'In the Dark' Sales Managers Cause Alarm

Many sales mangers don't have access to vital information regarding sales performance and potential. That effectively means they are driving in the dark and running the risk of an avoidable accident.

Sales is a Numbers Game!

We like to talk about numbers. We pull the calculator out wanting to really understand sales performance and potential and bypass hours of talking around the issue.

The fact is what gets measured gets managed, we want to talk to managers about their metrics. That is those variables upon which they will be judged and rewarded.

Managers want to talk about numbers too, but there is one big problem. A lot of the time they don't have them and cannot get them.

So when we ask managers about win rates, the number of sales meetings in the last quarter, the number of sales required next quarter we are often greeted with silence and a frown. When we ask about how these metrics vary across product lines, markets, or sales people the frown is even more intensive. Quite simply managers don't have access to key information regarding the performance and potential of their sales teams.

Managers Don't Have All the Information they Need.

Imagine driving without a dashboard telling you the speed you were travelling at, whether you had enough petrol to get you to where you are going.

Imagine not having the instruments to tell you if the breaks, lights, oil levels, or any of the functions important to staying on the road needed attention. Well this is what many well respected sales managers are doing when they don't have the information on the number of leads, meetings and sales cycles their team needs to work on at any one time. This lack of metrics is having major implications on how effectively they can manage communications with their peers, their team, their executives and their customers.

Visibility, Predictability & Control of Sales.

Sales forecast accuracy and sales reporting have long been a hot topic, and something that we are quite passionate about. We use the terms visibility, predictability and control because people can relate to them better. That is:

- Visibility of what is happening year to date (that is historical sales activity levels, sales revenue and margins).

- Predictability of what is going to happen to year end and thereafter (including booked and forecast sales, required activity levels and conversion rates).

- Control, that is the ability to impact on the level and effectiveness of sales activity, thereby immediately correcting any gaps and continually optimising people and process performance.

How to Achieve Greater Visibility?

Greater visibility comes at a price. It generally requires:

- Better Systems - that is the implementation of reporting systems, stricter forecasting methods, and even sales database, or CRM systems

- Better structures - such as a more structured approach to sales meetings, sales reporting and customer reviews

- Better plans and more importantly an approach to planning and target setting that sets out targets and metrics, not just based on sales, but on levels of activity (e.g. number of sales meetings required) and effectiveness (i.e. conversion rates throughout the sales cycle and ultimately win rates).

- Better processes - a more structured approach to the management of sales cycles so as to enable more accurate pipeline forecasts and the rating of individual sales opportunities.

Visibility is a Challenge.

We feel it is important that sales managers move from subjective measures to ratings based on the completion of specific elements of the sales process (e.g. documentation of needs analysis, contact with all members of the buying unit, or presentation of ROI model).

Many of these items will generate a kick back from salespeople and will require considerable commitment, effort and discipline to bed in successfully.

What is the alternative? Well, it is to keep on driving in the dark.

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.