12.28.04 -

The Sales Leader’s Role in Accurate Forecasting

Dennis J. Chapman, President & CEO, The Chapman Group  

Many sales leaders become very frustrated by their team’s inability to accurately forecast their sales. While we can appreciate their concerns, it has been found that if the sales leader would provide seven support activities to their sales teams, forecasting would become more accurate. 

The seven sales leader activities include:

1.   Establish a defined selling process with defined selling steps

2.   Set objective qualifier criteria (expected standards) to differentiate between the probability of close for any opportunity; i.e. difference between a 50% and 80% probability of close

3.   Conduct end of month reviews with each sales representative with a focus on identifying why some opportunities close and others didn’t; specifically identifying what could have been known and/or identified to have made the forecast more meaningful and accurate

4.   Establish by sales representative, trend marks that reflect a specific sales representative’s approach to forecasting; their degree of optimism or conservatism

5.  Establish and chair a Win/Loss review process to better determine what are the key win/loss indicators that need to be embedded into the forecasting process and forecasting metrics

6.  Share results and level of accuracy with sales team; solicit their input on how to make forecasting a “best practice” of the sales organization

7.  Hold sales representatives accountable for their forecast; reward forecasting success and address repetitive failure to meet forecast

12.28.04 -

Do you really know your customer? 

If you are going to forecast key account revenue for the next year you need to know more than you think.

John Cangiano, Senior Partner, The Chapman Group 

Too often revenue from your key or strategic accounts is forecasted based on what you think the account will purchase or perhaps based on the last several years of actual revenue from the account.   You may want to get clearer insight from the account, their perception on what their needs or requirements are going forward.  Of course, you ask your account contact what they will be doing in the coming year, quarter, or month but are you gathering the right intelligence to better understand the true potential or perhaps the risks that could result in a decrease of revenue or the worst case…attrition.   

You need to more effectively, timely, and efficiently gather the appropriate account input from the key contacts and influencers within the account not just from one key contact. Do you really know their views as it relates to the competition?   Remember your competitors are also forecasting revenue and that revenue may currently belong to you.  Do you understand their options to change vendors?  What are our strengths versus the competition and where are you vulnerable?  Can the competition service the account as effectively as you?  What is your current share today in the account and how much is the competitor’s share (may be several competitors)?   

What changes are your accounts initiating in the next year – downsizing, merger, acquisition, expense saves to name a few.  How are you viewed by the account?  Are you providing value or viewed as a commodity?  Do you know what you do well and where you need improvement based on the account’s perspective?  Have you even asked these questions to the key influencers in the account, not just your contact?  You may believe your account is satisfied and that revenue will be flowing in as usual with some growth, but accounts are lost every day along with the revenue they provide.   

If you are going to accurately forecast key account revenue you need to know if your accounts are loyal, not just satisfied.  How strategically aligned is the account to us – not only today but over the next several years?  Engaging our customers at all contact points and effectively measuring and analyzing their loyalty is critical in the forecasting process for key accounts.  You may not believe it but many of us are in a reactionary mode as it relates to our key accounts.  You need to proactively manage and ensure that account loyalty is part of our account relationship servicing model.  If you gather the appropriate customer input, assess their loyalty and identify and analyze “gaps” and values of the customer, only then can you initiate a viable business action plan that incorporates the basic components to achieve a more accurate revenue forecast.  Don’t wake up on a Monday morning to find out your account went to the competition and that the revenue you were forecasting from them disappeared.  Interview your key accounts, across multiple levels, to ensure you are delivering economic value to not only solidify, but grow the forecasted revenue for your key accounts.

12.28.04 -

Cleansing Your Sales Pipeline

Al Sneddon, Senior Consultant, The Chapman Group

How many of us have kept prospects in our pipelines long after they should have been removed? Salespeople are optimistic by nature and believe that maybe this is the month that a prospect will make their decision to buy. Does this thinking permeate your pipeline? If it does, you may have a stagnant pipeline with many names but not enough potential buyers. Looking at a long list may make you feel better but if they do not convert to closed sales, do you really have a strong pipeline? 

These are tough questions to ask yourself but your sales pipeline must be managed or you end up with a false sense of security. I like to use an expression when looking at my prospects, “Up or Out”. In other words, if they are not moving “Up” through your sales process, move them “Out”. This strategy works regardless of the length of your sales process. The determining factor is are they moving through your defined sales cycle process? 

