What is one of the least effective questions a sales manager can ask when trying to measure sales performance? ‘What sales do you have coming in?’
If you just heard yourself ask that question in the last week. Stop it now!
That is like asking a professional sports team what score they will have at the end of the game. They know what they are going for, but it totally depends on how well they play the game.
What should you ask about?
As you would remember from my previous post on Sales Process, knowing the path to the sale is vital and without this information, you will find your company and salespeople floundering, slowing down the sale and generally creating more frustration than is required.
Too many times I have sat in sales meetings and listened to the sales manager ask the sales team what sales are coming in. The salespeople respond with what they hope they will “close”. The sales manager writes the number down. During the next meeting, they ask the team where all those sales they spoke about last week are. The salespeople shrug and talk about how some of those deals that didn’t come in or have gone sideways due to one thing or another, but don’t worry, there are new prospects ‘in the wings’ causing a general scepticism and frustration towards the sales team.
Salespeople and meteorologists are the only professions that it seems to be ok with getting their predictions constantly wrong.
How can you get better at measuring sales performance?
The best way to start is to reverse engineer your sales process. How? Simply look at the sales process and work out what it takes to move from one stage to the next. If you don’t have an exact sales process – start here by reading my previous post about the sales process.
Let me give you an example of a simple sales process:
Of course, these stages may be broken up into multiple steps depending on the business.
The first question a business owner or a sales manager should ask is: How many presentations in the last quarter have led to a sale?
Let’s say 16 presentations have produced 8 closed sales – not sales still in the pipeline, just the net new clients. This is a ratio of 2 presentations for every sale.
The next question should be: How many needs analysis conversations need to happen to get a demonstration/presentation. Let’s say 2 needs analysis will create 1 presentation.
The third question is: How many qualified leads do we need to talk too, to get that lead to a needs analysis? Let’s say we need 2 qualified leads to move 1 prospect to a needs analysis.
And lastly: How many leads do we need to get a qualified prospect? Let’s say we need 3 leads to get a qualified prospect.
So, what does all that mean?
To achieve a sale in the above scenario, the salesperson needs:
- 24 New Leads
- 8 Qualified Leads
- 4 Needs Analysis, and
- 2 Presentations.
Now that we know what the sale process looks like, and the numbers required to get a sale, the best questions for the sales manager to ask are based on the activity.
“How many needs analysis meetings have you done this week?”
“How many presentations do you have booked for next week.”
And so forth…
Some extra benefits of doing this are:
- The greater the visibility of the sales process, the more likely you will be able to identify where the sale is breaking down or slowing down for individuals in your team. Once you know that, you can coach and focus on what they are doing at that point.
- Further, if you have a salesperson doing extremely well, moving a client from one stage to the next, ask them to share how they do it and the rest of the team will benefit.
- If you are a technical business, you need to allocate technical personnel to a new client when you sell a solution. This visibility will allow you to prepare for the new influx of work, without having to find the resources at the last minute and upsetting the operations team.
- Sales management becomes a lot easier when you have the data and process to back you up. You can performance manage salespeople that are not undertaking the activities that are shown to cause a sale. Weeding the salesroom is a sure-fire way to create the space for the good players to thrive.
Let’s stop the madness now and add some reality and professionalism to the sales and sales management world. Let’s start measuring sales performance that gives accurate information to allow sales managers better manage their sales team. It starts with the sales manager:
- Understanding the sales process,
- Understanding the ratios that currently exist,
- Identifying the gaps, and
- Upskilling the sales team based on those sales process steps.
Being a better sales company is rarely about being a ‘better closer’. It’s about developing the skills to move from one stage to the next smoothly.
Matthew Whyatt
Matthew works with owners and managers of B2B software companies to get more clients by simplifying high value, complex sales. Matthew started his first software business over 20 years ago, after a very successful sales career where he regularly outsold long established players in a number of markets. Matthews' relentless thirst for knowledge and his ability to apply that knowledge in real world situations makes him a truly versatile salesperson. If you're interested in scaling up and getting more clients then definitely reach out and request a free strategy session today.