Measure What Matters in Sales
We all know the old ‘what gets measured, gets managed’ right? It’s well known because it’s true. The magic is choosing which metric to measure as that’s where all the focus goes, often at the expense of the other ‘stuff’.
Let’s just consider sales ...
If you’ve been around the block once or twice with sales teams you’ll know that set a sales person a revenue target and they’ll push on to get it. Without a few other metrics such as profitable revenue, or customer’s that are financially viable, you’ll see a flurry of activity and signups of new clients that are at low rates, can’t pay the bills next month, or were signed up using some tactics that don’t align with your brand or values. Either way, the short time spike in revenue and sales person ego aren’t worth it, as the bottom line sinks lower and lower.
Sales targets are an essential metric in any commercial venture, they’re good to have, but don’t make them the only thing that gets measured. Get clear on what success means for your venture at that point in time – you might consider: the type of customers you want, the gross profit or margin needed, the parameters on any sweeteners or giveaways … and measure these too.
Even better is when you know your sales velocity (how quickly you’re generating leads and how fast they’re converting to customers), as then you can add to the dashboard the lead indicators too so everyone’s confident about how the goal’s will be achieved. The old rule of thumb 1000 leads in the top of the sales and marketing funnel equals 10 converted customers is often true so if you’re a startup, use that assumption and refine the calculation as you go.
Clear activity targets and performance measures that also capture the ‘right’ behaviours are a quick and easy way for everyone to be aligned on what the aim of the game is. Nothing like an excel spreadsheet to do the calculations and a weekly dashboard shared around to hone that focus!