Managing your pipeline means that your pipeline should be divided into a “Top 10” and a “Back 40”. Your Top 10 is reserved for only those prospects that are actively moving through your sales process and moving towards a decision. The Back 40 is the holding area for those prospects that meet your sales criteria but still need further development before being considered for the Top 10.  This does not mean that you totally ignore the “Back 40” though. You need to continue to work these prospects to develop and nurture them until they are ready to move into your Top 10. Remember that your “Back 40” is the breeding ground for your future Top 10. 

By segmenting your sales pipeline, and critically reviewing the prospects in it, you can optimize your time by focusing on prospects that truly deserve to be in your Top 10. Remember if they are not moving “Up” then move them “Out”, and replace them with a prospect that will move “Up”.

12.28.04 -

Forecasting Accuracy

Utilizing metrics in forecasting - the “Opportunity Qualifier”

Carl Schwartz, Senior Partner, The Chapman Group  

As a Wall Street investor, wouldn’t it be great if all of the companies that you invested your hard-earned retirement income into met their predicted forecasts. As a CEO, wouldn’t it be great if you could rely upon your sales organization to ensure that the many other investments you make in your company will meet the demands of your clients. As a Sales Director, wouldn’t it be great if you could trust your sales people!  

So often the success of your company depends upon the success of its sales representatives and account managers. In many cases, there is a direct relationship between forecasting accuracy and organizational success. In most organizations, however, selling is a game of subjectivity. Each sales representative has his or her own idea of what is a “forecastable” opportunity. With great variance, they put numbers on their forecasts that make them look good. Subsequently, their sales managers cut those numbers by at least 30% to make themselves look more accurate. Their sales directors trust no one and chop their managers’ forecasts by 50%. To make things even worse, many organizations commit common forecasting sins, such as applying a forecasting probability based upon the opportunity’s sales stage, which ignores your prospect’s buying process, or by applying the forecasting probability offered by the sales representative as a weighting factor to multiply against the opportunity amount (if an opportunity is worth $10,000 to the company and the sales representative claims it has a 80% chance of closing; the company records that as an $8,000 forecasted opportunity) whereas, in reality, the company will realize all or nothing.  

The truth is we cannot fault our beloved sales people. To do their job well, they want to believe that everyone loves who they are and what they do. Therefore, they rarely ask the honest questions of themselves that will truly make them successful in the eyes of their clients.  

So how can you achieve forecasting accuracy?

Through the relentless pursuit of honesty. In order to assess if deals will close or not, we must frankly be honest with our prospects and ourselves. To our prospects we must be honest to identify value for them in our relationship and, in many cases; to ourselves we have to be honest not to accept being led-on by our prospects. We have to be specific in our qualification questions and our prospects must appreciate our candor and respect our time, efforts, and value. In a nutshell, we must honestly, objectively, and rigidly, QUALIFY, QUALIFY, & QUALIFY our opportunities.

How should you accurately qualify opportunities?

Create a checklist template of multiple choice and yes/no questions that can be asked of 90% or greater of your prospects within a decision-making process. These questions should help you gain insight into your prospect’s buying or decision-making process. You could execute your sales process flawlessly and still lose business due to a lack of awareness of the true dynamics decision-making process. Some recommended questions for your opportunity qualification template may include some or all or the following: timing, budget, competition, your competitive position, buying history, buying cycle, relationships, sales activities, and sense of urgency, among other qualification questions or criteria unique to your organization. Then assign metrics and weightings to each question in your template; making sure they total 100%. Apply this metric to each opportunity and let it become the forecasting probability that you use throughout the lifecycle of your opportunity management process. Your opportunity qualifier template should become that list of questions asked throughout your sales process to your decision-maker, influencers, and your internal champion within your prospect. You may want to have different qualifiers for different products and/or different size deals.  

Once you have applied your qualification template to your opportunities, you are now ready to build an accurate forecast. Plot your opportunity revenue by targeted close date on your 30-360 day forecast spreadsheet and use your qualification rating as a gate to display your highest scoring opportunities. You will be extremely surprised at the accuracy of your sales forecast. Not unlike any other form of medication, over a period of time, you will regulate and get more comfortable with your forecasting probability number. Beware to brace yourself, in your first few months, for a challenging sanity check. However, understand that forecasting accuracy is attainable and in your future.

