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Games Sales People Play — The Challenge Of Activity Metrics

by David Brock on August 19th, 2010

A few weeks, ago, my post on The Most Used – Useless Metric In Sales created an avalanche of comments and emails.  Many of you commented on a variety of “useless metrics” you have experienced.  One of the most popular categories of “useless metrics” was Activity metrics.  Activity metrics are very popular, they’re easy to establish and measure.  There are all sorts of activity metrics:  Number of outgoing/incoming phone calls handled per day/week, number of customer meetings per day/week, number of proposals, number of sales opportunities in the funnel — the list is endless.

The problem with activity metrics is that all they measure is activity (dughhhh), they don’t measure the appropriateness, impact, or outcomes of the activity.   Activity metrics tend to measure what you’ve done, not whether you have moved the opportunity forward in the sales process.  In establishing activity metrics, it’s important to understand the behaviors they drive and to assess whether they are motivating the right outcomes.   It’s important to define the metric in terms of the results you are trying to achieve.

As I mentioned, Activity Metrics show up in various forms.  They can be goals that management sets on number of calls, meetings, proposals.  Activity also shows up in sales processes, one of my favorites is “Meet with decision-makers.”  For what purpose?  OK, I met them, I said “Hi,” they know who I am and what I am selling.  Did I bother to ask them their needs and priorities?  Did I determine their role in the decision making process?  Did I ask them about their attitudes toward us and the competition?  Do I understand why they are involved and what a personal win might be?

Another example of activity oriented metrics run amuck, requires me to reveal a deep dark secret from my formative years as a sales person.  Early in my sales career, my manager in the hopes of motivating the team to spend more time with customers, set the following metric:  There was a $10/day fine, if you were in the office between 8:30-4:30, unless you were entering an order, attending a meeting, or researching a sales opportunity.  You can guess what happened, we were already spending as much time with customers as we could–the team was good, we were really driven to make our numbers, we knew that we had to meet with the customers, but they only had the time to see us a certain amount of time, try as we might, we couldn’t fill all that time with cusotmer meetings.  Well, we solved the problem, the reality was, at least one day a week, we would have to pay $10 to our manager.  My teammates and I thought about it, we figured, why not spend that money in a way that we wanted to—that summer, every Friday, we ended up going to the movies–I’ve never seen so many movies.

Our manager’s intent was right, but the way the measure was implemented motivated unanticipated behavior.  When she understoond what we were doing, she quickly  stopped the metric, we started coming back into the office and doing things that would get us more meetings.

Often in doing reviews with sales people who have strong activity measures, I see much of the same thing.  People say similar things, “It’s easy to make my ‘call number,’  I can dial the phone so many times, I can talk to someone, they are often people that I know will never have an intention of buying, but I talk to them because I make my number.”  It’s hard to criticize them, they are doing exactly what their managers want them to do.

The problem is the way the metric is defined.  I actually like activity metrics.  Activity metrics, properly structured are great forward looking indicators.  Good activity metrics can give you great insight into your likelihood of meeting your overall business goals.  As an example, I measure myself on a couple of key activity metrics, but they are defined in a way that focuses me on achieving my objectives, not just accomplishing the activity.  For instance, I have to have a certain number of calls or meetings each week.  Those calls have to be with a certain type of person and produce very specific outcomes.  It’s a key metric for me.  I know if I achieve my goal, that I am highly likely to achieve my overall quota.  What makes this different though, is the activity is very well defined in terms of its purpose and the outcome.  Without this, it could be useless.

There’s another problem with activity metrics, it’s the way managers use them.  Too often activity metrics are used as a weapon (Metrics — The Secret Weapons Of Sales Managers) rather than as a diagnostic.  Since Activity metrics give you a forward looking view of the business, when an individual or team is not achieving the metric, it’s important to look at the underlying reasons.  Have there been fundamental shifts in the business or markets that are causing people to not achieve the activity goals?  Are there specific skills problems that might indicate a need for coaching or training?  Does the person understand the selling process, are they executing it well?  Activity metrics are great indicators and warning signs, they are not ends in themselves.

Too often, we also see too many activity metrics.  A sales person has to make a certain number of phone calls, have a certain number of meetings, submit a certain number of proposals, have a certain number of opportunities.  Too many activity metrics confuse the sales person on what the real priorities are, the key goals.  I believe there should be, at most, 2 activity measures.  The trick is determining the 2 that have highest impact on what you want to achieve.  It requires real study to understand what really drives your business.

