Measurement Kills

Is there light at the end of the tunnel? Photograph by HeavyWeightGeek.

Don’t over-measure your salespeople. Of course, you want to know if your sales team’s activities are putting it—and by extension, your organization—on the right track for success.

But companies tend to go too far. Because at extremes, measuring can kill your CRM program by driving salespeople crazy. “All you’re doing is measuring me,” they’ll say, and CRM adoption—and by extension, the hard data required to measure sales force effectiveness—will decline.

Everyone wants hard data. Executives, in particular, want to generate accurate sales forecasts, and as much as possible, predict the future. But these aren’t just numbers; they’re jobs, and without some ground rules the situation can spiral out of control. For example, executives at one of Innoveer’s energy clients used to literally get into fistfights at meetings, as they all tried to prove that their version of the sales data was true. Bonuses and promotions were at risk. Tempers, naturally, flared.

So how can organizations consistently measure their sales program, without measuring too much?

Forecasting Is Not Your Problem

Don’t start with forecasting. There are four best practices for excelling at sales force program measurement:

• Metrics: Track your progress toward a goal
• Feedback: Highlight the difference between what’s been achieved and what’s required
• Reporting: Analyze sales data and provide insight into trends and measurements
• Forecasting: Project sales revenue or volume

Roughly 50% of organizations implement sales force automation (SFA) to get forecasting; it’s that important. But as a result, forecasting tends to be the most overdeveloped SFA capability.

How do we know? Organizations often ask us to rank their relative process maturity, from 1 to 5, in a number of different areas, using our CRM effectiveness framework for sales. The underlying thinking: know where you excel, and know what needs improvement, because that’s what will make your program less effective.

So instead of devoting more time and energy to forecasting, focus on the other three aspects of measurement, and you’ll see your overall measurement capabilities, including forecasting, improve even further.

For organizations that excel in all aspects of measurement, by all means do bolster your forecasting capabilities, if required. One of our customers, for example, had relatively advanced overall measurement capabilities. We helped the company, which manufacturers chips for cable television controllers, implement more advanced forecasting processes, enabling it to reduce—from nine months’ worth to four months—the excess inventory it carried. This reduced its carrying costs, resulting in substantial savings.

Think In Metrics

To avoid over-measuring, articulate your business goals to know exactly which sales metrics to measure. In industries that rely on indirect sales, for example, meetings are paramount, because they allow salespeople to influence deals. One of the pharmaceutical companies we work with, like most, divides the doctors it wants to influence into groups of As, Bs and Cs, based on importance. Executives want salespeople to visit the As three times as much as the Cs, because it leads to more doctors writing more prescriptions. Each week, managers meet with sales reps to review their activities, and make sure they’re following the sales plan. In short, meeting these targets delivers results.

Direct sales must often measure in the opposite direction. For example, one of our high-technology clients wanted to determine how many telephone calls the inside sales team had to make to line up a meeting—about 400. Then, how many meetings resulted in a proposal? About 25%. Then, how many of those proposals did the company win?

Innoveer helped the company design those metrics, to help sales understand how to achieve certain results. This also enabled the company to know what to measure, so that it didn’t over-measure.

No Salesperson Left Behind

If top-notch sales programs know which measurement data to collect, they also know what to share, and how. We helped ABN AMRO bank, for example, tightly integrate its sales reports with the CRM system. Reports that managers deemed ultra-important displayed, front and center, whenever a salesperson logged into the CRM system. Perhaps the most important report showed how that salesperson was performing against his or her peers.

Sales is the contrapositive of Garrison Keillor’s famous Lake Wobegon quip: “All the children are above average.” This might seem obvious, but 90% of your salespeople won’t be in the top 10%. By showing the nine out of 10 salespeople where they stand, the firm thinks it can make them perform better.

In short, for sales programs to excel, know what to measure, measure it, share relevant insights and then get back to the job at hand: selling more. Otherwise, what will you have to measure?

Learn More

Based on Innoveer’s numerous CRM projects, we’ve created a CRM effectiveness framework based on this observation: Maximizing the effectiveness of your sales program requires excelling not just at measurement, but also managing pipelines, territories, customer relationships, as well as salespeople.