Ever wondered why sales force measurement is met with resistance?
Here is a great example of why the culture exists.
For many years, sportspeople were seen as gifted talent, something that cannot be trained, measured, or improved. It was just natural for them and could not be replicated. Those people on any sporting field were elite athletes to be treasured for their unique talent; until one day a man named Billy Beane proved that to be completely wrong. This symbolic image extends to salespeople.
Just like sporting people, salespeople want to be known as being special, possessing a unique talent that cannot be replaced. They have communicated their virtue, convincing everyone who listens for a long period of time. Those same salespeople feel a sense of entitlement holding to that idealism. Maybe in times gone by that may well have been the case, but it is not 2014 and that adage no longer cuts it.
Sports and sales are working on the same parallel. In all sports now there are statisticians keeping a record of every move made by those elite sportsmen and women on any major field. The statistics become public knowledge and a phenomenon with the film Moneyball. A film about the incredible efforts of Billy Beane and his major league winning team Oakland Athletics built from B grade players. Using statistics to build a team of the elite sportsman, he selected lower-cost individuals that could contribute the right behaviours to deliver results for the team. A conundrum that many sales managers now face.
That same principle is now applied to sales force measurement using the same philosophy as Moneyball.
Management can account for the good and the bad of every move a team member makes to identify their effectiveness and efficiency. To build highly effective sales forces. Companies are shifting away from their reliance on a few top or A grade performers and focusing on consistently performing B graders.
Successful companies today, are those that embrace the sales force measurement through the Moneyball methodology and look beyond just sales quota or sales goal attainment. Its not about one A grade person pulling you over the line, making the big sale, or holding the primary accounts. It’s not only about whether you win or lose the sales revenue game; it’s how the team is playing the game through each month, quarter, and year.
Sales, as like sports, can be measured with a number of statistics that can inform about the selling prowess of our sales force, that is if we chose to measure them. It can provide us with the vital transparency needed to effectively manage the team.
Sales organisations can benefit tremendously from individual performance statistics. It provides the ability to measure their ‘athletes’ and understand their true effectiveness. Where they need assistance and guidance to deliver the results and the value they contribute to the organisation. Needless to say it’s a hard ask of many sales managers, much like the same challenge Billy Beane was presented within that infamous scene of Moneyball during selection in the boardroom. The old ways are comfortable even if they are not delivering the results.
For those that take a contemporary view of sales forces and understand the value of sales force measurement and Moneyball, determining what to measure can be a daunting task and every business is different. Their sales process and sales requirements vary according to the complexity of the sales process. But here are just a few good measures you can start using now and it will immediately inform you as to the effectiveness of your sales team.
- Average Sale Size: How good is the salesperson at working with higher value customers or up-selling? How quickly do they discount sales? How well can they negotiate? Average sale size provides insight into how well a salesperson can manage larger sales opportunities, maintain the integrity of pricing, and drive greater value into the sale.
- Win/Loss Ratio: Typically measured now through CRM but not often reviewed closely enough. You need to know what percentage of opportunities does the salesperson close. How effective are they with the opportunities they uncover or leads they are handed. A higher winning percentage suggests an impressive ability to qualify or add substantial value to the sale. High winning percentages mean fewer leads and opportunities wasted.
- Average Days in Pipeline: Take all the opportunities in the pipeline and add up the number of days they have been in the pipeline, then divide by the number of opportunities. How long do sales sit in the pipeline? How good is the salesperson at knowing when to stop working a sale and close it? How often is the salesperson sitting on opportunities that will never come to fruition? Is their pipeline full of dreams (or padding)? Is there a decent ratio between average days in the pipeline and the average time to close? There should be.
- Average Time to Close: How long does it take for a salesperson to close a sale from start to finish? Who in your sales force closes sales faster? Who takes longer? How do average time to close rates compare with sales goals achievement and overall revenue achievement? If they are out of sync then revenue achievement can be a problem. Average time to close includes both wins AND losses. It’s designed to measure the amount of time it takes a salesperson to bring a buyer to the decision.
- New Opportunities per Month (NOP): Who is best at building their pipeline? Which salespeople are focused on new opportunities vs. closing existing opportunities? How many new opportunities are your salespeople putting into the pipeline each month? NOP is a critical metric few pay sufficient attention to. Knowing who is bringing in the opportunities is critical. A salesperson that cannot generate new business is of little value to most companies in today’s competitive market place.
- Average Monthly Pipeline Size: What does the pipeline look like from month to month? Who is good at being able to keep it consistent with quality, vs those who see big shifts as they close, then prospect, then close. This allows you to see who is capable of maintaining a strong pipeline while closing sales and driving revenue. Who delivers reliable and predictable revenue to the business.
Its time to install Sales Focus Money Ball as your sales management methodology. There are more critical metrics you can measure, but this will give you a starting point. You will find good salespeople will be found even in bad years, bad salespeople will no longer be able to hide. Sales are about the efforts of individuals and not just a team pooling of results. A grade players are scarce so you need to have consistent returns from your B grade players. One-hit wonders, like those in the big leagues, will not be able to bask in the glory of a lucky break that most likely landed in their lap. They will be shown to be poor performers once that sale is made.
Making this fundamental shift with sales force measurement will see executive management have more information to work with; trends will be easier to identify and quality decisions can be made.
If you would like to discuss how to improve the performance of your sales organisation and install sales force measurement systems, please contact our office.
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