Ed. Today we introduce a new contributor to The HUB who may not be new to you – Lee Salz. Lee is the President of Sales Architects and you may know him from his web site, his popular Sales Management Minute blog and audiocast, or from experience with his consulting services. Lee’s article on sales management metrics has been excerpted below, and we encourage you to visit his site to read the entire article.
Thinking back to one of the great cult films of the 1980s…Caddyshack. There is a conversation between Ty Webb (Chevy Chase) and Judge Smails (Ted Knight) in the locker room after Ty has just finished a round of golf. Judge Smails asks Ty what he shot that day and Ty responds by telling the Judge that he doesn’t keep score. Puzzled, Judge Smails says, “How do you measure yourself with other golfers?” Ty responds by saying, “By height.”
Obviously, height doesn’t tell you anything about a golfer’s performance which is what makes the dialogue humorous. Yet, there is nothing funny about a sales organization that is using meaningless, arbitrary data to assess the performance of their sales team. Even worse is if the only number tracked, measured, and monitored is revenue quota attainment.
There are four steps to identifying the metrics for your sales metric management system.
1. Measurable. If the area of the business you want to affect cannot be measured statistically, then how will you know whether or not it is working?
2. Meaningful. Just because you can measure a data point, it doesn’t mean that it belongs in your sales metric management system.
3. Goal-oriented. Statistics without goals tell you very little about performance.
4. Trainable. The final component is to identify the mentoring that can be provided to a sales person who is not achieving a defined metric in the system.
Designing your sales metric management system well-positions you to create an effective sales compensation plan. Remember, your sales compensation plan tells your sales people where to invest their selling time. Thus, the compensation plan reinforces your sales metric management system.