the timing or based on ‘gut feel’. This creates a high-risk situation as the business can become destabilised very quickly.
Those who seek excessive reporting have been motivated by the availability of information with the maturing of financial software products where the generation of financial reports from a database rich in financial knowledge. When the financial data is linked to an ERP system, they can gain an even greater number of reports, including products and customers. Often referred to as big data, and people become lost in reporting.
Companies are drowning in reports, and people spend endless hours reviewing the data. Company email inboxes are full of reports being distributed to salespeople and managers. Teams are being asked to prepare updated figures and forecasts on a perpetual basis in response to the reports they receive.
But is this reporting productive for the company or just a case of communiphilia throughout the business reporting?
The problem for sales management is much of that information presented is redundant or not relevant in how, please note the word ‘how’, they deliver results. The information is mostly historical, so it is past tense. Acting on the information is often too late, and for many companies, the delay can take months to change the outcome and drive growth. The how in sales management is what drives growth, not the past tense. Sales measurement must focus on the future, creating predictability for what will likely occur.
The reports we first mentioned, revenue, pipeline, and forecasts can be considered output reports. That is what all the activities of the sales organisation have delivered or will deliver: the output of their efforts.
The challenge comes when you decide you want to alter those inputs. The inputs are the activities and actions of the salespeople that will deliver the results or outputs. Those reports are not necessary for the executive but are certainly important for the sales manager. A sales manager is judged on their ability to drive growth and make timely decisions that maximise market competitiveness. A sales manager who can drive growth above industry standards is the person you want to lead your team. They need to demand the right information that will allow quality and timely decisions to be made. The company needs to respond, ensuring the right information can be gathered and appropriately reported.
A sales manager who does not draw on the right reports is overly exposed to making poor decisions, which in turn affects the results delivered. The information goes to the core of the decisions and directives given to their team.
So the question becomes, ‘What reports should they be looking for in sales measurement?’
For a sales manager to drive growth, they require five key metrics and 15-25 supporting metrics to be reported on consistently. Each company has different metrics depending on the level of growth it requires, the maturity of its industry, and market competitiveness. The metrics most often change year-on-year and are related to the company’s strategy. Outside of this, companies are wasting time and resources in creating, reading, and dispersing reports.
If you are concerned about the sales measurement occurring in your business at this time, please contact our office to discuss your specific business situation.
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