Sales and marketing are data/numbers driven, at least they should be and sometimes we pretend they are. But too often, sales people and managers don’t really understand the data/numbers.
Some of you are probably thinking, “Dave you are really off base here, of course we understand them, we know we have to make our numbers!”
Too often, however, we aren’t looking at the right data/numbers or we aren’t looking at them in the right way.
Conversations sometimes go like this:
Me: “What do you have to do to make your $5M goal?”
Salesperson: “I got to sell a lot of stuff!”
Me: “What does that mean, how many deals to you have to work?”
Salesperson: “Enough to make my number! Aren’t you paying attention Dave?”
Or I may be talking to managers:
Me: “I see you’ve set daily call goals of 50 calls per person. How did you come up with that number?”
Manager: “It seems like an aggressive goal. I’ve always believed sales people need to be on the phone calling!”
Me: “How do you know it’s enough or maybe it’s too many?”
Manager: “Good point, I’m going to make it 100 per day…..”
And round and round we go………
In order to achieve our goals, we need to understand the “numbers” that underlie our business fundamentals. We need to make sure we are tracking the right numbers. For example, to make our quotas, how many deals do we have to be working? What’s the average value of those deals? What’s the sales cycle? What’s our win rate? How many high quality leads to we have to be qualifying? What is a quality lead?
Every activity we undertake in selling must produce an outcome, those outcomes, when linked together produce the ultimate outcome—an order. We need to understand those critical outcomes at each stage of the process. We need to understand the relationships between each of those steps and the desired outcomes: X leads produce Y qualified high quality opportunities which produce Z closed orders totaling revenue of A………
Simple, we all know this. Some of us even apply this logic to establishing these goals and tracking performance. Unfortunately, too many don’t.
Sure, they’ll give me numbers, but they don’t understand what the numbers mean and what it takes to produce the right numbers.
To understand our numbers, we have to get deep into what they mean–because it’s understanding those that drive results.
For example, I may know the magic number to produce a healthy pipeline is “50 MQLs a week.” But what does that mean? But what’s a quality MQL (Or any other number you choose)? What are the qualities, characteristics of those, so that I know I’m counting the right things. It’s actually quite easy to build a pipeline of 100 opportunities. I might fool myself into thinking, “hitting my goals is a slam-dunk.” At the end of the month/quarter/year, I find I haven’t hit my goals—but I have enough opportunities, what gives?
Knowing our numbers is the critical first step. But stopping there just enables you to prove that math works. To really understand the numbers we have to get under them, understanding what they mean and what creates them
If we don’t understand our numbers and what they mean, we have no hope of managing performance.
I agree with you on this. To be able to act and address a problem, we must know what kind of problem we are looking at first. This way we can see where we stand and how we perform. Also, there must be a standard KPI that would guide us to start with and not just keep pushing until we think it’s about right. Great article, David! Thanks for this!
Brooke Harper