What Are You Measuring?

If you walk in to just about any office with an active sales organization, you’ll see some kind of posted metrics. Big dry erase boards will have several rows and columns measuring everything from inbound calls to deals closed. Some offices even have electronic scrolling signs that update in real-time with the organization’s key metrics. Metrics, metrics, metrics! It’s what drives virtually all sales organizations.

But what about home based sales professionals? What are you measuring? I mean really measuring? If nothing, then you should consider changing that behavior soon.

Blog continued below . . .

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What are you waiting for? Those deals won’t wake up on their own!

Frank Bettger in his book, How I Raised Myself from Failure to Success in Sales, gives virtually all of the credit for his success to measuring his sales activities. And this was before spreadsheets, CRM systems, and even computers. The original copyright date of the book is 1947.

So what should you be measuring? That’s up to you, but here are some thoughts:

• Number of outbound dials.
• Number and/or value of proposals delivered.
• Net new contacts initiated.
• Number and/or value of sales closed.
• Number of appointments scheduled.
• Ongoing pipeline value.

In short, you should measure anything that, when improved, will lead to an increase in sales and help you achieve your goals.

If you don’t have an automated way to measure your activity, start with Post-it notes or a tablet. Just make sure that it’s something that stays in front of you and is easily accessible. Then just start tracking the activity. Over time you’ll notice two things; first whatever you measure will improve or increase, and second your sales will grow. It’s really that simple.

If you aren’t measuring anything now, why? If it’s not a part of your sales culture then make it a part of your personal sales culture. Start with something simple and stick with it. I can promise you that it won’t be a burden and you will see the results.

Are you someone who likes to visualize? Consider how a future conversation might transpire:

Before measuring your activities:

Manager: “So how was your week?”

You: “I had a great week. I sold a few things, and initiated some important new contacts.”

Manager: “Sounds good, better than last week?”

You: “Yeah, last week was really slow.”

After measuring your activities:

Manager: “So how was your week?”

You: “I had a great week. I sold three new accounts and up-sold four for $24,500 in new bookings. I also initiated five new contacts and that resulted in three new appointments next week.”

Manager: “Sounds good, better than last week?”

You: “Yeah, last week was really slow. I only sold three new accounts and up-sold two for $15,300 in new bookings. I only initiated three new contacts for one new appointment.”

The stark difference in these conversations comes from your willingness to measure your activity, thereby knowing exactly where you stand day-to-day or week-to-week.

What if I had painted the scenario differently? What if the first conversation was with you and the second conversation was with a colleague? Which rep came across more professional? Who seems to be taking their role more seriously? If you are looking to make a change this year, measuring your performance could be the edge that you’re looking for.

Measuring is free, it’s easy, and it is something that will improve your performance. If you don’t believe me buy Frank Bettger’s book and take his sage advice. It will serve you well.

How Much Pipeline is Enough?

With the new selling year under way, we are all focused on the numbers. New goals and quotas are being assigned. New territories are being distributed. With all of this you may be looking at your pipeline and wondering “Is this enough? Do I have a chance to hit my numbers with this pipeline?” It’s a common question and the answer is really pretty simple, provided you have the data.

If you have pipeline reports from 2010, dig those out. Ideally you should have several reports to review. The goal is to get as much information as possible covering several reporting periods. To calculate what you need in pipeline, take a look at how many deals you closed from the population of all deals. Divide that number by the total number of opportunities to calculate the ratio. (If you’re a sales manager use the team totals.) If you closed one out of five opportunities, then your closing ratio is 20%. Now divide your goal by the closing ratio and you’ll have your pipeline number.

Here’s an example. Let’s say that your quarterly goal is $100,000. Here’s what your pipeline looked like at the beginning of Q3 and Q4:

Q3 Pipeline Report				Q4 Pipeline Report
Opportunity Name	Amount	Closed (Y/N)		Opportunity Name	Amount	Closed (Y/N)
Table, Inc.	$10,000	Y		Widgets R Us	$13,000	Y
Samco Services	$5,000	N		Chair, Inc.	$15,000	N
Chair, Inc.	$15,000	N		Corp Connect	$5,000	N
Servco	$20,000	N		Airplane, Inc.	$17,000	N
Typo Supreme	$7,500	Y		Converse	$12,500	Y
Airplane, Inc.	$17,000	N		The S Factor	$1,000	N
Car, Inc.	$10,000	N		eBook Sellers	$30,000	N
Industrial Svcs	$15,000	N		Allied	$25,000	N
Allied	$25,000	N		Printer, Inc.	$5,000	N
Printer, Inc.	$5,000	N		Discover Svcs	$15,000	N
Total Pipeline	$129,500			Total Pipeline	$138,500

Going in to each of these quarters you felt pretty good about your chances of hitting your goal. After all, with a goal of closing $100,000 in new business, you had more than enough opportunities. All of these deals felt pretty solid. Several of your Q3 deals simply pushed in to Q4. So why did you fall so short of hitting your goal? You didn’t have nearly enough pipeline coverage.

