You, however, are using Sales Performance Management concepts to help guide you. Metrics focused on results and the current state of sales help you identify your destination, landmarks, and the path you have taken so far. However, these items aren’t the complete toolkit to reach your destination efficiently. This is a complex environment, and if you don’t know which direction you are headed in, you could start to walk in circles. One of the key tools of navigation is a compass that shows which way you are headed. In the same way, effective Sales Performance Management requires leading indicators that show not just the path you have been on, but where you are headed.
When managers look for measurements of their sales performance, the go-to information is generally about current results. These results are what we are evaluated on, so that is a very natural tendency. To effectively manage and change a sales force for the better, though, Sales Performance Management needs to show how present actions impact the future. The needs of a sales force remain specific to that sales force, so making sure that your SPM is providing you with the appropriate leading indicators takes a bit of evaluation:
- Identify your corporate objectives. What facets of sales are you attempting to influence?
- Think about what behaviors or intermediate steps are required to achieve those objectives.
- Determine measurable components of those behaviors or steps.
- Identify and communicate the leading indicators that you believe matter most to the objectives identified back in step one.
Keep in mind that the indicators need to be clear and actionable. A compass is an incredibly simple tool, and that only helps to boost its value. Using a compass is a simple task and the result is extremely clear. That is the ideal for your indicators: simple, clear, and usable to drive adjustments. One common leading indicator is the pipeline ratio (total value of pipeline / total assigned quota). While the wins at the end of the funnel are the ultimate goal, we understand that what is in the pipe right now greatly influences the results down the road. Before wins dip, we can have a chance to see it coming and act, as opposed to being forced to react after being blindsided.
It’s easy to get caught up in the concrete results, but a leader has to know which way they are headed. Knowing where you are is not enough to eliminate aimless wandering. To give yourself the perspective required, evaluate your Sales Performance Management framework and make sure that it helps you lead the way to effectiveness. If you haven’t already signed up, consider participating in the event below to learn tomorrow’s best practices today.