For Your Eyes Only … About Your Sales

Don’t read this article if anyone is looking over your shoulder. Why? Because it’s about to reveal one of the best-kept secrets in business for turning around sales that you can do on your own. Keep this one to yourself because it will give you an advantage like you’ve never seen. Best of all, it doesn’t cost a dime.

While everyone knows they should be tracking performance, measuring results, and managing against objectives, the truth is that not many small and midsized business owners do these things, and those that say they do, don’t do it well.

It’s both an art and a science, which makes it tough. And what makes it even more difficult is that it’s different for every business, which is often why companies hire outside consultants to help them develop the tools they need to manage their performance.

In What They Don’t Teach You at Harvard Business School: Notes From a Street-Smart Executive, author Mark McCormack cites a study in which students were asked if they had goals and then followed up with them 10 years later to determine how they were performing.

Here’s what he discovered:

• 13 percent of the students had goals.

• 84 percent had no goals.

• 3 percent had written goals.

Here’s what is really interesting: A decade later, they found that the 13 percent who had goals were doing twice as well as the 84 percent who had no goals. But what about those who had written goals? Did they do any better? You bet they did! The group that documented their goals did 10 times better.

Simply by writing down what they wanted to accomplish, students increased their performance by 10 times compared to those who had no goals at all. They took the time to write down their goals, and as a result, they were more committed to them. Most people aren’t willing to do that.

The same is true in managing your business. The secret is to develop key performance indicators (KPI) and then measure your company’s progress against those KPIs.

Understanding KPIs

In the past companies often used a “command and control” approach to manage their business. Managers told employees the tasks that needed to be done and controlled their work by measuring their progress to ensure the job got done.

Today businesses prefer to use a “trust and track” approach style of management, in which managers trust that employees will do the job, and then track performance in an effort to help them improve.

I’m not going to lie to you. Creating KPIs is not easy. It’s one of the reasons that many companies don’t do it well, if they do it at all. Why? Because you have to identify what you care about most, and measure the performance of employees, managers, and the company based on the KPIs.

The former CEO of eBay, Meg Whitman, once said, “If it moves, measure it.” That may be an overstatement, but you get the idea. If it’s worth doing, it’s worth tracking. In fact, just by concentrating on the three to six most important KPIs, you can have a large impact on your business.

Developing KPIs can be accomplished by asking these five questions:

1. What is our monthly revenue goal?

2. How many sales are needed each month to reach that goal?

3. Based on our closing rate, how many proposals are necessary to reach the sales goal?

4. How many qualified contacts do we need to obtain to reach the desired number of proposals?

5. How many leads do we need to get the desired number of qualified contacts?

Once you determine your objectives, you can then track the behavior that will help you reach them. The idea is to work backward, starting with the end in mind. Deconstruct your sales process so you can break down the activities that matter most to your business.

Most companies do track their sales process, but look only at end-ofmonth results. Where they fall short is by not tracking KPIs during the month, and not gauging how their goals are progressing for each activity. Nor do they track the KPIs for each employee, only the business as a whole.

If a company has 10 sales representatives, you should deconstruct the sales process to determine realistic goals for those reps that can be tracked every day. Based on the KPIs you can manage the behavior and activities of your employees.

When developing your own KPIs, ask yourself this: What are our sales goals, and what steps do we need to take to reach those goals? Then measure each step in the process to identify the strengths and weaknesses.

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