The True Purpose of Sales Metrics and How to Coach to Them
Perhaps you've heard the management adage, you can’t manage what you don’t measure.
Metrics are important in every aspect of any business, but they’re especially critical in sales and recruiting. Staffing leaders can’t rely on their gut instinct or intuition to guide every decision. There is far too much information to consider and the risk of being wrong and failure is high.
That’s why the most successful companies obsessively measure everything about their business including their sales and recruiting functions.
To help you gain an in-depth understanding of sales metrics well beyond simply knowing what to track and measure, I've written this blog, the true purpose of sales metrics and how to coach to them.
What are Sales Metrics?
At the most basic level, sales metrics are factual data points that represent a recruiter, seller, team or company's performance. Recruiting and sales leaders use these metrics to track progress toward goals and prepare for growth such as hiring and sales compensation planning, forecasting revenue for executive management, the board or investors, and to award incentives and bonuses, and identify any issues with their sales strategy and objectives before it's too late to take corrective action.
The Real Purpose and Intended Use of Metrics
One of the most misunderstood sales and recruiting management activities is the design and use of sales metrics. Sales metrics are important because they allow us to measure, understand, control and improve sales and recruiting effectiveness and performance. Unfortunately, many recruiters and salespeople believe (and rightfully so based on their personal experience) that metrics are designed to play the role of "big brother" by micromanaging their activity and how they spend their time. The theory is that the manager uses these metrics as if they're a drill sergeant, constantly pushing their people to do more. While there are some misinformed manager's who do use metrics in this manner, this is NOT the intended purpose of sales metrics.
Sales metrics have two primary purposes.
The first intended use of sales and recruiting metrics is to measure the health of the company looking into the future. These are metrics such as total pipeline revenue or weighted value of the pipeline, and they are typically reported at the corporate level. By assigning dollar amounts and probabilities to various milestones in its sales force’s aggregated opportunities, management can build a credible sales forecast for its overall organization.
The second use of sales and recruiting metrics is to measure the effectiveness of recruiters and salespeople at moving candidates and opportunities through their sales cycle or recruitment cycle. In essence, these metrics are designed to drive very specific behaviors and help salespeople and recruiters improve their efficiency. In this regard, sales metrics are used and applied the same way a professional athlete tracks their personal statistics. Take Steph Curry, NBA all-star (professional basketball for non hoops fans) for example. He along with his coaches are tracking all sorts of statistics. See a sample size in the diagram below.
Why are Steph's coaches tracking all of these metrics? Not so they can "ride him" and "micromanage him." They track these metrics to help Steph operate at the most efficient level possible so that he has energy at the end of the game when they need him to hit the game winning shot. They also know what shot he should take that will give him and the team the best chance for success. Tracking these statistics makes Steph Curry better.
Sales and recruiting metrics should be applied in the same manner. Recruiters and salespeople and their managers should WANT to track every metric and statistic in order to improve their performance and effectiveness. In fairness, salespeople and recruiters need a manager who understands and possess the coaching skills.
What many staffing organizations struggle with however is understanding which metrics to measure and understanding the relationship between the data or metrics being tracked. Let's explore the cause and effect relationship between sales metrics.
Breaking Down Sales Metrics Into Three Components
Sales and recruiting activities are those in which the sales rep and recruiter has 100% control over the outcome. Activities are the causes that lead to other effects including the achievement of sales and recruiting objectives and business results. Sales and recruiting activities that should be tracked include:
- # of call plans completed
- # of outbound calls (raw dials) completed
- # of outbound emails sent
- # of voice mail messages left
- # of LinkedIn requests/inMails sent
Most staffing companies don't track these metrics. Why? Many feel or believe this is micromanagement. Believe me its not if the manager knows how to use the data. Tracking these metrics is critically important for a couple of reasons:
- Activities are the things the rep or recruiter has 100% control over. NOTHING else matters if the rep or recruiter doesn't do the activities. Without tracking activities the manager will struggle to coach and improve performance. Imagine trying to improve Steph Curry's shooting percentage if he never took one shot. Where would you even begin?
- If you don't track activities than you can't improve efficiency, effectiveness and performance. Most if not all, staffing managers track face to face sales meetings religiously. And all managers want their salespeople to get MORE sales meetings. As a manager, if you track face to face meetings but don't track activities, how can you coach and improve your sales rep's effectiveness at securing face to face meetings? How can you identify where and why they're struggling to secure face to face sales meetings? You can't and that is why tracking activities is so important. This is just one example of how tracking activities can improve sales effectiveness and performance.
Sales reps and recruiters don't have 100% control of the achievement of sales/recruiting objectives. Sales and recruiting objectives can be influenced, but only by managing their preceding activities. Examples of sales and recruiting objectives include:
- # of face to face sales meetings
- # of intake calls or candidate interviews
- # of candidate submittals
- # of signed agreements/MSAs
- # of new job orders
If you're a manager wanting your sales team to sign additional logos (MSA's) or your recruiters to increase candidate submittals, you first need to diagnose what they are doing that is 100% within their control to produce the desired objective.