In this example you closed two out of ten opportunities in each quarter, so your closing ratio was 20%. Now divide your goal of $100,000 by 20% to get your pipeline requirement of $500,000. That’s well above the amount that you felt so good about going in to each quarter. Yikes! Now take a look at your current pipeline. Does it support your goal? If not, it’s time to start setting some appointments! (More about that in an upcoming post.)

It is also worth noting that you closed $17,500 in new business, representing 14% of the dollar value of your pipeline in Q3. In Q4 that value was 18%. So is the closing ratio 20%, 14% or 18%? Good question. I would suggest using the figure that is most consistent across reporting periods, so in this example I’d stick with 20%. Otherwise, use the smaller of the two figures to be conservative particularly if you don’t have a large sample size to work with (3-5 periods). In that case you would divide $100,000 by 14% to get a pipeline requirement of $714,000. Over time you’ll find that one of the ratios will be more consistent than the other.

When you find that you have a huge gap in your actual pipeline versus your pipeline goal you have two courses of action: first, start building new pipeline as quickly as possible; second, improve your closing ratio. Neither of these is simple, but both need to be addressed in order for you to achieve your goals.

Whether you are a sales leader or individual contributor, it is absolutely essential that you understand your closing ratio in order to build the pipeline necessary to achieve your goals. Otherwise you are just guessing.

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On Being Authentic

I was having dinner with a new sales rep recently and she asked me “What’s the most important thing I need to know in order to be successful in sales?” I wasn’t ready for this question and I had to pause for a minute to think about it. The typical answers raced through my mind; work hard, listen, build good relationships, etc. But this rep was new to selling, having come from the industry, so my answer had to be a really good one. And then it struck me, “Always be authentic.”

Why is this the most important advice that I could give a new seller? Think about it for a minute. You can do all the right things necessary to be successful; prospect, perform product demonstrations, put together great proposals and use all the great closing techniques you’ve ever read about. But if you are not authentic, your prospect will know from the very beginning and won’t trust you when it comes to making an important buying decision.

Many years ago I was reselling computer hardware and asked a manufacturer’s rep to accompany me on a sales call. This was a particularly important meeting for me so I wanted to bring in the expert. I had come to know the rep fairly well and liked him very much, although we had not been on a joint sales call together. Imagine my disappointment when he totally changed when the customer walked in the room. His voice raised a few octaves, he started using words that were not a typical part of his vocabulary, and he faked laughed his way through the meeting. After we left the building he reverted back to his old self and said something like, “Well that went well.” Needless to say, I never took him on another call with me.

Contrast that experience with another. My wife and I had taken a few days off and were driving home from Austin to Dallas, about a three hour trip. I had a customer who had moved companies and had taken on a new role at a large trucking company in Waco, about halfway home. I had called him to let him know that we would be passing through, and asked if he would be willing to give us a tour of his new company. He was more than happy to oblige. My wife was a bit apprehensive since a b-to-b selling situation was not an environment that she was familiar with. I assured her it would be okay.

We met the customer, took the tour, and chatted for a while. It was an impressive company and he had a big job. I was happy to see him doing so well and was optimistic that we would do business with his new company. When we finished our “meeting” and went to the car, my wife said something that has stuck with me since, “You didn’t change in there.” She had fully expected me to behave the way that the manufacturer’s rep had – change my voice, fake laugh, and use big words. You know – turn in to a sales blowhard. I didn’t realize it at the time, but she was telling me that I was being authentic.

Being inauthentic, or fake, can cost you big time. Savvy customers will test you. They’ll ask you trick questions like “How is the banana peel working on the apple that you’re developing?” When you smile and say “Oh, just great” they know what that they’ve got on their hands. This kind of thing happened to one of my reps, and the customer called and asked him to be pulled from the account. He didn’t have time to work with someone trying to fake his way through.

You should do all the right things associated with being successful in sales – prospect, put together killer presentations, have great conversations, and close deals. And you should always be authentic. You can fake your way through a few situations, but sooner or later it will catch up with you. Customers want to work with real people. Don’t you?