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| Home - Industry Article -
September 09 |
Measure More Than Revenue |
By Jerry Sparger, Founder and CEO, Global Business Solutions, LLC
When evaluating sales performance, companies typically
measure revenue booked against plan. While revenue results will
tell you how well you have done in the last period, they cannot
predict how well you will do in the future. Revenue is a
trailing indicator, meaning by the time you measure it for a
period, it is too late to change it. Even if you are
accomplishing all of your sales goals, revenue numbers will not
tell you how prepared your organization is to adapt to market or
economic changes. If you find yourself behind forecast, relying
solely on revenue numbers to evaluate performance, you are
forced to take short-term steps to make up lost revenue.
What can you do to more accurately assess sales performance and
ensure sales organization agility? Not only measure the past
(e.g. booked revenue), but also measure the future. In any
business there are leading indicators which, if achieved, yield
the desired results. If you measure them correctly and perform
to your established goals, you should make your revenue.
Possible Indicators to Measure
Activities to measure and target values will vary by business.
Your strategic goals and objectives and processes will help you
decide which indicators to measure.
Some indicators to consider for measurement are:
- Personnel Potential – do you have the right people in the
right jobs with the right tools to meet your future business
needs?
- Marketing Campaigns – is your marketing bringing in the right
leads?
- Process – do you have management processes and templates to
manage and correct sales activities?
- Funnel Management – do you have a sales funnel with clear
rules and metrics for moving sales accurately through your
funnel?
- Corporate Sales Culture – does every department in your
business help close sales in a measurable way?
Let’s examine how measuring these indicators can help you meet
or exceed your revenue goals, and avoid surprises.
Personnel Potential
When sales people don’t make their numbers it might not be their
desire, training or work ethic. A person without the inherent
skills to sell cannot become a good sales person no matter how
hard they try or how much training they have.
Sales embodies several very different disciplines such as field
sales (acquiring new customers), telesales (acquiring customers
via inbound and outbound telephone calls), account management
(growing existing accounts), or supporting complex sales as part
of a team sales approach. Each of these roles is very different,
and requires different skills.
How do you measure ability to perform in each of these roles?
Statistically validated assessments can measure ability to
perform the roles you need to optimize your revenue production.
The best of these tools identify attributes top performers share
with each other and not with lesser performers, based on
thousands of companies and hundreds of thousands of employees.
Such tools can also identify areas in need of improvement,
resulting in appropriately targeted training.
Marketing Campaigns
Leads that don’t fit your target customer profile hurt, rather
than help sales, by creating additional work. The number of
contacts or the conversion rate to a contact won’t necessarily
improve the number of good sales opportunities.
Measuring opportunities that fit sales’ target customer profile
gets closer to determining if marketing is helping sales. The
sales department needs to determine if the contacts fit the
profile. If the target customer profile is done correctly,
marketing can measure how many good fits were delivered to sales
for a given campaign. This can be compared down stream with
closes. Sales can set a % of closes against good fits. If
marketing delivers the right number of good fits and sales
closes their target % of good fits, then revenue goals should be
achieved. This makes good fits delivered a valid leading metric.
Process
Measuring processes and associated activities and information
flows is difficult, but worthwhile. This will focus your
organization on making it as easy as possible for customers to
buy from you.
The right processes will align everyone in the company around
the customer. Examining how your customers buy, and identifying
what activities take place to serve them is a start. How every
activity impacts your customers, what information the activity
needs and provides to others, when the activity takes place and
who is responsible are the key indicators to measure. Each
activity and information flow should be traceable to an event
that makes it easier for the customer to buy.
One last point about these indicators; you should have a review
cycle in place to evaluate how your processes and activities
impact customers. Don’t be afraid to challenge your processes
and correct them.
Funnel Management
A funnel is a valuable tool for forecasting and for resource
assignment; it can help you with the next quarter and the next
year. Clear rules should be defined for moving into and through
the funnel. Create specific hurdles to be cleared for each stage
in your funnel, and stick to them. Make them visible, so that
managers can see the logic behind every forecast entry. This
will help improve forecast accuracy, and allow you to place
sales support resources when they are legitimately needed.
Corporate Sales Culture
Measure culture? If your staff takes tea with their pinkie
extended, then you have culture! Not that kind of culture. We
mean a uniform understanding of each person’s role in helping
customers buy happy.
Do you have strategic goals and objectives that will help make
your customer’s lives easier? If so, do these trace to clear
objectives for each employee? Are employees empowered to help
customers? Do employees understand their role in helping
customers?
Do employees have incentives to work together to help customers?
Everyone should be motivated to work together. If your processes
are clearly measured, you can create an incentive program to
ensure that everyone is working to serve the customer and close
sales.
It Ain’t Easy
These are possible indicators to measure which can improve the
likelihood of meeting revenue goals. There are many others.
Deciding which ones and what values to measure must be done
carefully; it is a challenge for any company.
Jerry R. Sparger is Founder and CEO of Global Business Solutions
and has more than 40 years experience creating innovative solutions to business
problems. He spent the first 30 years of his career in senior and executive
management positions, specializing in new ventures and turning around struggling
business units. In 1997, Jerry founded Global Business Solutions – a management
consultancy that helps companies improve revenue, streamline operations and
deliver greater value to their customers. Since founding Global Business
Solutions, he has not only led the team in providing valuable solutions for
clients, but has also served as chief intellectual architect, creating and
perfecting methodologies, authoring numerous articles for national business
publications, lecturing and speaking to audiences across the country. For
article feedback, contact Jerry at
jrsparg@gbsonline.net
 
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