March 14, 2009

What MPG is your sales organisation delivering?

Why Sales Managers are paying increased attention to meetings per quarter, and other key sales effectiveness variables.

I had a director years ago who struggled to reconcile what was a very busy sales office, with the results that were being achieved. On his occasional visits he would innocently ask ‘are we busy fools?’ - a question that secretly enraged both over-worked managers and staff. Yet, it struck at the heart of the issue of sales effectiveness.

MPG = Meetings per Quarter

Let’s put it at its simplest – meetings per quarter (mpq) is the motoring equivalent of miles per gallon (mpg). Like a car, a business, or a salesperson, has a certain amount of fuel in the tank. In respect of selling, that equates to a certain number of customers and prospects that can be met in a quarter.

A high, or rising, mpq could suggest that;

  • The wrong type of managers and organisations are being met
  • The level of pre-qualification is inadequate, or the criteria are out
  • Leads are not being nurtured to sales readiness
  • A more sophisticated approach to sales meeting is required, or enhanced sales skills
  • The sales proposition needs to be revised, or more fundamentally the market segments being targeted.

Making Every Meeting Count

Regardless of the reason it means that sales costs are rising and that reaching the sales target is going to be more difficult. Prospects are increasingly difficult to identify and costly to meet.

Buyers want to see less sales people and only a small proportion of sales people will get in the door. That means making every meeting with a sales prospect count is very important.

Two Very Important Metrics

Just like in motoring, mpg, mpq (meetings per quarter) and lpq (leads per quarter) is all important. Ultimately, it tells you whether you can reach your sales target, or will grind to a halt somewhere along the way.

Meetings per quarter is also one of a number of important metrics that indicate the effectiveness of your lead generation activity is, and puts the leads per quarter metric in perspective. As sales meetings are costly, the average cost of a sales meeting for many companies being in excess of 1,000 euro, meetings per quarter and cost per meeting are important metrics for every manager.

Metrics for Activity, as well as Effectiveness

Of course, how much fuel you are consuming (mpq, lpq, etc.) and how fast you are travelling are interrelated, but separate variables. So, the metric of meetings per deal, as well as meetings per sales cycle are equally important. There is no point in having lots of meetings that go nowhere and ultimately it is the conversion rate to deals won that matters most.

Productivity & Effectiveness in Sales

Sales productivity initiatives to generate more leads, meetings, etc. have been high on the agenda in sales organisations for many years. Managers initially targeted increased levels of sales activity, but with more complex sales cycles have turned their attention to sales effectiveness as the priority.

Imagine one of the back wheels of your sports car was spinning faster than the other, with lots of activity and poor conversion rates, or increasing conversion rates with little activity. The result would be lost of smoke and burning rubber, but little movement. That is why our formula views activity and effectiveness as two side of the selling axis.

Thus, increasing the number of sales meetings, proposals, etc is futile unless they are successful. The level and effectiveness of sales activity must be increased in tandem.

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