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Metrics Matter, But Which Ones?

by David Brock on August 2nd, 2012

As sales people, we’re certainly familiar with metrics.  There are all sorts of measures that are supposed to help us set priorities and drive our behaviors.  The king of all metrics, hanging over our heads like the Sword of Damocles is quota–revenue, orders, whatever.  Then we may have all sorts of other metrics.   There may be activity metrics like the number of phone calls we need to make, the number of deals we have to have in our pipelines, and so forth.

Sometimes, we have so many metrics, it’s difficult to determine which we should focus on, so we just do what we do.

Metrics are important and matter to all of us.  Metrics are like signposts on a trip–or better, like a GPS.  When we get off course, they help us understand how to get back on course and reach our destination.  When we are on a long trip, it’s important to have these interim milestones, signs or directions that keep us heading toward our destination.

Quota is our destination, it’s the goal each of us has.  It’s the commitment we have to ourselves and our company.  But it’s a pretty lousy direction sign or milepost.  It doesn’t give us much insight about what to do to get on course.  Often, by the time we know where we are in our journey to achieve quota, it’s so late, we are so off course that it becomes impossible to get back on course to reach our destination.  (Well there’s always next year.)

So the metrics that matter most are those that tell whether what we are doing today, this week, this month are the things that are going to enable us to get to our destination.

Critical metrics can be gathered into 4 key categories–some historical or backward looking, like quota attainment or sales, some forward looking–those that tell us whether we are on course to our goal.  We need a balance of both. 

Generally, we look at Business Management, representing the end game and including measures like quota attainment, revenue, orders, customer satisfaction and others.  These are generally historic.

We also need to look at Strategic metrics, those that make sure we are aligned with and executing our company’s strategies.  They may include goals for customer retention, acquisition, share, product line sales, new products, and others.  These can be a mix of historic and forward looking metrics.

Operational measures are important for helping us focus on doing things most effectively every day.  They should be tied to the Business Management and Strategic measures, but must be leading/concurrent metrics.  Most funnel/pipeline measures fall into this category.  A lot of activity measures also fall into this category.  For example, I know if I don’t make a certain number of prospecting calls every week,–this month,  I won’t hit my goals in the 4th quarter of 2013.  Great operational measures are those that we know we can tie directly to the outcomes required in the strategic and business management areas. 

Too often, however, we fail to do this, setting inappropriate operational measures that may cause us to miss our goals.  For example, several weeks ago I met with the VP of Sales for a company.  He had applied a blanket funnel coverage model of 3X.  What this means is that people have to have 3X the volume of deals in their pipeline as quota.  For example, if an individual has a $1M quota, then they need to have $3M in their pipeline.  On the surface, this makes sense–until you realize their average win rate was 20%!  They needed at least 5 times coverage.  No wonder quota performance was so bad!

Operational metrics are the heartbeat of what we do everyday.  It’s critical that we understand what drives business results and how we link operational metrics to overall business performance.  Otherwise, we have the wrong measures in place!

Finally, Personal Development measures are something that we often overlook but are critical.  They address issues like, “Do we have the skills or capabilities to achieve our goals?”  They lead all the others.

As sales people, we are used to being measured.  The challenge is are we using the most appropriate measures!

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