I am willing to bet that every Chief Executive in the country knows his revenue numbers for the past two years by heart. Revenue numbers are figures by which executives are judged for past performance. Yet, when it comes to the metrics that predict the future, I am willing to bet again that most CEOs are not watching the metrics that will tell them where their businesses will be in the upcoming years. Too often overlooked, there are business activities that create the environment for future success in a changing business world; business drivers for future success. Those who pay attention to these business drivers create more agile, profitable businesses. Those who ignore key business drivers are left scratching their heads and wondering what went wrong. There are five key business drivers to measure and every CEO who wants control his business’ future should know their values by heart. They are; the value of the leads marketing generates, the rules and metrics that control the sales pipeline, the strength of the processes that serve the customer, the passion of the sales culture and the accuracy of the talent management.
Is marketing bringing in the right leads?
Leads that don’t fit your target customer profile create additional work for your sales staff and hurt rather than help sales.
Measuring the number of leads that fit your sales department’s 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 downstream with closes. Sales can set a percentage of closes against good fits. If marketing delivers the right number of good fits and sales closes their target percentage of good fits, then revenue goals should be met. This makes “good fits delivered” a valid leading metric.
Sales Pipeline Management
Do you have a sales pipeline with clear rules and metrics for moving sales accurately through your pipeline?
A pipeline 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 deals 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 where they are most needed.
Do you have management processes and templates to manage and correct sales activities?
The right processes align everyone in the company around the customer. While evaluating processes, activities and information flows can be challenging, it is worthwhile. Getting your processes right will focus your organization on making it as easy as possible for customers to buy from you.
To start, examine how your customers buy and identify which activities take place to serve them. Key indicators to measure here are: what information the activity needs and provides to others, when the activity takes place and who is responsible. 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.
Corporate Sales Culture
Does every department in your business help close sales in a measurable way?
Do you have strategic goals and objectives that will help make your customers’ lives easier? If so, do these traces 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 defined, you can create an incentive program to ensure that everyone is working to serve the customer and close sales.
Do you have the right people in the right jobs with the right tools to meet your future business needs?
When sales people don’t make their numbers the cause might not be a lack of 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), tele-sales (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 predict the ability to perform the roles you need to optimize your revenue production.
A Starting Point
The five key business drivers that we have discussed are a great place to start. That being said, there may be other business drivers specific to your industry or your business that will also be key to your understanding of where your business is going. This process is not always easy and it does require a dedication of time and intellectual energy to really understand the key elements of your business to watch. However, the benefits of managing to the future rather than reacting to measurements of the past far outweigh the challenges of doing the work.