I’ve traveled miles with two warped-speed children in my backseat. (Don’t worry, I’m the one who has them!) The majority of sales managers laugh when I talk about the fenders. I almost smashed into trying to keep the kids in check and drive with my eyes on them from the rearview mirror. “Sure,” they chuckle, “you have to keep your eyes on the road, looking forward.” However, when you consider the way they run their sales departments, They’re looking at the same thing I was the rearview mirror.
Every salesperson can say with absolute precision when their top managers ask: “How’d we do last month, and are we gonna make a plan?” If they’ve driven more than a couple of miles in their team, sales managers are aware of how to respond. They glance at their sales revenue odometers and inquire of their sales team reps and leaders the exact question that I get in the back of my car: “Are we nearly there yet?”
The major issues that arise from these questions are:
They’re focussed on revenue which is a “rear view” indicator, instead of on the activities, which are indicators of what’s going to be accomplished within three weeks, three months, or even three years.
The point of reference is totally internal. How do we perform against our plans, or how are we performing compared to last year. It’s not about how we are doing with regard to the variety of opportunities being considered and are currently available in the market.
Predictive Indicators and Coaching Frameworks
The second question, “Are we nearly there yet?” ought to be “Are we doing the activities in the right numbers in the right ways at the right times in order to produce the revenue we want in the future?” (Trips straight off the tongue and all other elements are essential). The first step in increasing sales efficiency is to figure out methods to measure and forecast the future, not what HAS occurred. Without these predictive measures sales, managers have only two gauges. You’re there/not there.
It is the first thing to establish your business’s development procedure. It is also important to identify the leading indicators that are predictive such as the number of leads, activity levels on sales calls, levels, consider rates and the number of proposals that are sent as well as funnel conversion rates and the average size of deals, to mention just a few. These numbers can inform the sales manager the way their business development process is going and what the revenue will likely be coming in three weeks, three months, or six months down the road.
With the hard data that connects the current and future outcomes with sales, managers can analyze what the process of business development operates as well as identify the difference between expectations and actual tasks and establish areas for coaching to boost performance. The business development process, as well as its related measures and performance indicators, allow sales managers to measure the performance of their sales reps and serves as an underlying reference point for sales reps and managers.
Suppose we’re considering the cumulative time of sales (the total number of hours salespeople spend to close an individual segment of business). We inquire: “Is it important to reduce cumulative sales time?” The heads all nod, “yes.” We inquire: “How high is it today?” Because very few businesses have actually formulated or collected the data, no one knows. In the absence of process metrics, sales executives are left to guess and use the rear-view mirror.
If we had defined our process and evaluated the results, we might find that the average cumulative sales time is 20 hours. Furthermore, we may find that the shortest total time is 12 hours, during the longest of 36 hours. This information lets us consider two important figures that are the average cumulative time for sales as well as “actual versus average” differences by sales reps as well as for the sales team in general.
Suppose we’re tracking and analyzing the cumulative sales time in a consistent manner, creating an overview of the business process as well as the likely future outcomes. (If the average cumulative sales time increases, future sales are likely to decrease unless other variables are changed. Management’s responsibility is to increase the average and decrease the variances.) If we can identify and track other factors that predict our perspective of the future will be clearer. Sales reps and sales team managers and executives at the top can answer “Are we there yet?” by telling the audience, “We’ll be there in 3 hours” (or three weeks or three months )… or in the worst scenario, declaring, “Daddy’s lost,” and implementing a solution before running out of time, and Mommy is furious.
External Reference Points
The second element to “How are we doing?” is the one that asks, “Compared with what?” The most common benchmarks are the way we’re doing in comparison to our plans and how we’re performing in comparison to the last time. Another mirror shows the rearview. It sounds like:
Us What are you up to this year?
Sales Manager: Great! We’re up 15percent over the previous year. And, we’re way ahead of our goal by 5percent.
I’m not calling you Goofy However, the thing I’m interested in is: What proportion of the deals that are available on your market have you been looked for? If we don’t know the answer, we’re not sure what size sales could have been. We can only say that we’re performing well relative to the expectations we had. Even if you believe that you know that the Marketing Department is supposed to solve this problem, Sales managers who aren’t sure of the answer won’t be able to deploy their sales reps efficiently since they don’t know what the process was in the past, is now, or is about to happen.
For instance, our experiences and other studies show that a majority of leads at trade shows are never taken up. The research also shows that, regardless of the source of the lead, more than 48% of leads aren’t ever contacted. About 90% of salespeople stop selling after the fourth time they attempt to get into an account or to sell an entirely new line of products to an existing customer. Since there aren’t any reliable external benchmarks, everyone is happy so long as the sales perform or exceed the goals of the plan.
In both instances, due to the emphasis on revenues over activities, and the use of internal references instead of those from outside, sales executives have their eyes fixed on the rearview mirror, and the result is that there are numerous collisions – customers who disappear, salespeople who quit or walk away with a sense of frustration, potential customers who are able to escape. The primary element to improve sales efficiency is to engineer what is typically not designed – the sales process. This is a management task for managers. To increase sales, in the long run, managers need to enhance the effectiveness and value of their business systems and not simply demand that everyone be more efficient when looking out the rearview mirror.