12.28.04 -

1.   Subjectivity leads to failure; utilize valid qualifiers

2.   Top down and bottom up process

3.   Cleanse the same old opportunities

4.   Don’t expect better accuracy from inaccurate forecasters

5.  Only a new business view; include expansion of existing revenue base

6.  One big bucket; separate by product and by service

7.  Ensure accountability for the number

11.30.04 -

Win/Loss Analysis, Learning & Taking Action

Fundamentals with Peyton Manning

Ken Allred, CEO, Primary Intelligence 

Despite recommendations that I pick a top notch running back as my first pick, I selected Peyton Manning in our ultra-competitive, traditional Primary Intelligence fantasy football league.  Some questioned my decision, but have since been silenced given Manning’s performance this year.  The correlation to what I see Manning do after each and every offensive drive and what we do at Primary Intelligence was just too obvious.   

“Pressure is something you feel only when you don’t know what the hell you’re doing” is Manning’s favorite quote coined by Hall-of-Fame coach Chuck Noll.  If you find yourself watching a Colts game you’ll notice Manning studying photographs of the competition’s defense after every offensive drive.   It doesn’t matter if the offense just scored or went three and out, Manning is studying what happened after every drive. 

Arguably, Manning was the best at his position in high school and in college.  Today, he is an NFL superstar and one of the best quarterbacks in the league.  The Colts are one of the few teams in the NFL to effectively operate in a “no-huddle” offense.  One of the primary reasons that the Colts often execute with a “no-huddle” offense is to give Peyton time to look at the defense and then select one of the two plays he goes to the line with; either a run or a pass play.  This strategy would be far less effective if he failed to study and understand what happened after each offensive drive.  Each offensive drive either results in a win and the Colts put points on the board, or it results in a loss and  a change of possession.   

There is an important lesson for us to learn from Peyton’s obvious success; we should be analyzing our wins and losses as astutely as Manning does.  If we don’t, how can we possibly be prepared to compete in future opportunities?   

How many of us are running “no-huddle” offenses in our sales strategies, but haven’t done the required homework of studying our past wins and losses? 

Systematic studying of our competitive wins and losses creates ongoing opportunities to develop the appropriate plays, or sales strategies.  This type of analysis is proven to lead to more effective and more competitive sales strategies and tactics.  By calling plays based on what we are experiencing at the frontline in our target markets and by making modifications and adjustments to our respective go-to-market strategies as the competitive landscape and markets change, measurable improvement to sales efficiency is recognized in a short period of time.  However, sales leaders would be unable to do any of this in an effective manner if past wins and losses are not evaluated on a regular basis. 

Fortune 500 executives at every level have expressed how valuable analysis of recent competitive wins and losses is to them in nearly every area of their enterprise; sales, marketing, product development, customer support, strategy, operations, etc.  In fact, Primary Intelligence has found that more than 65% of Fortune 500 organizations now use win loss analysis as part of ongoing business planning.  Win loss analysis, when conducted properly, is so valuable that several Fortune 100 VP of Sales have told me personally that they are convinced their organization will lose market share if they ever discontinued studying past wins and losses. 

Having talented, experienced sales executives and channel representatives on your front line is a good first step, but it isn’t enough.  Sales executives need regular sales intelligence on why they’re winning and losing.  Meaningful sales intelligence identifies the areas with the largest positive impact on the outcome of future competitive opportunities.  By using this information your sales team will be able to review their sales approach and ensure that their playbook has the most effective strategies and tactics.  Imagine having a whole team of Peyton Mannings.  It is possible, but only if we give the team the intelligence they need.

11.30.04 -

Sales Confidence
Leading Indicators that Predict Future Outcomes
Rob Jeppsen, Primary Intelligence
 
Several years ago, my wife and I built a home in a developing community.  At the time I was traveling nearly every business day.  While the home was beautiful and had stunning views, there was one small concern.  Less than three miles from our home was the state penitentiary.  Given this dynamic, we made two decision:
 

1. We decided to never open the door to anyone in an orange jumpsuit.

2. We decided to get an alarm system.
 
If, while I was away on business, the “Boogeyman” broke into my home and the worst happened with my family, it wouldn’t help me much to sit in the living room looking at the broken window used to enter my home and say “I’m replacing this window with one that is much more difficult to break.  In fact, I’ll even put some bars over this window so a break-in like this never happens again.”  The unfortunate fact would remain that I had experienced a tragic, yet avoidable loss.  With an alarm in place, if that same window breaks, things happen immediately.  Alarms sound, police are instantly notified, and my family is trained how to escape without harm.  The bars are a lagging indicator.  The alarm is a leading one.
 
