How to Use Sales Process Measurement to Improve Marketing and Selling Results
I’m on my way back to Canada to work with a client for the week. I’m spending a lot of time away from home this month, which makes me unpopular at home. Besides, it gets darn cold in Canada.
However, as always when implementing a new sales process, things are very interesting … from many points of view. Here are two to consider:
The measurement perspective of the process (the subject of this week’s article) is critical. This is where you stitch together the means of gathering the data such as Google clicks, landing page opt-ins, qualifying phone calls, and opportunity qualification criteria. You have to have a framework for it all to fit together and a means of validating it, all the way down to some countable aspect of reality. Then, after you set it up, you watch as the spreadsheets get filled in day by day and use simple charts and pictures to analyze what is going on.
The other side of things is in the perspectives of the people who have to implement the work, write the ads, deliver the scripts, talk to prospects, and decide how hard they have to push their conversations with those prospects. Their view contrasts with mine, because they look at things according to how their own job performance is evaluated … More than once, I have observed senior executives (including me!) who are thrilled to figure out how the process needs to work intellectually, but then become
disappointed when their organization fails to execute.
Implementation of the new process is a crucial piece … It is where you have to get out in the field to work with people, to help them make the new way their own. This means building relationships and helping them remove roadblocks and take risks to make things work. It cannot happen on its own. It has to be led. I hope to have an overview of that for you in next week’s column.
In the meantime, if you live up North and are feeling the cold, bundle up!
Until next time
Michael J. Webb,
November 6, 2007
How to Use Sales Process Measurement to Improve Marketing and Selling Results
Companies have known for decades how the sales funnel works. So why do they have so much trouble measuring the sales process and predicting its results?
The answer to this question opens up incredible potential: It means you can manage sales and marketing scientifically. It means results can be made more predictable and reliable. To answer this question and then put the answer into practice is not really all that difficult. It requires two things: This article addresses the first, which is a good understanding of how your sales process works and how it
can be measured.
A future article will address the second point, which is developing the cultural alignment that makes it in your salespeople’s self-interest to provide the information required.
What Does It Take to Measure the Sales Process?
Before you can measure a process, you need to understand the product created by that process. In sales and marketing, the product is a series of actions we get certain people to take. Ultimately, of course, these actions should lead these people to become a customer.
Sales and marketing processes work by:
- Helping people to more easily understand their problems,
- Enabling them to identify credible solutions and the value those solutions represent to them, and
- Removing barriers to their action (such as perception of risk, inertia, saving face, etc.).
This is not rocket science by any means. Yet companies have a devil of a time measuring it in any meaningful way. This drives immense frustrations because executives have no way to identify how their process really works. They have to rely on their experiences when they were in the field or trust a few key individuals to make the right judgments.
When markets and technologies are changing, it becomes very difficult to predict outcomes or know what corrective actions will improve results. In the absence of the evidence and data provided by a process approach, businesses have no ability to identify cause and effect.
This dilemma happens when businesses have not thought things through from the customer’s perspective. If you are familiar with the idea of the “Customer’s Journey,” also known as the “Buyer’s Journey,” you know what a useful framework this is for designing a sales process. (Incidentally, a good book on this subject is Hugh Macfarlane’s “The Leaky Funnel.” http://tinyurl.com/2s649o. It enables your company to align your sales and marketing activities to the way your customers buy. Most important, it is the key to solving the problem of sales process measurement and forecasting. (You can read about this concept in Chapter Six of “Sales and Marketing the Six Sigma Way.”) http://tinyurl.com/gtpov>
What Are You Measuring?
Knowledge of how your customers buy provides the insight you need to understand what you should be measuring. The framework of the Customer’s Journey enables your team to think in terms of the flow of leads, opportunities, and deals. This is a production flow, which can and should be measured just like any other production system. Your sales and marketing activities (causes) consume time and money in
their attempts to create leads, convert them into opportunities, and win deals (effects). It is good business to measure these so you can improve their value and reduce their cost.
The characteristics of a good sales process measurement system are:
- It tracks the production flow (quantity).
- It helps predict production output (quality).
- It provides actionable information.
- It provides diagnostic data.
Good Metrics Track Production Flow (Quantity)
The goal of sales and marketing is to maximize the production of paying customers overall. The mistake most companies make is sub-optimizing: People focus only on certain stages (on the assumption that others will take care of themselves). They do not have the ability to track the entire flow of leads, opportunities, and deals. A good example of this is the time and money spent optimizing the generation of “leads” that salespeople do not follow up on (for whatever reason).
The measurement system must enable the company to track the flow as if it were inventory. This means you must be clear on exactly what is meant by terms such as a “lead,” a “qualified opportunity,” and so forth. Millions of dollars are wasted every day by companies who assume that people who download things from their website, provide their contact information at a trade show, or filled out a bingo card from a magazine must be a “lead.”
Whether these so-called “responses” are worth anything depends WHY they downloaded, provided their contact information, or filled out the bingo card. What were they responding to? What offer was exactly made?
If your offer is a raffle for a big screen TV or an iPhone, you may get a lot of names and addresses, but your ideal prospect probably won’t be among them. To track the production flow effectively, you must be thinking about the Customer’s Journey and how you can help them move toward THEIR GOAL rather than yours.
