Two Rules For Using Sales Metrics Effectively

Don’t Use Single Metrics

Single metrics tend to give you a very narrow view of what is being measured. In and of themselves, some metrics may tell you a story, but it may not reveal the moral of the story. It usually won’t tell you what the story means or how to make improvements.

Maybe your win ratio is lower than you need it to be. This means your not closing well enough, right?

Adding other metrics might add to the picture. Maybe your win ratio is low, and you also show a high percentage of deals falling out between the discovery stage and the evidence stage. That metric might mean that not enough value is being created at the discovery stage to command a presentation. It could mean that your needs analysis and discovery isn’t getting you the result you need to move the deal forward, and when you are able to advance to the presentation, you do so without having what you need to win.

Qualitative information can help you to understand what is needed to improve your win ratio. Is it poorly qualified opportunities? Is it a poor needs analysis or discovery? Are you losing because your solutions aren’t right?

One metric by itself isn’t enough to make a sound judgment. You need qualitative information, and a deep look at other metrics that might help inform your interpretation.

Swap Input Metrics for Output Metrics

Trade input metrics like number of sales calls made and estimated value of opportunities for output metrics like commitments for a future activity that advances the sale.

It is helpful to know how many dream clients you completed a discovery call with this week, but not if none of them committed to a future activity that advances you towards a deal. We track metrics like number of presentations made, but not a metric that relates to the outcome of our presentation: How many of the buying committee member’s votes did we gain?

There shouldn’t ever be a sales call made without an intended outcome that moves you towards a deal. That means that there isn’t a sales call made that doesn’t require a commitment to move forward at the end of the sales call. Period. Exclamation point!

Why measure the number of sales calls and not the number of commitments to advance the deal? Why measure the commitments that advance the deal and not measure the number of kept commitments?

In sales, we say things like “our clients don’t want drills, they want holes,” and then we proceed to measure drills. Think about it, and tell me that I am wrong.

Output metrics are made up of the commitments, large or small, that move us closer to a deal. We should be measuring those commitments, the output metrics, and not worry so much about the input metrics.

Conclusion

Sales metrics lie; they don’t tell the whole picture. To make sales metrics more useful—and honest—add qualitative information, ignore single metrics, and measure outputs instead of inputs.

Questions

1. 1. What single metrics capture your attention and why? What other metrics might help you to better understand the metrics that you believe are important performance indicators? What additional metrics could you use to help you determine what actions would help you to best make the improvements you need to produce better sales results?

1. What are the input metrics that you capture? What are the real outputs that you might be misrepresenting at input metrics? What outcomes are really trying to measure? Even though the outcomes are tied to input metrics, does increasing the number on the input metric necessarily produce an increase on the output metric? Would you be better off improving the effectiveness, instead of the activity?

For more on increasing your sales effectiveness, subscribe to the RSS Feed for The Sales Blog and my Email Newsletter. Follow me on Twitter, connect to me on LinkedIn, or friend me on Facebook. If I can help you or your sales organization, check out my coaching and consulting firm, B2B Sales Coach & Consultancy, email me, or call me at (614) 212-4279.

Read my interview with Tom Peters (Part One and Part Two).

Read my Blogs.com featured guest post on the Top Ten Sales blogs.

Read my monthly post on Sales Bloggers Union.

Get The Sales Blog iPhone App to read The Sales Blog and Twitter Feed on your iPhone.