This hypothetical applies to sales intelligence.  While there is a tremendous amount to be learned by evaluating won and lost opportunities, the reality is that the wins and losses have already happened and business opportunities may be gone for a long time…years in some cases.  As a result, it is important to have leading indicators for your organization that identify when your own “Boogeyman” is lurking outside your window.
 
Attitudes and Outcomes
In most cases a company’s salespeople are the face of an organization.  They are charged with the heaviest lifting associated with the task of moving the sales needle.  Every day these people are in the trenches, working with customers, competing with identified competitors and reflecting their attitudes to potential customers.  It is important to remember that companies don’t buy from companies.  Instead, people buy from people.  It is critical to have a way to tap into the attitudinal drivers that make up a salesperson. 
 
This concept is one that makes sense to most people intuitively, but very little research has been conducted about sales team attitudes and competitive outcomes.  Primary Intelligence has been studying this relationship since 2003 and the relationship is remarkable.  Research shows that as the confidence of a sales team moves in a positive or negative direction, sales outcomes follow, moving up or down three to six months later.  As it turns out, Sales Confidence is a leading indicator on corporate sales in much the same way that Consumer Confidence is a leading indicator on the U.S. economy. 
 
This presents an important fact:  If your salesperson has a perception about your firm (good or bad), your company has three to six months before this perception spills over to those of your customers.  It is very difficult to separate how your salespeople feel with their respective levels of effort.  As a result, it is important to not only understand the drivers of sales confidence, but to also develop an instrument to measure these on an ongoing basis.
 
Measuring Sales Confidence
Measuring sales confidence is a subset of six core drivers.  Each of these drivers must be carefully monitored and understood in order to effectively leverage the sales intelligence.  Ignore these drivers at your own risk:

1. Know what to measure.  Sales confidence is a subset of six core drivers.  These drivers have been proven to predict future outcomes as early as a quarter in advance. 

    A. Self Efficacy:  A measurement of how well trained a salesperson is in:         

i. Salesmanship in general
                                                                                                      

ii. Representing the Company
                                                                                                    

iii. Representing specific products and services

   B. Competitiveness:  A salesperson’s willingness to do “whatever it takes” within reason to win business

   C. Company Loyalty:  The degree to which a sales person wants to see the Company succeed.

   D. Strategic Direction:  How much is the sales team bought in to the direction of the company and belief in management.

   E. Innovation:  Confidence in products and services, commitment to customer service, and ease of doing business

   F. Value Creation:  Does your sales team really think they can engineer value for their customers?

2. Keep it current.  Many sales teams suffer from what I call “Last Year’s Survey Syndrome.”  A census of your team is unimportant.  Instead, sample a meaningful portion each month and get a clear reading of the confidence of those that represent you.  It is tough to guess how change will affect your team.  So don’t guess.  Keep measuring, and keep it current.

3. Don’t shoot the messenger.  It is important for salespeople to be confident they can share these attitudinal scores without feeling like they are sending in a letter of resignation.  As a result, anonymity is critical to assure meaningful readings from the front line.  Not only will anonymity assure that the feedback you receive is meaningful, anonymity guarantees that sales confidence measurements will be used in a constructive way. 

In 2004, a large pharmaceutical company changed its compensation plan towards the end of the second quarter.  The company based the entire bonus plan on market share growth.  Shortly after this change was announced, the next month’s sales confidence sampling was sent to 10% of the sales force.  The results were significant.  A score that had traditionally been high was competitiveness.  This month, however, the score plummeted and fired an early warning system.  Open-ended responses about competitiveness included statements like “It is in my best interest to let market share drop over the next 2 months so I can try to build it back up for year end.”  This is a fantastic example of a powerful leading indicator.  Each of these drivers will help you understand if the sales team is engaging or disengaging, and why.  In this case, the company was able to address some concerns and re-measure again in the ensuing months. 
 
As sales leaders, we are ultimately responsible for moving the sales needle.  This challenge is job #1 of every company, with good reason.  By watching the confidence of your sales team on an ongoing basis, you can know if next quarter’s sales line is heading up or down.  More important, you’ll be able to get to the root cause of these catalysts in short order.  Don’t wait around for the “Boogeyman” to cause an avoidable loss.  Build a plan to measure the confidence of your sales team and make leading indicators a core part of your leadership strategy.

11.30.04 -

Which key accounts are staying or leaving?

