Do Your Sales Metrics Lie?

alt text image for a man lying while taking an oathThe short answer: Yes, your metrics lie.

Metrics are numbers; they are quantitative. They can tell you much. And they can you tell you little. What they lack is a qualitative context.

Example 1: Activity Metrics

Let’s take two salespeople and their individual numbers. Salesperson 1 makes ten face-to-face sales calls in a week. Salesperson 2 makes only five sales calls per week. Looking at the metrics, Salesperson 1 has twice the activity. Double the activity has to be better, right? The answer is no, it means nothing without the quantitative context.

Were the fifteen prospects that were called on all equal? Did Salesperson 1 only make twice the calls because they he called on unqualified prospects while Salesperson 2 called on qualified dream clients? The qualitative value makes all of the difference in the world, doesn’t it?

Simple, isn’t it? Then why it so infrequent that the qualitative value is added?

Example 2: Time to Close Deals (Cycle Time)

How about more complex metric? Let’s look at the time it takes to close a deal. Maybe Salesperson 1 closes deals in just under ninety days. It takes Salesperson 2 just over two hundred and seventy days to close a deal. Salesperson 1 closes deals in a third of the time; that has to be good, right?

Without knowing the deal size, the lifetime value of the deal, whether or not the deal is a good strategic fit, and some additional facts about each deal, this metric is meaningless. Maybe Salesperson 2 has the larger, more complex deals. Maybe their deals will produce far more value over time. Maybe Salesperson 2’s deals will allow them to create the kind of value that unlocks future deals and bridges the company into new strategic growth markets.

Not so simple to determine whether or not the cycle time should be shorter without the information, is it? Why then do we not work to discover it?

Example 3: A Look Into the Pipeline

If we peer into our fictional salespeople’s respective pipelines, we might find that Salesperson 1 has $1,000,000 in the final stage of the sales process. Salesperson 2 has only $600,000 in the final stage of their sales process. All things being equal, Salesperson 1 has a better opportunity to close more business, right? But all things aren’t equal.

Doing a simple opportunity review using the company’s sales process checklist, we might find that while Salesperson 1 has more deals in the final stage, that he also skipped over the important value-creating steps that might have given him a reasonable chance to win his deals. We might find that these deals aren’t really in the closing stage at all; in fact, they may not even be the kind of deals that his company wants.

Completing the same opportunity review with Salesperson 2 might show that the deals are rock solid, that the sales process has been followed, that the deal strategy provides a greater return on the dream client’s investment of time and money than they need to justify their purchase, and that she has verbal and written commitments that allow her deals to be forecast with great confidence.

Understanding these metrics is much more complicated that it appears on the surface. That is because numbers lie. More isn’t always better, and neither is less. They are meaningless unless and until they have the qualitative factors added in and they are properly interpreted.

Metrics Are Great Tools, If Used Correctly

I am not suggesting that metrics aren’t useful. Far from it! In fact, understanding your metrics is critical to your success.

But in order to make metrics valuable and meaningful, you have to look at them in the context of the qualitative factors. This isn’t easy.  Understanding the story that your metrics tell requires someone with the knowledge and experience to ask the questions that will provide the qualitative context that make them useful. In order to know what needs changed and what needs to be improved, you need to add these factors to your interpretation.

It’s often helpful to get a second, unbiased set of eyes on the metrics, someone who isn’t tied too closely to the outcomes. Someone with the knowledge and experience to help see through the numbers to the meaning that is hidden inside their relationship to the context.

Collect all of the metrics that are meaningful to you and to your sales results. Then add the qualitative factors that give them their context and their meaning. This will ensure that your metrics tell the truth.

Conclusion

Quantitative metrics are critical to your success and must be tracked. But they are meaningless without the qualitative factors that give them their context and their meaning.

Questions

  1. What are the most important personal sales metrics that you track? Are they all quantitative?

  2. What qualitative factors are missing from your sales metrics? What do you need to add to these metrics to make them meaningful and useful? What questions need to be asked in order to provide this context?

  3. Who could you share your metrics with that has he knowledge, the experience and the background to ask the hard questions that will allow you to make judgments about your future behavior based on your metrics?


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Filed under: Sales 3.0

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