Guest post by Jason Jordan, co-author of Cracking the Sales Management Code.
In the late 19th century, John H. Patterson of the National Cash Register Company (now NCR) created sales territories, quotas, incentives, training, processes, and all the other sales management tools that we still use today. For the next 100 years, there was little if any innovation in sales management. Sales managers plodded along doing all the things Patterson taught us to do.
Until the end of the 20th century… When CRM was born.
In the 1990s, sales management was given the gift of CRM and all of the robust reporting capabilities that came along with it. But given the massive investment that companies have made in CRM over the last two decades, we aren’t so sure that it has improved sales management’s effectiveness to a commensurate degree. Indeed, sales managers are still learning what to do with all that data they now have at their fingertips.
To understand how sales forces are in fact using that data, Vantage Point Performance conducted a ground-breaking research study into the metrics that leading sales forces are using to measure and manage their sellers.
Interestingly, we discovered that all of the thousands of sales metrics in our study fell into one of three categories:
- Business Results, which are outcomes such as revenue and market share
- Sales Objectives, which are sales force goals such as acquiring new customers and selling certain products
- Sales Activities, which are the day-to-day tasks like planning and conducting sales calls
A key insight from the research is that only sales activities can truly be managed. Sales Objectives and Business Results are important numbers to everyone, but they cannot be directly controlled by sales management. In fact, Sales Objectives and Business Results are trailing indicators of a sales forces performance only showing you what youve accomplished in the past. Measures of Sales Activities are leading indicators that foretell whether those Objectives and Results will be attained in the future by providing insight into your salespeoples behaviors today.
Amazingly, only 17% of the metrics in our study were focused on Sales Activities. Or stated differently, over 80% of the things sales forces are measuring are things that they cannot actually control. You can’t control revenue you can only control the things that your sellers are doing day-to-day. For example, which types of prospects your reps are calling this week, and what types of conversations they’ll have. Or whether they’re completing their call plans, and if they’re proactively managing their opportunities. Wouldn’t it be great to measure the things that you can actually manage in your sales force today?
This is how CRM is failing us. Or perhaps how were failing it, since CRM is just a tool. It does what we tell it to do. Information goes in, and information comes out. Which information we request and what we do with that data is up to us as sales managers.
In summary, we’ve proven to-date that we can report a lot of Business Results and Sales Objectives that tell us how successful we have been. What we haven’t yet learned to do is to measure and manage the critical inputs to that success the Sales Activities of our sellers. Once we can do that with confidence, we will begin to realize the full power of CRM. Not the power to examine the past, but the ability to predictably influence the future.
Jason Jordan is a partner of Vantage Point Performance, the leading sales management training and development firm. He is a recognized thought leader in the domain of consultative selling and conducts ongoing research into management best practices in hiring, developing, measuring, and managing world-class sales organizations.