Miller Heiman, interviewed Nattalie Hoch, Executive Vice President of Sales Operations about some of the key sales performance metrics that were identified in Miller Heiman Group’s Sales Best Practices Study. The following are excerpts from that conversation.
Sales Performance Journal: What’s so important to you about the two key metrics you chose to focus on for this quarter?
Nattalie Hoch: When I think about the two key metrics out of the several best practices to choose from, they are so closely aligned to driving forecast accuracy, and as you start into a new year, this is where you can make or break the rest of the year.
SPJ: So what comes first in your mind?
NH: The number of qualified opportunities in the funnel is BIG, because you look at it week by week, month by month. As a sales leader, you always want to ask: How big is big enough? That will always come back to knowing your year-end target and the gap you need to close to get you there.
SPJ: Would you say that the number of qualified opportunities is a future predictor of success?
NH: Absolutely. That’s something you can impact right now that is in sales control that isn’t about delivery yet. How much do I have to put into the top that can bring me the number I need at the bottom? The number of qualified opportunities goes hand in hand with the value of them coupled together. It’s the number equaling up to a certain amount of value. If the number doesn’t equal the value you need, you don’t have the right number, so you better go get more. More in number, more in dollar, whatever it takes or however you get there—but you’ve got to go get more. Doing this, along with new account acquisition, is gold. You expect to have a certain amount of companies come back, but everyone has to get new business. So these two metrics are really tightly aligned—increasing number of qualified opportunities and new
If you’re going to be successful about creating more qualified opportunities, you need to have the right behaviors in place with the team to help get you there. Behaviors include a consistent process. For example, say you have a salesperson that has focused a great deal of effort into a couple of big things that were all for Q4 and for four months straight, that’s all he focused on. The net result will be that as he rolls into the beginning of the year and looks into the top of the funnel, his number of qualified opportunities is nearly barren. In other words, if you are all about closing and you haven’t been prospecting, you’ve missed a critical component.
SPJ: What happens if you don’t continue to create qualified opportunities?
NH: This leads to what you’ll hear people refer to as the roller coaster effect. You have a lot of revenue and are doing really well and forget to prospect. All of a sudden the next month or the next quarter (if it’s a 90-day cycle), you’re down. But while you’re down, you prospect, prospect, prospect, and suddenly the next quarter you pop up again because all of that heavy prospecting starts to fill up the funnel and you come up to the top of your roller coaster. You start servicing, forget to prospect, and you come down once again.
SPJ: Is improving forecast accuracy viewed as a leadership issue?
NH: Yes. I know of one sales leader who pinpoints his 10 percent growth last year to improving forecast accuracy. He says, “I tie everything that we did to that. It made that much of a difference—the rigor.” It’s not that he didn’t look at it before, and it’s not that he didn’t know it, but he wasn’t having the conversation with his salespeople, week after week, on How do we close the gap? So that’s all he focused on—how do we close the gap? He subscribed to that same rigor applied to his team, and that alone is what he attributes to helping them get their 10 percent growth. Forecast accuracy is a metric; what we gave him was forecast rigor, which actually measures how many qualified opportunities you have. That’s been a rigor of Miller Heiman for a while.
SPJ: So they previously didn’t have that, then?
NH: They didn’t have the rigor. It was loose. They looked at some things but didn’t look at them quite the way we did. So we added some rigor. We told them, every single week you need to know what do you have that’s been signed and what do you believe is going to be signed? Obviously you have targets—that’s a given. Say you’re supposed to sign $1M in a month. What do you already have secured and signed? “We have $700K.” What do you think is going to get signed? “About another $100K.” What’s your gap? “Gap is $200K.” OK, against that gap, where’s it going to come from?
So they go look at qualified opportunities. “We don’t know where the gap is going to come from because we don’t have it in the funnel, so we’ve got to go find it.” Now they have a $200K gap coming from the air. There’s huge risk in that. From the senior level down to the sales team, they’ve got to go find
$200K more. Where are they going to find it? Go prospect. Or, if they close out this month $200K down, they better be filling more for next month because they’ve got to make up whatever million dollars they have for next month—plus the $200K short. That’s where rigor comes in: Where are you supposed to be, what do you already have contracted, what is the gap, what do we have to fill the gap? That became a weekly cadence between sales leader and sales team. Where’s the gap? Where is the gap going to get closed? They now look at the number of qualified opportunities as well as the value of them, too. That was the discipline that got put in on the other side.
SPJ: Going back to your previous response, why do you think prospecting so often gets put on the back burner?
NH: Prospecting is the hardest thing to do. It’s the stuff you don’t like to do, so you put it off. But the more disciplined you are, you even out those peaks and valleys. If you are constantly putting new opportunities in the top of the funnel and not just getting lost in the middle of all the stuff, you will be more successful over the long run. What selling work you do, and in what order, matters—you come out of the bottom of the funnel, you close, and as soon as you close, you prospect before you go do the things in the middle. Because if you just do the stuff in the middle, you’ll get lost in there and you’ll never go back and prospect. This is straight out of Strategic Selling®.
SPJ: What is the benefit of looking at your funnel on a consistent basis?
NH: When you’re not looking at the funnel regularly, you can’t be surprised at the end of the month or at the end of the quarter that you didn’t make it. If you’re doing it right, even if that deal falls through you should be able to say, Well, this one, this one, and that one—these are my cushions if I can’t win all of them. And that’s reality—you’re not going to win them all.
SPJ: Is it a matter of just constantly staying on top of it?
NH: Constantly. It’s Q1 now. Knowing your target, knowing you’re contracted, value to fill the gap—those are the most important metrics to focus on. And forecast accuracy? Everything I just described gives you forecast accuracy. That’s what it gives you.