If your offer is an opt-in to an article or white paper that helps define the problems with which they are struggling and offers them some hope of a solution (which may include your products and services), you might be more likely to find your ideal prospect among the responders.
By defining your sales process in these terms, you can devise simple ways of tracking the flow of people who are at the various stages of the buying process. You can account for the production flow, as if it were inventory, and identify the yields between the stages. You can identify the bottleneck in the production flow and prioritize your efforts in the right place to improve results. What’s more, these simple techniques will help you identify the costs of this bottleneck, so you can persuade others in your company of the wisdom of improving things.
Good Metrics Predict Production Output (Quality)
Once you have set up the means of tracking the flow so you can account for all of the leads, opportunities, and deals (including the ones that go down to dead, lost, or no decision), you need a means of getting clues for what the problems in the process might be. Just as in any other kind of production, the causes for poor yields have to do with the quality of the “material” you are dealing with.
Much has been written about the need for salespeople to qualify their prospects. However, few companies have taken this step to its logical conclusion. You can identify the observable characteristics of what you are producing. Further, as they progress through the stages, you can observe more and more detailed things about them.
Some companies offer several different alternatives to people who visit their website for the first time. You might just peruse the site. You might provide your contact information in exchange for a good article or newsletter. Or, you might be willing to have an instant message chat to get quick answers if you have a more urgent need. What a wonderful way to “measure” the quality of a “lead!” The customer’s own actions indicate their responsiveness making it a very reliable measure of quality. Has your marketing department experimented with a mix of information products, webinars, assessments, or other free services to see which ones generate the highest quality leads? They should.
I have often written about the need for companies to develop qualification criteria for salespeople around observable characteristics of their sales opportunities. You can develop Likert scale questions (i.e., on a one- to five-point scale) that enable them to identify the extent to which the prospect has the kinds of problems you can uniquely solve, their perception of your company, the extent of relationships you have with people in various key departments, access to decision makers, etc. Once these qualification characteristics have been tested out with a statistically valid number of deals, they become an invaluable instrument for guiding salespeople’s behavior and for forecasting the likelihood of closing.
Companies often overlook the necessity of handing off the closed sales opportunity to the people who must deliver on the promises. This too can be simplified and systematized to help the customer get the value they wanted with the least amount of pain and to flag problems before they get out of control. The outcome should not just be that they pay the bill; but that they refer you to other qualified prospects (net promoter score). Following up systematically to gather this referral, Voice of the Customer, and case study information provides an invaluable asset to the marketing department for use in telling new prospects about the wonderful results your customers actually achieve.
Good quality metrics identify observable characteristics and not opinions or gut feels. Using this approach for each of the stages above makes it possible to predict the conversion rates with increasing precision. It means you can start getting a handle on marketing ROI, as well as sales forecast accuracy. People will still have to make judgments, of course, but the discipline of tracing them to the bedrock of observable facts is the most powerful way to make judgments more reliable and repeatable.
Good Metrics Provide Actionable Information
Once you can measure actual process yields, you are in a position to begin taking corrective actions that work. The quantity of qualified opportunities multiplied by the observed conversion rate provides a reasonable indication of how much business will close. If it is not enough to meet the goal, you have two choices: You either increase the flow (quantity of qualified opportunities) or increase the conversion.
- Quantity can be increased through lead generation techniques (whether done by the salespeople themselves or by the marketing department).
- Conversion can be increased by either improving the quality of the deals (as by better sales techniques, so salespeople have better relationships with coaches and decision makers) or making the offer more attractive.
This is familiar territory for sales managers, who are caught in this dilemma for much of their careers. The difference is that with the process defined correctly, you actually have a chance of measuring the effect of corrective actions. Specific plans and contingencies with at least somewhat predicable outcomes can be implemented when a shortfall in production appears imminent. If expectations are not met, they can be better traced to specific, observable facts so that better corrective actions can be developed for the future.
Good Metrics Provide Diagnostic Information
The difference in this approach is that it provides rich sources of information to help diagnose the causes of problems and bottlenecks in the sales process.
What is your offer?
Several clients have had difficulty with poor quality of leads from their websites. By analyzing the situation from the perspective of what their customers wanted, they discovered that the problem was in their offer: Their websites were originally designed around their product. No thought had been given to understanding and helping customers through their Customer Journey. Once the proper Voice of the Customer work had been completed, it was fairly easy to come up with offers that effectively attracted the right types of prospects
Making the sales funnel flow faster
Many clients struggle with poor qualification criteria, so they have difficulty figuring out what they need to do differently in the sales process. Once the criteria are defined correctly and enough opportunities have been statistically analyzed, crucial factors stick out like sore thumbs. Often the criteria can be reduced from twenty five or thirty on the first go around to less than ten on the second. Further, these essential criteria are clues to what make prospects most likely to buy quickly. This enables the sales team to make appropriate offers to them and highlights the characteristics the marketing team must look for to further revise their lead generation efforts.
Having facts and data about the quantity and quality of your leads, opportunities, and deals is the only reasonable way to diagnose the problems and solutions to a sales process. The key to getting more customers to buy is to figure out what they want as they move along their journey and to find a way to provide it to them.
Michael J. Webb
November 6, 2007
great post…i was hoping to one day become a black belt.