Business (Sales/Recruiting) Results
Sales and recruiting results are the culmination of all of the things that a sales rep or recruiter and the sales organization does. These metrics are so high level that a sales rep, recruiter or manager can only influence these numbers but they can’t directly “manage” them. Business results are achieved by executing the underlying sales activities and achieving the sales and recruiting objectives. Recruiters and sellers can't achieve business results without first executing the sales activities and achieving the preceding objectives. While there are managers who try to "manage to the number," you simply can't. It's impossible because you can't exert control over the results, you can only influence them via activities.
Examples of business results that should be tracked and measured include:
- # of placements
- Revenue attainment
- Gross margin attainment
- Gross margin %
- Gross margin growth
How to Use Sales and Recruiting Metrics as an Effective Coaching Tool
As I touched on previously, many managers (those will little experience, lacking training) believe that metrics are a tool to be used to micromanage their people and hold them accountable to higher levels of activity. Yes, metrics do play a role in holding people accountable, but there is a right way and wrong to go about it.
Imagine the following conversation between a sales manager and his sales rep.
Sales Manager: Dan, I looked at your activity report for the prior month and I see your number of sales meetings and new opportunities qualified were abysmal. You need to get more meetings to qualify more opportunities to get back on track and hit quota. I need you to get 10 meetings this week and identify and qualify 3 new opportunities. Is that clear?"
Sales Rep: "Yup, that is clear."
One week later the sales manager and sales rep sit down for their weekly meeting. Does this conversation sound familiar?
Sales Manager: Dan, last week when we spoke we agreed you would get 10 new meetings and 3 new new opportunities. From the activity report you went on 3 new meetings and qualified 1 new opportunity and that job order still needs to be further qualified. What seems to be the issue?"
Sales Rep: "I know boss, I'm trying really hard but I did go on three meetings and all three went really well."
There are a few problems with this manager's approach:
- Because the manager is trying to manage to a number that neither he nor his sales rep can exert 100% control over, he is focusing his time and energy on the wrong issue
- Because the manager is not tracking, measuring and talking about the sales activities, he can't properly diagnose the issue let alone provide coaching to develop the necessary skills
- Due to the manager's in ability to identity and diagnose the sales reps issue or challenge with scheduling sales meetings, he can't get the rep to buy into his solution (that getting more meetings is the solution to identifying and qualifying new opportunities). He can't get the sales rep to identify and admit what their challenge is and for that reason, the rep will not buy into a solution (make more calls to get more meetings)
The net result of conversations like this is frustrated sales reps and frustrated sales managers. Instead, a sales coaching conversation in which the manager incorporates metrics into the discussion should sound something like this.
Sales Manager: "Dan here is a copy of your activity and performance report from the prior month. Can you please look it over in preparation for our meeting tomorrow? When we meet we can review and discuss together. I want you to see if you can spot any trends."
Sales Rep: "Yup, sounds good."
Now the sales manager and sales rep meet for their 1:1 meeting.
Sales Manager: "Dan, so let me ask you, what are some of the observations you made from reviewing your activity and performance report?"
Sales Rep: "I noticed my meetings took a big drop from the prior month. I know partly why that happened but I didn't realize it was such a big drop off from the prior month."
Sales Manager: "Why do you suppose that happened and what do you think you might need to do get back on track?"
Sales Rep: "I got busy with the Penske file and that took a bunch of time so as a result my prospecting dropped off. I looked at my total outbound prospecting calls and I noticed they dropped by 55%. But I can turn it around."
Sales Manager: "Wow, that is a big drop. Yeah, that was a great project and you did an amazing job. What did you learn from that experience that you can apply going forward so the next time you have a big project you can work the project and maintain your prospecting level?"
Sales Rep: "I learned that I need to manage my time more effectively. I need to continue to make prospecting my top priority. In fact, I need to make sure I do it first thing every morning before things get crazy."
Sales Manager: "Great, so where do you plan on going from here to get back on track this month? What steps are you going to take?"
Sales Rep: "Clearly I need to start making more calls and from that I hope to get some meetings booked. I need to crank up the prospecting to make sure I identify and qualify enough new opportunities to meet my quota. That will be my focus. My goal is to make 50 prospecting calls per day."
This is how top performing managers who truly understand the intent and purpose of sales metrics use them in their coaching conversations. They lead with questions, they empower their people to take action and to take responsibility for their own results. Perhaps most important of all, they reserve judgement and allow their salespeople to speak first and self diagnose. To learn more about sales coaching and how to empower your people, download our eBook, How to Create a Culture of Accountability Through Coaching and Empowerment.