One of the more important seminars at a recent Sales 2.0 Conference in San Francisco involved a panel of Sales Operations experts slated to discuss the best sales metrics to track. The question of which metrics should be used for your organization has to be one of the more strategic decisions a sales leader can make. Unfortunately it is a decision that is usually left to your sales finance person or to your CRM administrator based on predefined reports. So the question you need to ask yourself is, “what metrics do I need to effectively drive my business?”
Competitive Metrics (the internal view)
Behavior is most easily modified by what you chose to measure and how you choose to share that metric. According to Sarah Doody of Personal Metrics, “The idea that measuring behavior can drive behavior is central to game mechanics. By providing players with performance cues, the player alters their behavior to get to the next reward.” There are now many software companies (Bunchball, LevelEleven, iActionable, Hoopla to name a few) offering gamification solutions that will generate and share individual performance metrics with peers, displaying their metrics in Salesforce.com for all to see. In the right organization this gamification could be a very effective catalyst for intense peer pressure, thus driving performance improvement.
Benchmark Metrics (the external view)
Fewer sales metrics are better than too many metrics; it’s the difference between focus and noise. Any of the metrics you use should be actionable or, at minimum, motivational. When you look at a sales dashboard or read an analysis of your metrics do they readily suggest how you should react or think about the subject being measured? If your job involves managing several direct reports one of the relevant metrics for your job is their sales performance. If your job requires that you meet a quota (and what sales job doesn’t!)you need to know your current and projected quota attainment. These are typical metrics for a sales leader and unless they have other specific performance goals an argument can be made that these are the only metrics with which you should be concerned! The most effective metrics that help you drive the business are not necessarily the same metrics as your peers, subordinates or individual contributors. The most effective metrics are those directly related to your job.
Metrics can be lagging or leading. Lagging metrics are like a rear view mirror, telling you where you have been or where you are to date but with no ability to improve the future. A stacked ranking of your team’s quarter to date performance or your bookings to date are examples of this metric type. Others, called leading indicators, can help predict your future performance. Leading indicators are typically related to the pipeline, be it your sales pipeline or the estimated pipeline from your new product launch based solely on market research. Accurate predictive metrics are more difficult to obtain, less certain but more highly valued in that they allow you time to react and affect change.
Taking predictive metrics to the next level is the science of predictive analytics. Lattice Engines applies the power of predictive analytics, the norm in the B2C world, to increase B2B sales productivity. A while back in Gerhard’s Selling Power blog he wrote, “The insight is that the explosive growth of data about companies and purchasing decision makers contains hidden but invaluable intelligence for frontline sales teams. Lattice Engines has encapsulated this vision into its sales intelligence software, salesPRISM. [The founder and CEO, Shashi Upadhyay] explained that this is the first solution that combines a company’s internal view of its customers and prospects (e.g., purchase histories, product usage data, customer service records) with external information about these accounts and decision makers (e.g., news sources, company Websites, social media).”
Are the metrics you’re using aligned with these goals? Do you have other ideas related to metric effectiveness? As always, feel free to respond here!