Welcome to where the magic happens. Every project, class, system and process I have ever implemented started with a blog post RIGHT HERE. So dig in, there is gold in these electrons.
Most Sales Departments stink when it comes to tracking their numbers. The question upper management ALWAYS asks is why? My two cents; we don’t know the most important numbers to track and we don’t realize how important they are to our entire selling effort. Well, those excuses end today!
The first area that we need to clear up is the difference between trailing and leading indicators. Trailing indicators refer to metrics that happen as a RESULT or in the past. Number of sales closed or total dollar amount closed are examples of the trailing variety. Leading indicators are what foretell objectives and what results will be in the future. The activities that a sales person performs on a daily basis, such as phone calls or appointments, are examples of leading indicators.
We always need to know how many and how much business has been closed (trailing) but we can’t control the actual closing of the sale. That is why we can never lose sight of the activities (leading) it takes to fill the pipeline and, more importantly, directly affect the closing of the sale. This is crucial to short and long term forecasting accuracy and critically more important to overall SALES SUCCESS.
Leading Metric Indicators
I first focus on the BIG 4 of Leading Metric Indicators (LMI’s): Calls, Discovery Appointments, Presentations and Closes. These are pillars of a sale that will tell you the overall picture of what is working, why it is working and what needs to be fixed.
The next LMI’s that I track are more descriptive of the sales reps everyday work.
If the BIG 4 gives you the overall picture, when you drill down to this level you uncover more of the texture in the everyday activities of your sales team. Not just the raw numbers but WHY you are getting the raw numbers. When we understand both sets of LMI’s and their conversion rates it helps us to more accurately predict closing rates in the near and long term.
Trailing Metrics Indicators
I always track total number of closed sales and total sales dollars. They are important and necessary to measure where we have finished historically, yet it always amazes me what sales management forgets to measure in the Trailing Metric Indicator (TMI) category.
A.U.S.P. or average unit selling price is the total sales dollars divided by the total number of sales. For example if total sales dollars are $100,000 and total number sales are 10 your A.U.S.P. equals $10,000. Knowing this number tells you how many sales it will take to hit your objective. This TMI is key to planning your goals and objectives throughout the year.
The final TMI I track is Average Velocity of Sale or the A.V.O.S. This is the average time from when a lead becomes an opportunity to when it converts to a sale. Having the handle on this metric allows you to realistically plan WHEN your business is going to hit.
12 chapters of data making up one book; lose one of the chapters and you wonder how and why things are happening. Lose two chapters and the story starts to sound nonsensical. Lose three and you wonder why you started reading the book at all. 12 categories of data when monitored and measured can radically affect your sales team’s short and long term success and viability.
Sure it takes time and getting sales to record their info is difficult. Keeping up with the numbers is a job in of itself. I have heard all of the excuses before. I leave you with a question. If you could produce a set of numbers telling you how to improve, what to improve and when to improve your sales results wouldn’t you want to know them and wouldn’t you do everything in your power to track them? Yea, I don’t know either…