Loyalty metrics will tell us the story

John Cangiano, Senior Partner, The Chapman Group

How many of you would begin a long car trip if the oil light was on or the gas gauge was on empty?  In your everyday life you live and operate through metrics.  The level of your blood pressure, the gauges in your car, fluctuating interest rates, even balancing your diet are ways that you employ metrics everyday. Metrics are a critical ingredient in our personal lives so why aren’t metrics mission critical when it comes to key accounts that deliver revenue. Surprisingly enough, businesses have not adopted metrics to fully measure how loyal key accounts are and the risk of attrition.  It’s critical that you realize that metrics provide the key calibrations required to effectively understand what your accounts expect and how they are strategically aligned to you.   

Imagine going to the office Monday morning and receiving a letter, e-mail, or a phone call from one of your key accounts informing you they are giving notice and will be going with the competition.  Of course you may be able to save the account if you are lucky but you need to know long before you get that message that they are leaving and lose the account.  Metrics are predictors and they provide you with on demand, leading indicators for change.   

I am not talking about a customer survey which is normally a point in time.  I am talking about utilizing metrics to determine possible risk of attrition, strategic alignment, and relationship alignment and performance assessment.  Your focus should be on keeping and growing key customers. You need to be fully cognizant of your customer’s issues and challenges. How they view the competition, how they view you at different levels within the account, and what you can do to improve the relationship.  A first line manager may view you as critical but the CEO or another senior officer could perceive you as a commodity as opposed to adding value.  To effectively service and manage key accounts you need to fully understand their emotional dependence, business dependence and their structural dependence on you.   

Loyalty metrics will also tell us what the account values and therefore what you should be focusing on.  Loyalty metrics help you better understand your competition and how they are viewed by your account at the various levels within the account - - from senior management to first line management.  Metrics are available on demand and will provide you with the data, knowledge and eventually the action needed to manage your accounts.  

The question is rather simple, if you are not measuring your accounts today when will you manage them efficiently and effectively?  You should not be asking yourself if you do this but rather when you will implement and deploy loyalty metrics.  Without measurements you really don’t know what to focus on, what to change, what challenges or issues are based on the account and not your perception.  

Remember if you can’t measure it you can’t manage it.  Metrics don’t just tell you what your customer says, it tells you what you need to do to retain or develop a strong, profitable and meaningful customer relationship.  Don’t show up for work one day with the cancellation letter telling you that a key account has decided to move on to the competition.  Begin to employ metrics in order to proactively manage the account so that will never happen.

11.30.04 -

Making Your Sales Forecasts Accurate

Quantitative Opportunity Metrics

Al Sneddon, Senior Consultant, The Chapman Group

One of the most challenging aspects of sales is creating an accurate forecast of which revenue opportunities will close. There are major implications in getting this number as accurate as possible. Cash flow, manufacturing the right amount of product, having the right quantities on hand, being able to meet customer needs and being able to eliminate overstock of the wrong kinds of inventory, are all affected by accurate forecasts.  

So how do we improve the accuracy of our forecasts? One of the ways to do this is by employing metrics. You should employ opportunity metrics that will look at a transaction objectively, and that uses a scoring model to identify where we stand in the opportunity. 

Many of us will look at our opportunities and subjectively use a scoring system that may sound like this; “they told me it’s ours”, “don’t worry it’s in the bag”, “my gut tells me I’ve got it”.  These subjective types of responses leave a few challenges. How do you accurately forecast a “gut feeling” of a 75% chance of winning? The old method would entail you calculating 75% of the revenue associated with the opportunity and forecasting it as such. But in sales you usually either win the deal or lose the deal, not 75% of the deal. Using a metric based opportunity scorecard gives you an objective view of the opportunity based on science (numbers), not feelings. By employing metrics and a scoring model that looks at each sales opportunity, you can objectively better understand if you will close the transaction. Sales can then be forecast by numerical ranking. This system removes the subjectiveness of most forecasting as it is employed today. This scoring and ranking system is understood by everyone and each transaction can be analyzed with specific metrics and process.  

By using a numerical scoring system, managers will also be able to apply filters that can be applied to analyze all transactions greater than a percentage. By adjusting the filtered percentage higher or lower, you are able to see the transactions ranked by metrics and their close probability percentage. 

Metrics are the keys to making your sales forecasts more accurate.

11.30.04 -

Predictive Sales Analytics

The Future is Now!

