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SPIF Tip #45: Beware What You Measure About Sales Performance

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A recent article by an HR

consultant made the following argument (summarized):

If you want to increase sales by 20% – 30%, simply

  1. Rank order the salespeople by performance
  2. Divide the resulting curve into thirds
  3. Identify the characteristics of the people in the top third
  4. Replace or upgrade the people in the bottom two thirds to make them have characteristics that resemble the first group.

Here is my response:

With all due respect to the author of this article, he has no idea what he is talking about.

I did something like this once with a client. We ranked their salespeople from highest to lowest close ratio. Noting that lowest performer was noticeably lower than the rest, my statistician told me privately, "The client should probably fire that guy." When we showed the bar graph (which included individual's names) to a room full of the client's salespeople, they reacted with gasps, giggles, and some shuffling. What were they thinking?

The guy with the lowest close ratio was the top salesperson in the company!

Why was his close ratio so much lower than anyone else's? Because he, alone among the salespeople, was religious about entering every possible sales opportunity into their CRM system. We learned, in fact, that the only way the sales V.P. had been able to get participation in the CRM was to require salespeople to use it to issue quotes. Most salespeople only entered sales opportunities into the system when they needed a quote.

 

Understanding sales performance requires systems thinking

There are lots of ways to measure sales performance. And every one of them is guaranteed to be wrong if you make the mistake of assuming sales is merely about what salespeople do. It isn't.

Salespeople are trapped in a system, just like everybody else.  That list of questions the author of this article provides are tangential to the issue, at best. That is why you have "huge cacophony" when you bring up process improvement to the sales department.

If you expect the sales department to pay attention, you must have at least some understanding of what adds value, and what doesn't from the perspective of the sales department (and the customer).

Have you seen examples of this in your world? Tell us about it in the comments below.

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