Activity metrics can be very powerful.  Great sales professionals establish personal activity metrics to guide themselves, improving their impact and productivity.  Great leaders put in place appropriate activty metrics and use them as diagnostics.  When you are putting in place these types of metrics make sure you:

  1. Clearly define what you are trying to achieve with the activity–what outcomes, what results?  Make sure the activity focuses on achieving something, not just getting a “tick mark.”
  2. Re-assess activities you have in your sales process.  Make sure they are clearly defined.  Again focus on achieving outcomes, not going through the motions.
  3. “Game” the activities.  Look at how the sales people might behave in achieving the activity goals.  You don’t want them spending afternoon’s in the movies.  If in gaming them you are getting the behaviors and outcomes you want, then you probably have a good metric.
  4. Realize the activity metrics are powerful indicators and warnings–they are great diagnostics.  Use them for this, look at the underlying reasons for not achieving a metric.
  5. Keep them to a minimum, use no more than 2.  Make sure you have identified the 2 key activities that really drive your business.

Make your activity metrics useful and you will really drive business growth!

From → Leadership

  1. When I was reading your article I kept thinking about the metric we are using and how I feel it gets around many of the problems you discussed.
    Right until you wrote about how a metric should only measure the two most important stats, which is whar our system does.

    I work in a very short cycled industry, we make a small sale the first time we speak to a customer, then we make a larger deal a few weeks later and at last a very large deal after between 6-12 months of cooperation.

    The motivation to make the larger deals is of course obvious, the salesman gets paid A LOT more for a big deal than a small.

    But to motivate hard work and a constant stream of new customers we have set up a system where we demand a certain number of phone calls from each salesman.

    For example, they have to make 140 phone calls, once they are done with that they can relax. To make sure they don’t just through calls out the door we have added an incentive, every sale you make is worth 25 (actually 26 as you count the phone call) meaning that if they make sales they have to work a lot less.

    This has worked very well, our salesmen are hunting hard for deals and working really well.

    For our own sakes and to be able to predict the future we do measure a lot of other statistics, like call length, number of contacts, moving the customers further in the sales process and number of long term customers just to name a few.

    But using only that one metric with the salesmen has really worked well.

    • Thanks for the great comment Daniel. Cheers to the sales person that only has to make 6 calls a day — consistently. The challenge then is to get him to make 10 of those calls a day. You’ve got something that works for you, but consider turning the crank one more time.

      What % of your folks achieve their “140” by making signficantly fewer than 140 real calls a day? That might be an important overall metric. What you really want, based on the comment, is 6 small sales per day. What if you focused on that metric then did diagnostics on those that were having trouble achieving that? For example, are they making enough calls? Are they calling the right people? Are they having the impact they should on each call. You might ramp productivity at a much faster rate than you are currently.

      Thanks for the comment and great illustration. Your comments always add a lot to the conversation. Regards, Dave

  2. David,

    Thanks for the post. Good topic. I believe activity metrics are put in place for two reasons (1. to validate the reason for paying someone a base salary or billable hours (I’m not selling but I’m busy over here!)), (2. to use the results to establish norms, which could be used to set future goals). I’m not a fan of activity metrics that are connected to results-related goals.

    In the lead generation world, I have made the argument against dial quotas for years because reps end up simply making dumb dials just to reach a number instead of making calls to move the sales process further. The quota is usually for underachievers because we know overachievers will not only make their numbers but you cannot stop them from doing whatever it takes to surpass their quotas, even if it means making more dials than the quota states.

    I have known reps who have had a dial quota of 80 dials to day and a meeting quota of two meetings per day. They’d set up the meetings in the first hour of the day and then call prospects they knew would never answer the phone for the rest of the day to make the ridiculous dial quota.

    Sales goals should always be about results. If your quota is five new sales per month, I don’t care if you did it as a result of 10 dials or 100 dials. I don’t know why managers don’t think this way.

    Kind regards,

    Emanuel R. Carpenter
    Author of “Six-Figure Cold Calling”

    • Emanuel: Thanks for joining the discussion, you’ve made outstanding points. So many of the activity metrics I see remind me of attendance in grade school–got a check mark just for showing up. These are meaningless, a waste of everyone’s time and do not address the root issues of productivity.

      That being said, activity metrics defined in terms of the outcome or result that is desired can be very simple and poweful—which is also your point.

      Your comments really add to the quality of the discussion. Thanks for taking the time. Hope to see you here again. Regards, Dave

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