The blog post ‘Sales people do not like to be tracked, measured or accounted for against anything other than quota’ started the longest discussion in the comments this blog as seen so far. Whilst you should check out all the comments, I would like to highlight the one from Bryan Karp (@midnitecoder). He also posted it to his own blog www.bryankarp.com. I agree with him that the following metrics are important but I am sure sales people would not like to be tracked against all of them:
“Yes, Sales people must be measured by much more than just their quota. I run the Pre-Sales and Analytics department where I work and engage with multiple internal sales people and our external channel partners. I spend a good percentage of my time reviewing and analyzing metrics for various aspects of the business and metrics are critical, hence my view “Unless you can measure something, your attempts at managing it, and maintaining or improving its performance, will be unscientific at best.” by Lord Kelvin. So, yes sales must be tracked and measured on each aspect of the business, and while quota is certainly an important aspect in what sales people need to be measured by it can by no means be the only measure.
I’ll walk through each of the points, but sales people should also be measured by the
- ROI of the deal
- Lead to close time
- Customer satisfaction after the deal is closed
- Accurate population of data within the CRM
- Forecast-to-actual sales
- % Penetration within account
- % Conversion rate by lead type (hot/cold)
- Time per sales stage
- Attrition rate per sales stage
- Average deal size
- Ramp time
Metric: ROI of the deal – It does no good for a deal to be sold if the return is going to take years, or there will never be a return because the contract ends before a return can be recognized. Far too many times I have seen in companies where the sales rep pushes for a deal to meet their quota without regard for the level-of-effort required by services, or support after the deal is closed. This then kills any margin left.
Metric: Lead to close time – While not a metric to hold a rep 100% accountable for it is a key metric. Imagine if you knew for all your deals the typical lead to close time from when it entered the queue from BusDev and/or marketing to when it was closed. This can enhance your visibility and forecasting capability. Additionally it can help highlight individuals how might need additional training and who might be able to help them.
Metric: Customer satisfaction after deal closing – This ties back to ROI and later in the account when you try to get a reference. If you have a true ‘Cassius the closer – character from Selling the Wheel’ they worry about getting the deal closed, not always what is required afterwards. This can lead a bad taste in the client’s mouth and put the deployment team in a precarious situation.
Metric: Accurate and complete data population within the CRM – A no brainer! I have heard the reasons why it isn’t done from various sales people and it ceases to amaze me.
Metric: Actual-to-Forecasted sales per time period – this does tie to quota, but really it ties closer to how well the rep does at forecasting. Additionally if you track this over time companies can increase their visibility in corporate forecasting, and also detect problems earlier. If you detect a sales person is historically off by 10% you can adjust in your corporate forecasts and help them with training to improve. If you see a one-time drop you can keep an eye on them for the next time period vs. trying to guess what happened last reporting period. Seems like a no-brainer, but as I’ve talked to people it seems this metric is never reported on or tracked.
Metric: % Penetration within account – In most sales engagements there are specific roles that need to be identified. Where deals can go bad pre or post deal closing can be attributed to not having fully penetrated the account to find all the key players.
Metric: % Conversion rate by lead type (hot/cold) – Simple measurement by resource to determine what % of leads they are given convert.
Metric: Time per sales stage – Quickly highlights for management and sales person if displayed properly deals that need attention. These would be the deals where it is taking significantly longer in the current deal stage vs. the average. Additionally it helps to identify problem spots if it is tracked. We measured every stage in one of pre-sales efforts and were able to quickly identify key areas for improvement, and develop a longer-term plan. By doing this we reduced our step within the sales stage thereby helping the sales person move the deal faster. My point is…IF you track the time per stage by deal you can quickly find areas that need improvement and focus a team to improve the methodology.
Metric: Attrition rate per sales stage – Where are deals falling out of the sales process and of equal importance is why?
Metric: Average deal size – Easy metric to measure, but if you measure properly you can get a good feel for the number of deals you’ll need to close when doing next year’s budget.
Metric: Ramp time – Sales people just like everyone else need to be measured on how long it takes them to be self-sufficient. While most have the sales background every company has a unique value proposition, methodology and of course product / service. If a particular rep is taking longer than average you can work with them to close the gap with training or determine if you need to make a change.
I’m sure there are other metrics that can and should be measured, but the list above are my thoughts. Again let me know if you think I’m off base, or just plain missed some key metrics.
The metric ‘ROI of the deal’ could probably even be split in ‘Expenses necessary to close this deal / deal size’ and ‘% price was discounted by’.
4 thoughts on “Metrics to measure around a deal”
Interesting post. Reading through, I had a thought on another metrics-related topic. The original question was about measuring sales reps; my thought was (directly or indirectly) measuring the utility of all the other efforts supporting sales’ abilty to have good conversations. For example, it costs real money to pay a marketer to create a white paper–would it be useful to know how often that asset was used, by whom and for what deal outcomes? This is just an example, but my broader question is how do sales enablement professionals want to be able to track back the content you provide to usage, and results, in the field?
Thanks for your insightful questions.
For the sales enablement application we use I have described some of the functionality here https://salesenablement.wordpress.com/2009/06/12/finding-the-right-sales-enablement-documents/
The application lets sales people rate (1 star to 5 stars) every piece of content and leave comments about it. The marketing employees get these comments and the ratings. The part of the application that is shown in the videos linked above can actually filter down to lets say all Sales Enablement content created by marketing employee Adam Example and rated 5 stars or lets say all his content with 1 star only etc… With the right culture of rewarding contributors of good content this can go a long way. Types of content that do not work do not need to be created anymore etc… Also a possibility for sales people to contribute what really worked well for them in the field is important and should be rewarded (in case it does help others as well).