I was in a VP of Sales’ office and we were talking about his team’s performance and the overall market. We both had opinions around where the market was going and if the team could adapt. We started to speculate a bit about where things would go. He then said, “Let’s look at the sales report.”
In a sales organization, reports are pretty important. They are important in other functions as well, such as marketing, but don’t seem to have the same urgency as they do in sales. Sales is not unlike a competitive sport in that the statistics are often highly scrutinized. Sellers, not unlike baseball players (or pick another sport), have some key stats that give an indication of how they are doing, but they may not tell the whole story.
Most sales reports in the business-to-business world of selling include at least three key statistics or metrics for each seller:
- Some sort of attainment figure. The company may call it a sales target, budget or quota, with the last one being the most common. A seller’s quota attainment percentage (e.g., 0-100+%) is often the key barometer for how he or she is doing and is usually the main metric for inclusion in President’s Club.
- Pipeline coverage or multiple. This is usually a bit of a leading indicator in that the pipeline is a mix of current quarter opportunities and future ones. The coverage or multiple is a function of the amount of quota remaining. Given an expected win ratio of 25-33%, most sales managers want to see a multiple of three to four times quota.
- Some kind of activity figure. This one is often the hardest to gauge and is not consistent across industries or teams. In pharmaceutical sales, a sales rep may have to make six-to-eight face-to-face calls a day, while in other industries, one face-to-face meeting a week with a key decision maker may be sufficient. Activity tracking is also one of the hardest areas to get sellers to record, with some companies using GPS to track sales calls based on a company car’s location.
Per the metrics or stats above, a sales manager, who is also a coach, should be able to gauge how their team is doing, but there may be other seller characteristics that are undervalued from a pure quantitative lens, yet are quite significant. Other seller attributes might include:
- Attitude. A seller may not have the highest attainment or pipeline multiple on the team, but if he or she has a positive attitude and is willing to learn, the sales manager will often allow more time to demonstrate performance.
- Effort. In sales, effort that doesn’t translate to revenue is often not enough to keep a sales job, but similar to attitude, it usually gives the seller more time to perform.
- Knowledge. A seller may have some specialized knowledge that provides value to the team and organization that may not show up in a pure numbers assessment.
None of the attributes above are sufficient enough to keep a sales job if the numbers aren’t there quarter-after-quarter, but they should be reviewed as part of an overall evaluation. The balance for sales leaders is embodied in the two quotes below:
- You can’t manage what you don’t measure
- Not everything that counts can be counted, and not everything that can be counted counts
So … the sales report is important. Very important. Good intentions are not going to keep a VP of Sales in a job. The average VP of Sales tenure is around 18 months. However, like a good coach, a sales leader needs to not only review the numbers, but also the behaviors, attitudes and efforts of their team. Ride-alongs, informal conversations, and thinking style alignment may all be keys in engaging the team, elevating expectations, and driving new behaviors.
What else do you review besides the sales report?