Three Rules to Develop Effective Sales Metrics

It is accepted wisdom that you can't improve what you don't measure. This applies equally in life as in sales. You can’t improve your cholesterol levels without drawing some blood. You can’t know how much weight you’ve lost, or gained, without standing on a scale. And, in sales, you can’t improve your performance or productivity without measuring the effectiveness of your sales processes.This means you need metrics that help you truly understand how you’re doing at any one point in time. But the key is that your metrics should measure the robustness of your sales process, instead of focusing on outcomes.Here are 3 rules to help you develop more effective metrics.

1. Focus on Your Process Instead of Outcomes.

Orders are not a metric or a key performance indicator. It is important to remember that orders are just an outcome of a process. In this case, your sales process. Focusing on orders doesn’t tell you enough about the effectiveness of your process, about the value of the series of events that lead up to the outcome and what you could do to improve your process to improve the speed or quantity of outcomes. Orders tell you in a macro sense that your sales process is or isn't working but they don’t give you the “why."

2. Measure Quality Instead of Quantity

Don’t become seduced by the quantity of things as indicators of performance. It’s easy to get distracted by:

• How many cold calls did we make?
• How many leads did we generate?
• How many prospects are in the pipeline?

Instead it is more important to examine your processes from a quality perspective. Ask these questions:

• How many conversations did our cold calls generate?
• How many leads did we generate that converted into qualified prospects?
• How many qualified prospects converted into orders?

Identify the measurable elements of your sales process and define quality based metrics for these that you can measure on an ongoing basis.

3. Measure Time Rather than Duration.

Every time I work with a company I ask the question: how long is your sales cycle? Invariably, the answers I receive are measured as a period of time: years, months, weeks and days. But, the duration of your sales cycle tells you very little of value about the effectiveness of your selling process. To accurately measure the productivity of a sales rep you have to track how many hours and minutes of sales time he or she invests to move a prospect from Point A (interest) to Point B (decision.)Time is important on two levels.

• First, a sales rep’s time is a fixed sales resource. Therefore, the only reliable way to increase their productivity is to help them decrease the amount of time (versus duration) they require to move customers through their buying process to a decision.
• Second, you have to measure how time correlates to success. Does the amount of time a rep requires to get a decision correlate to their win rate or the size of the order they win?

Ideally, every sales manager should have two key metrics they use in their day to day routine in an attempt to capture a meaningful snapshot of the current status of their sales efforts. Similarly, sales people should have no more than two key metrics to measure their progress.When you choose your metrics just make certain that they are measuring what truly matters.