Dennis Chapman, CEO, The Chapman Group

Overview

The use of formalized metrics or predictive analytics in sales and account management can be appropriately termed innovative. The use of formal metrics and measurements in sales is a well-known and existing “best practice.” Some more formal metrics that have been and are still in use today include:

o        Quality of an opportunity; the % or chance of closing now

o        Ratio of revenue against target; sales performance ratio

o        Ratio of profit against profit expectations; % of margin

o        Time in front of a customer; sales efficiency quotient 

The most significant difference between traditional formal sales metrics and the proposed new sales metrics is their degree of value, accuracy, method of creation and the impact that they may have on the future. Traditionally most sales metrics have been obtained by analyzing existing sales data and having systems generate these metrics. While these metrics are accurate and valuable, they are a “rear view mirror” or “after the event” analysis. They present a historical view of what has happened in numerical values. Another example of a misuse of a metric is assumptive forecasting; i.e. a subjective 80% chance of closing a $100,000 contract equals a forecast of $80,000 – in most cases you win the contract or lose the contract, not win 80% of the contract.  

The positive about this type of data is that it portrays a point in time measurement of how a company is doing financially. The downside is that these numbers do not always influence or project the future. New approaches with “predictive value” (predictive analytics) enable companies to gain a timely competitive edge. 

Facts about Metrics

• They are created as a by-product of proven “best practices”; i.e. analyzing an account or opportunity
• They are for the sales person; they convert situational assessments into “on-demand” values that enable a sales person to view trends, status, etc.
• They will be a business staple within all functional business units including sales; the evidence is already growing, i.e. six-sigma business measurements
• It has been well established that sales has a scientific element, as well as an element of artistry; the emerging scientific elements are sales metrics; i.e. prospect to close ratio’s, leads to prospect ratio’s, key account revenue attrition to revenue retention
• We are not speaking about activity metrics that concerns some sales people as the basis for micro-managing

Most Commonly Asked Questions

The consideration of the use and application of metrics has generated several important questions: 

1. Does the use of metrics create more work for a salesperson?

Metrics should be employed at the sales level as a concurrent sales activity and not increase any efforts or work for a sales person. Similar to driving a stick shift in a car, the act of shifting has little effect on productivity during the event of traveling from point A to point B in a specific period of time, shifting is a concurrent activity. 

Salespeople should already be reviewing the dynamic knowledge that has been captured and is associated with current sales opportunities and accounts. As part of this review process, and concurrent with this process, completing check-offs (metric based assessments) will add greater intelligence to the existing knowledge database. Metrics will bring the knowledge to life by pointing to specific actions to take based on a system driven quantitative analysis. 

One should not confuse additional data entry with the use of metrics. These are totally different activities. Metrics are system generated, not sales person generated - utilizing metrics as a percentage of time and effort becomes a non-issue. 

          Validation that metrics do not take additional time

The Chapman Group performed a “time-in-motion” study and found that when a sales person properly assessed an opportunity or an account, and that when a situational template for the process was available to guide the process, that it actually took less time to conduct the situational assessment. The “clicking / selecting” of certain conditional statements took no additional time. Sales metrics were a by-product of the situational assessment – no net time increase for the sales person. An important secondary discovery was made; the metrics generated by the system actually saved time in the long run by providing an existing barometer (situational condition) to view any time and a reference point to re-build / re-evaluate from during the next situational analysis. 

2. Do metrics provide an equal or greater value on the time investment for a salesperson?

Analyzing and interpreting data is one of the most challenging and subjective efforts associated with any business function, not just sales. The primary issue with subjective analysis is that a group of ten people may all see data differently. A common life example may be illustrated by this statement; “deaths by drunk drivers has dropped by 10% over the last five years”. Some assessments of this data point may be:

o        Very positive trend, keep doing what we are doing

o        There are still 30,000 deaths and this remains a significant issue

o        Little progress is being made and we need to change our whole solution  

     All very different views/assessments and all driving very different next actions. 

In a sales organization it is recommended to institutionalize “best practices”, ones that the best do intuitively. Metrics help influence this effort and ensure that most sales people within an organization are doing the recommended “best practices”. Converting “best practices” into metrics provides a suggested action based on historical data, experience and some objective quantitative analysis.

3. Do the best salespeople need these metrics?

As strange as this answer may seem, they probably do not need metrics, they already intuitively have the metrics as part of their successful approach to selling. Then again in most sales organizations the best are not the primary concern at hand, it is the other 80%+ of the sales team that the organizations would like to get to perform like the best. In many situations, it has been found that the best are also some of the more hungry resources for innovation and “best practices”. 

