If You Don’t Understand Your Sale Numbers, You Can’t Improve Performance
Sales and marketing are data- and numbers-driven, at least they should be and sometimes we pretend they are. But too often, salespeople and managers don’t really understand the data and the 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 salespeople 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…..”
Around and Around We Go…
Tracking the Right Numbers
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.
The Meaning of 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.
David Brock is president of Partners in EXCELLENCE, a management consulting firm focused on sales productivity, channel development, strategic alliances and more.
I really enjoy your articles David. Over the years I’ve become a big believer that sales is not a black art, it’s actually just math. If I make “x” calls or social media contacts, a % of “x” will engage, a specific percentage of those will become prospects, we’ll close a specific % of those and those deals will break down into an average deal size of “y”.
The other thing I learned, is that averages are great reference points, but individual reps benefit most from knowing their own unique “math”. Some will be better openers, others will be better closers, but their individual “math” will be consistent.
Although once the math for each rep is known, there might also be real teaching/learning opportunities to make someone a better opener or better closer, or cycle lessons learned between reps. This is where the “make more calls”, “try harder” sales mentality can be dispensed with and real sales improvements can be made (what is Bob doing that makes him a better opener, what is Sally doing that makes her a better closer – the math has told you that Bob is a better opener and Sally a better closer, now you can try and determine what they’re doing differently that can be shared with the team).
And if you really want to get fancy, you can start focusing on “math” questions like “should I be focusing the sales team on revenue sales targets, margin sales targets, or should I be focusing on yield (producing the most margin based on the least amount of revenue – which is better for cash flow, self funded growth and is more resource/growth friendly).
But that last one is probably a topic on it’s own.
Can’t wait to read your next post David, thanks for sharing.
Director Sales & Marketing
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