I’m obsessed with metrics and numbers. Call anyone in our company for help on sales performance and we will ask you to dump all sorts of data on us: Historical performance, historical performance by sales person, by customer segment, by product, by region, pipeline metrics, sales cycle time, win rates, average deal value, deal distribution, customer retention, customer churn, new customer acquisition, share of customer, share of solution, share of territory, any number of activity metrics, phase of the moon/tidal currents and their relationship to the sales cycle. OK, the last data point is just experimental—we can’t yet draw conclusions on sales performance based on phase of the moon.
We’ll dump the data into our “magical analysis” programs and start coming up with observations and lots of questions.
I see a lot of sales executives and managers obsessed with numbers and metrics as well. They measure everything, have endless dashboards, and always knows their numbers. It’s what they do with the numbers that is the problem. Usually, they start pounding on their teams–“We aren’t making enough calls! We don’t have enough in our pipeline! We need to step up sales on this or that product! We need to increase average deal values!
Numbers and metrics are important, but blind focus on the numbers is wrong. It’s important to know your numbers. It’s important to know where you are against your numbers. But you can’t address opportunities or performance issues just by focusing on the numbers.
Numbers should drive questions about what they mean. Why is our sales cycle increasing? What’s causing our average deal size to decrease? Why is our customer retention slipping? How do we improve win rates? How do we increase our prospecting effectiveness? The questions go on and on. Do the numbers indicate an individual is struggling and we need to coach them? Do the numbers indicate a systemic change that impacts the entire organization–perhaps as a result of changing competition, changing customer buying patterns, and so forth.
Numbers should generate questions which drive the search for understanding. Numbers are the results of things that are being done or not done within the organization. To improve our numbers, we need to identify those things that are adversely impacting the numbers. We need to understand what those things mean. We need to determine what we need to change, what we need to do differently.
Too often we think the numbers provide the answers, when instead they are only indicators that drive questions and the development of answers to those questions.
To the managers living by their spreadsheets and dashboards, managing and tweaking the numbers—we know math works. Don’t over analyze the numbers, invest your time in trying to understand what the numbers mean. Question them, use them to develop questions, search for what’s causing the numbers to be what they are.
It’s only through this, that you’ll find the answers to drive your numbers in the right direction.Business & Finance Articles on Business 2 Community