These 36 metrics were submitted to an expert panel (Mark, Dan, and John). The panel was asked to rank these metrics on a usefulness scale. The top 5 were submitted to a group of successful CEOs. These CEOs were asked to vote for Sales Metric of the Year.
And the winner is…Look-to-Book Ratio!
What is the Look-to-Book sales metric?
The Look-to-Book Ratio is the measurement of how many big deals were won or lost after the Chief Sales Officer visited with the prospect.
What does Look-to-Book do for a CEO?
The Look-to-Book ratio helps a CEO overcome the fear of bringing in an expensive vice president of sales.
What does it mean for a CEOs to use the Look-to-Book ratio?
CEOs who use the Look-to-Book ratio can answer the question “Do I have the right sales leader?” with confidence. A surprising finding emerged as we tried to name the sales metric of the year. Sales leaders track metrics the CEO does not care about. CEOs track sales metrics the sales leader has never heard of. For example, you won’t find these metrics on a typical dashboard. We asked our panel why the Look-to-Book metric was so important:
“Our company lives and dies by the big deal. If my sales leader is not impacting these deals, he is not focused on the right things.”- CEO of SaaS firm.
“My team determines my success more than anything else. The sales leader is on my executive team. Measuring his effectiveness is very hard. There are many thing he gets credit for he does not deserve. There are issues he gets blamed for he should not. This cuts through the noise.”- CEO of commercial real estate firm.
How should you use this metric?
At the end of the quarter pull the top ten report. On it are the ten biggest deals, won or lost, for that quarter. Send this report to the 3rd party who is doing your win/loss reviews. Ask the win/loss firm to modify its question set. Consider adding:
- Did you meet with our Chief Sales Officer?
- Was this meeting in the beginning, middle, or end of the buying process?
- Did you meet once or multiple times with him?
- Did his involvement add value to you?
For example, if he met with 10 accounts and only one closed, then the Look-to-Book is 10:1.
What might you do with the results?
A quick, back of a napkin way to interpret the results is as follows.
- High visits/high wins- don’t change a thing. Your Sales VP is a super star.
- High visits/low wins- you have a hard worker who is not talented. Train him or replace him.
- Low visits/low wins- a VP of sales who is focused on the wrong items. Get him focused and see how he does with more attempts.
- Low visits/high wins- talented sales leader sitting behind a desk. Get him on the road.
Ask your win/loss firm to perform extensive research on these big deals. You want to know what the true drivers of big deal victory are. For example, one of my business service clients learned an unknown fact. They were being dramatically underpriced by their competitors online. The competitor stripped out the field selling expense and passed the savings along. This competitor was driving prospects to an online shopping cart. My client ran a series of tests to see if they could respond. The results? They increased win rates by 32%. The same service being sold to the same customer against the same competition. All they did was shift the channel they moved the service through.
Look-to-Book revealed to this CEO he did not need an expensive sales executive. The head of sales could not “move the needle”. The prospects wanted a lower price and were comfortable buying online. This gave the CEO confidence to let the head of sales move on. The Look-to-Book ratio proved to the CEO he should bring in an ecommerce head of sales.
Action to Consider:
- Start measuring the right things. Download the 5 metrics CEOs nominated this year.
- Deploy the Look-to-Book ratio. Start by giving your win/loss provider new questions to ask.