Monthly Archives: November 2015

Mind the Gap: Key Sales Metrics to Focus On

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
account acquisition.

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.

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Not All Opportunities Are Created Equal

Are you sales picking up for Christmas? Image courtesy of cooldesign on freedigitalphotos.net

Are you looking for the right sales opportunities? Image courtesy of cooldesign on freedigitalphotos.net

On the first day of October, sales teams everywhere hear the sound of a starting gun as the clock starts ticking toward December 31. With less than 90 days left in the year, and less than 70 selling days, the race for revenue becomes all-consuming as sales professionals search for ways to shift gears and speed up the process. With so little selling time available, why waste this prized resource on prospects who won’t return results? Learn how to better interpret prospects’ actions to help determine whether it’s selling time or time out for each opportunity in your funnel.Focus on your best opportunities.

Prioritize your selling time more effectively and increase close ratios. The following opportunity pursuit checklist provides some questions to ask yourself about an opportunity to decide if it’s worth pursuing:

  • Good match to ideal customer? Stop and think about your customer list. Which customers do you wish you had a thousand more of? What makes these companies your best customers? Who are the customers you’d like to fire? When you’ve finished making your list of characteristics, you’ll need to prioritize. Which five traits of your best customers would you replicate? Using this formula to pursue new prospects will keep you focused on those companies more likely to do business with you. Better yet, you will stop wasting time pursuing prospects that have a low probability of closing.

 

  • Open access to key decision makers? The quickest way to accelerate the sales cycle is to make sure you’re reaching the right decision maker in the right way. Time is a nonrenewable resource, and not all opportunities are “created equal.” If you can’t get the meeting, you can’t get the sale. And that meeting needs to be with someone who can influence the final decision to buy. It’s logical reasoning, but, whether you’re new to sales or a veteran, you know that it is tough to get through to that person in the corner office. Unless you have the password. That password is your Valid Business Reason (VBR), which defines the purpose of the meeting.

 

  • Favored against the competition? Penetrating an account where your competition is deeply entrenched can be tough. Some companies invite you to bid as a matter of compliance, when in reality they have a preferred provider who already has won the business. Go head to head with an established vendor if there’s a potential for good return. Otherwise, your next best alternative is to keep a presence in the account as a potential second option, rather than to pour endless resources into an attempt to take the business away from a deeply rooted rival.

 

  • Have a developed coach? A good coach functions as an information resource for the salesperson. He or she not only enables you to check the accuracy of the information you’re getting, but also provides information that you have been unable to get elsewhere. Coaches can help you tie together everything you know, or are still trying to find out, about who the real key players are for your opportunity. The use of an effective coach can be the difference between a sale that almost makes it to the close and one that not only closes in your favor but that also generates winning opportunities for you far into the future.

 

  • Customer’s priorities are clear? Customers need you to fix a problem, avoid a crisis, or accomplish a larger goal. Staying focused on their issues, rather than your need to close the deal, enables you to examine your deals closely and uncover areas you can potentially work with. This gives you the ability to identify deals with the best potential and then prioritize based on which are most likely to close soonest. Prioritizing those deals is best done based on your knowledge of what customers need and when they need it. It does no good to pressure them to close if your solution doesn’t answer a need they feel is urgent..
  • Budget has been allocated? Find out what the buying process looks like by asking:
    • What is the budget and has it been allocated?
    • How will the decision be made for this proposal?

If you hear, “Our budget was cut at the last minute,” you may not have reached the right level of decision maker to insulate your sale from this outcome. A higher-level decision maker may have been able to reserve a budget if your proposed solution is critical enough to their business issues. If your prospect is saying, “Your price is too high,” it may be that he’s afraid to go back to his boss and ask for more budget because the company is behind plan. If the customer uses budget for something else, then the perceived need is not strong enough to keep the customer from diverting funds to another area.

  • Customer is putting in equal effort? Sales professionals should jointly set long-term objectives with their customers. Salespeople who use joint-venture selling to facilitate the process make the experience easier for themselves and, ultimately, the prospective customers. Rather than showing or explaining a product right off the bat and assuming the prospect will automatically want your solution, sales professionals who are more likely to win guide the process by:
    • Asking, exploring, and learning a prospect’s needs
    • Searching for a fit between the contact’s concept and their product
    • Keeping the potential customer in mind during every step of the process

If you answer no to any of these questions, take a step back and think about whether the opportunity is worth it right now. Is this really one of your best opportunities?