With modern technology, the question is not what you can measure, but what you benefit from measuring. Following the right metrics will help you as a sales executive evaluate the performance of your team and steer them in the right future direction. Measuring the wrong or additional metrics will simply take precious time away from the things that matter.
In a recent webinar, Vainu’s Country Manager in Sweden, Emil Westrin and James Pember, Founder of Sparta spoke on the topic of How to measure the right sales activities. In this blog post we list the key takeaways from this session and give you concrete tips on how you find out what metrics your organizations should focus on. You can see the full webinar here.
What are sales metrics?
First things first. Sales metrics, also referred to as Key Performance Indicators (KPIs) are a set of objectives to evaluate the result of both individual salespeople and the organization as a whole.
Why are sales metrics important?
Metrics help you make important decisions based on facts and data instead of on your gut feeling. They create a framework for how your organization can evaluate performance and the result of specific actions and/or changes in the sales process. Metrics should be the key to predicting future success. In addition, metrics help with incentives and compensation.
“Metrics are about predicting the future, forecasting and understanding where we’re going.” James Pember, Founder, Sparta.
Which metrics to focus on?
There’s no one solution to fit all when thinking about how to improve your sales numbers. Which activities you should focus on depends on your offering and the structure of your sales organization. There is however a universal sales formula that applies to every modern B2B sales organization.
1. Universal Sales Formula
# of sales moments X hit rate X average contract value = total sales
# of website visitors X conversion rate to demo requests or meetings X meeting hit rate X average contract or order value = total sales
# of phone calls / emails X conversion to meeting X meeting hit rate X average contract or order value = total sales
Sales results can only be improved if the actions your team is taking on a daily basis are having an impact on one or many of those factors in the formula. For example, if you believe asking for referrals is a great way to increase the number of high quality meetings, you’re positively impacting both the number of meetings and their hit rate. The challenge is finding which activities help your team increase the metrics mentioned above.
“I think the problem with metrics is that sometimes we focus so much on the metrics and KPIs that we forget to actually measure what people need to do all day in order to be successful.” James Pember, Founder, Sparta.
Focus on actions first
Ask yourself: “What are my best performing sales people doing that the average performing ones aren’t?” The answer to this question is what you should focus on, measure and reward.
We all want to get up at 5 AM to go to the gym, just as we all want to make those 70 calls a day; however, we often don’t. If you see that high phone activity is a way for your organization to increase one of the factors in the sales formula, evaluate what you can do to motivate your team to reach the hypothetical metric of 70 phone calls/day.
According to a study made by ProSales, the average sales team in Sweden has 20% high performers. When people start adopting the actions only this group of people do, these high performers will also get rewarded, as they’re likely to achieve better results.
“Great sales people do things that mediocre sales people don’t do.”
How to get started with measuring actions instead of outcomes
- Find out which factor(s) in the universal sales formula you should focus on.
- Look around the room for the best salesperson on the team and figure out what they do differently. Do they come in earlier, do they go to networking events or read books on sales? Whatever they do, make sure the rest of your team follows her lead.
- Reward people for doing the things that lead to success.
There’s no one solution fits all, and so figuring out what works for your organization is obviously paramount. Make sure you’re evaluating your chosen KPIs over time to see if you need to tweak any of them.
Read more about how to improve your total results by increasing every factor in the sales formula in our ebook Mathematics for B2B sales professionals.