In addition, in most organizations valuable account and process knowledge is often in the minds of the sales organization. Getting knowledge and converting knowledge into metrics in a system provides value to the sale person and protection of account intellectual data by the company.  

Our suggestion is to use an approach that satisfies the best, as well as the rest of the sales organization. A proper solution needs to include the top 10% and the next 90% of sales personnel and meet the needs of the entire sales organization. 

Note: While any sales system should be for the sales user, management does need metrics to run their business in a competitive world. Ensuring knowledge gained stays with the company, risk of revenue attrition is measured and dealt with, new product market shares and opportunities need to be measured and evaluated. 

4. Do metrics impact revenue performance?

One of the most important management philosophies continues to be; “if you can’t measure it you can’t manage it”. This supports the well known and recognized fact that when critical actions (best practices; process steps and skills) are universally executed, those actions lead to sales success; we should and need to measure them, and when we measure them we can improve them. To measure anything requires an initial benchmark and numerical data that shows performance against the benchmark. 

Metrics provide the numerical values. They play an integral role in improving sales by enabling users and coaches to first become aware of performance that is not properly aligned to benchmarks. Once this conditional situation is understood, sales people and their coaches can then take immediate corrective action to optimize the opportunity to succeed. 

     Specific examples on how knowledge gained through metrics will help include:

o    The qualifier metrics in an opportunity; is the probability index improving or regressing? (estimated time to perform first time, 5 minutes; ongoing 1 minute)

o    Account rating; is this an account that is likely to grow with us or will they leave? (estimated time to perform first time, 5 - 7 minutes; ongoing 2 minutes)

o    Relationship index; are we fully penetrated and aligned in this account and/or on this opportunity? (estimated time to perform first time, 3 - 5  minutes; ongoing 1 minute) 

5. Is there proof of the impact and value of metrics?

     The following represent some real case study situations that may serve as proof.

1. A commercial real estate sales person in Maryland has directly attributed his 50% improvement in sales to the metrics contained within an opportunity qualifier.

2. A leading water treatment chemical supplier was able to reduce account attrition by almost $8mm annually through the use of account indexes and account team performance assessments based on metrics.

3. A national skills seminar company was able to significantly improve the accuracy of their forecasting and close ratio through the use of opportunity qualifier metrics.

4. A national services organization has been able to move direct sales revenues into a more positive position through the use of opportunity qualifier and sales process metrics.

6. How will predictive analytics play a role in the future of optimizing sales performance?

On the horizon most companies are now rapidly adopting sales metrics to help identify trends and key next actions. The metrics that are now being deployed include: 

1. Win/Loss Metrics; how, why and what do we need to do?
2. Sales Confidence Index; trend data based on sales force input
3. Opportunity metrics; assessment of key win influencers
4. Account metrics; assessment of key retention influencers
5. Relationship metrics; assessment of key relationship influencers

6. Loyalty indexes; to measure and project revenue retention

7. Are metrics primarily a way for managers to micro-manage sales people?

While metrics can provide detailed insights into sales performance, this is not their recommended primary application! They are primarily intended for a sales person or an account team to use to gauge their own performance and take immediate and appropriate next actions.

If used as a tool for micro-managing, they will become less valuable for an account team or sales person and in time, not be accepted or bought into as valuable sales tools. 

This should be a non-issue for “top performers”. Their results speak for themselves. However, it has been found that even the “top performers” find value in metrics that guide and self-coach to even greater success. The micro-managing concern is a more traditional argument against micro-managers / micro-managing, not the use or application of metrics and predictive analytics. 

Most often micro-managing has been focused on activity metrics; these are not the focus of the sales success metrics that we have developed and presented. 

8. What are my options; as a person and as a company?

All sales people and sales organizations have choices when it comes to metrics. The choices are more relative to how the metrics are obtained and not if they are needed or are going to be implemented. Running a sales assignment or a sales organization without metrics is similar to either flying a plane or driving a car without gauges. Neither would anybody recommend, nor would many people like to be on either end of these blind rides. 

