by Frank Donny, Chief Evangelist, Marseli and Michael McGowan, CEO, Sales6ix.
The text books set the bar high for sales managers in terms of their role as effective performance agents. However, they usually don’t mention that many, if not most sales leaders, don’t have the time to be effective! Most sales management is done on the run. In fact, it is now recognized that sales managers are most effective when they intervene “in the moment”, at the point when the work is being done, and not afterwards at the month or quarter-end meeting.
So, how does a sales manager become a more effective manager? How does a sales manager become more productive, drive higher performance across the sales team, and not have to take time off to figure out how to do it?
At the heart of the answer, is insight – the performance information a manager works with. Most sales managers interaction with data ranges from a hurried spread sheet overview once a week, to poring over dozens of CRM reports, that don’t really give clear information about performance gaps or pipeline or forecast risks. Yet in 80% of sales organizations, the right data actually exists and is recorded already. So what is that data and how do you get your hands on it?
Put 4 Universal Data Points to Work
There are 4 data points associated with every sales opportunity that are the basis of efficiently diagnosing and developing a plan to improve sales performance.
1. Reps working on the right opportunities (opportunity quality)
2. Opportunities being in the right stage (following the sales/buyer process)
3. Having accurate close dates (deal push reduction)
4. Correct deal valuation (pipeline value accuracy)
What accelerates the value of the data is producing a small set of on-demand analytics and visual reporting right inside of your CRM system that makes it easy for the manager to use the data and spot problem deals before it is too late. It’s then that the data becomes the manager’s effectiveness tool.
Working with the Right Opportunities
One of the biggest killers of sales efficiency is when reps do not properly qualify early stage opportunities. Mostly due to the lack of a tightly defined opportunity persona and requirements, sales teams that do not have a clear definition of what a qualified opportunity is and when it can move from your first stage to your second stage in your process create a higher cost of sale and longer sales cycles.
To get a handle on what is happening in your first two stages (the most critical stages), track stage age, deal flow (your conversion rates) and key activities that are happening in your first two stages. If you have a high conversion rate from stage 1 to stage 2 along with a lower than average stage age and little to no activity being logged, take a deeper look at performance in your next two stages. Be on the lookout for a dip in your conversion rate for your second stage. If this is happening, reps are pushing too many unqualified deals too far into your sales process. Being laser focused on deal qualification early in your sales model will significantly improve your efficiency, time to revenue and allow your reps the much-needed time to focus on deals that really matter.
Stage of the Selling / Buying Cycle
Sales process stages are now accepted as the norm in many sales organizations. What is also the norm is each sales person defining the stages as they see fit, and ignoring the criteria associated with each stage. The flow of a sales opportunity is not measurable the way one would measure the flow of oil in a pipeline, so we need to describe it using categories or stages. Doing this in a disciplined way leads to enormous gains in sales effectiveness and enable managers to instantly diagnose the health of an opportunity. Managers need to use stages this way:
- Have fewer rather than more: 5-6 is optimal for a robust sales process.
- Allow no variation in the labelling or defining of the stages. Present the stages visually, rather than linearly.
- Align stages to the age of the opportunity and your buyer process.
- Replace tactical reactions / conversations with strategic intervention.
The Projected Close Date
CRMs have turned close dates into a mandatory and meaningless “field”, yet it’s the one metric that drives the forecast, tells us how optimistic or realistic the rep is, and how well informed they are about the opportunity. And it’s the metric that tells us the extent to which the rep is tuned into the buyer’s timeline which in turn, drives the sales forecast. Managers need to encourage reps to develop two specific behaviors with regard to close dates:
1. Raise timeline issues early in sales conversations with buyers.
2. Stop and think about real consequences of selecting a close date, before committing to it.
World-class sales managers don’t allow close dates to be treated as a guessing game; they make accurate close date recording part of sales performance measurement, correction and recognition. Here’s a great tip, know the average sales cycle of each individual rep. When reps first enter opportunities into your CRM system, they may not have a handle on the close date. Coach them to use a date in the future that is out at least the same number of days as their average sales cycle.
Correct Deal Valuation
Although it can vary by industry, valuing an opportunity is usually practiced more as an art than using principle founded in reality. Many managers actively ignore opportunity value until the deal is actually committed – because they don’t actually believe the numbers - but in doing so, they allow forecasting and even cash flow problems to grow wings. Also, loose deal valuation leads to loose opportunity management from the very start of the sales process, as evidenced in poor questioning, poor deal strategizing and weak management of stakeholders.
It is wise to have minimum deal values, early in the sales process that are increased over time, versus the more usual practice of reducing the deal value, as the deals gets closer to the end of the sales process; we've all experienced the end-of-quarter forecast collapse, as big deals turn into nothing more than small trials of the product or service.
A couple of key analytics can shine a lot of light on how reps are managing deal values, if at all. It’s a metric managers should challenge and educate their sales people how it affects forecasting and deal strategizing.
There are definitely more data points that we could have added to this list. The idea is to keep it simple. Focus on fewer metrics and be laser focused on acting on the insights those metrics uncover. By keying in on these four data points several results will happen. You will improve your coaching. You will improve your efficiency. You will improve your sales rep’s success. So, go ahead and get your hands on your data. Your insights are waiting for you.
About the authors:
Michael McGowan is co-founder and CEO of Sales6ix, an easy and powerful pipeline and forecasting tool for sales teams. He is author of Rules of the Road for the Sales Team: The Manager’s Essential Handbook for Creating the Self-Correcting Team.
Frank Donny is founder and CEO of Marseli, a marketing and sales diagnostic, performance measurement and improvement software and services company. He is a frequent blogger, author and speaker on sales and marketing integration and performance.