Some fast evolving and innovative options for capturing the data necessary to create and drive the development of necessary metrics include:

o        Administrative help centers for data input

o        Voice recognition tools

o        Simple point-click approaches to data entry and selection 

11.30.04 -

10 Top Values of Predictive Sales Analytics 

1.   Knowing the future enables a sales person to conquer the challenges of the future!

2.   It is better to anticipate sales failure than to deal with sales failure!

3.   Working qualified opportunities makes sales people money!

4.   Long term success is based on knowing why we win and/or lose sales!

5.   Input from the eyes of the sales organization speaks volumes!

6.   Measuring which accounts are loyal versus just satisfied reduces revenue attrition!

7.   Account teams can measure their progress and effectiveness!

8.   Sales forecasts become reliable and the basis for sound decision making!

9.   If you measure it, you can inspect and improve it!

10. Save on training expenditures; focus process, methodology and skills development!

10.28.04 -

Recruiting and Selection Using Assessment Tools

One of the primary reasons why a person fails at work today is not due to skills but behavioral incompatibilities that exist between that person and the demands of the job.  It is recommended that a company who is hiring utilize assessment tools to better determine if a potential new hire aligns to the demands of the job.   

Why use these tools? 

To better understand who the person is we would like to hire and how they will fit into our company.  Of course we can call their references, but would you ever provide a reference that would not be glowing?  We could review their resume, but in today’s world there are companies that provide resume services and in fact will write the resume for you.  The applicant with the perfect resume and the great references seems to be a perfect fit, but are you sure that they are the right hire and match for your organization.   

How should we use these tools? 

If a company is hiring new sales people it is critical to develop a baseline or benchmark of the ideal sales person.  It is always recommended that we have our top 10%-15% performers take an assessment test to develop the benchmark.  When new hires complete the assessment we can then view how they are aligned to those sales people who have a proven track record and demonstrated success.  We will now know the traits that mark what a successful sales person should have.  The selection process is objective and not based on first impressions or a good feeling.  Assessments help us to better identify applicants with the right traits, so we can prioritize our interviewing process and interview the people with the highest probability of being successful. Remember it is still critical to have at least 3-4 people interview the applicant.  Of course when using any test as a “selection” tool, it is critical to ensure objectivity and non-discrimination in the selection and hiring process.  Cover all your bases. 

• Validation – Use a well defined method of selecting the most successful employees as applicable for the job in creating a benchmark.
• Ensure that only those traits that can be demonstrated as being applicable to the job and where testing both the most and least successful employees demonstrates a measurable difference, are considered in order to meet EEOC guidelines. 
• Non-Discrimination – under no circumstances should a test be used to discriminate.  A properly developed “baseline” can help assure non-discrimination.

It is always suggested that all applicants who apply for a position be tested.  Assessment tests should not be used randomly.  Remember your job is to find the most qualified individual who will have the traits to be successful in your organization. 

The Chapman Group is not a legal authority. For specific information pertaining to employment law please consult the Equal Employment Opportunity Commission (www.eeoc.gov) or your legal advisor.

10.28.04 -

Assessing a Sales Team 

2005 is right around the corner. Is your sales team in place for the New Year? Have you made the necessary decisions regarding the team? These are questions that most sales managers ask themselves as the New Year approaches. Many managers also ask themselves, what criteria should be used in judging my team members? Although there are endless metrics that can be applied, below you will find metrics that most managers will be able to use to assess their sales team. 

For many sales managers the first and most obvious metric to look at is; Revenue vs. Quota performance. Whether it is judged as revenue or margin contribution, everyone looks at this metric. By ranking your team you easily see differences in performance. You can also review previous history to see trend lines of individual performers based on year over year performances. 

Another metric to be examined is Activity Performance. By tracking and understanding team and individual ratios you can pinpoint areas of potential development. Again by tracking high value activities in your sales process i.e. prospecting calls, appointments, demonstrations, proposals and closes, you can rank your team by activity performance ratios. This has the additional benefit of identifying potential skill development areas. 

Account Retention and Expansion is another metric to be examined. What percentage of accounts grew and was there any attrition? Are new relationships being developed and is there an increase in new sales opportunities within those assigned accounts? Again by ranking and reviewing these metrics a clearer picture of overall sales performance begins to emerge. 

Sales opportunity metrics also need to be measured. Are sales cycle lengths growing or decreasing? What is the percentage of wins to closes and opportunities? These metrics demonstrate an ability to generate sales opportunities and booked business. 

Lastly your subjective measurements need to be examined. Are you seeing personal growth and development? Has there been an overall improvement in performance? Ask yourself if your sales team has 7 years of experience or 1 year experience repeated 7 times. 

By employing these metrics or others that can be developed to fit your team, you can go into 2005 with a team that you know can achieve their goals.