Ask the Coach: How do managers determine metrics?
Here is a question I received last week. It is from one of my previous team members in Pune, India.
Question:
Hello Coach,
My question is – “How do you decide upon the factor that a rep should make at least 49 dials or 8 connects per day, for the MBO.”
Is there a particular strategy or calculation to come up with this kind of target ??
My senior has asked me to set up 6 conference calls per week, and I am managing with only 3-4 call set ups per week.
He does not consider number of dials or connects, for performance. And, problem is that my prospect list is draining fast with majority of ‘Not Interested’ status comments.
Please suggest me about what i can do to improve my performance, in such a scenario .
Answer:
The answer to how to schedule more meetings comes in two parts. Before we dig into these answers, I want to begin by outlining the first question of how effective metrics are established. I was sitting in the office of the CEO of DreamFactory, and we were discussing the methodologies of the inside sales team and how to make them more effective. When we discussed metrics, I began explaining how you had to work backwards from the end result to the most minute activity. He saw this as obvious, and could not believe that anyone would see it another way. Unfortunately, many people design metrics based on other details, not just the end result. If you want to accomplish a goal, look at how many activities it take to get to that goal. In the case above, 980 calls produced 160 connects. 160 connects produced 3-4 meetings a day. It is from this that you can now build a plan.
The first thing to look at when trying to hit an objective is how successful you are at each leg of your activity chain. In the scenario for this question, the rep is only making 50-75% of their objective. The simplest way to improve this is to increase the number of dials and connects. If you look at the 980 dials to 4 meetings scheduled, this is around 243 dials per meeting. To get to 6 meetings, you would have to increase your monthly dials by 486 a month. This is an extra 25 dials a day. While this may be simple, it is also challenging in the amount of time it takes.
The other thing to look at, and the way I would recommend increasing your number of dials is to improve your ratios of dials to connects, and your ratio of connects to meetings. Let’s look at the connects to meetings ratio. If you are speaking to 160 people a month, and only 3-4 are interested, the message is poor. Work on scripting a compelling entry statement. Find unique reasons to talk to each company. 4 in 160 is a 2.5% close ratio, and frankly this is really poor. I would want to have at least a 25% close ratio in scheduling meetings, and this would mean that I could reduce my connects to 100 a month and still make 25 meetings. Now, how would I do it? I would start by looking at what accounts I target. Next, I would look for the right contact and only call people at the highest possible level. Third I would research the company for reasons they might want to talk to my company. And finally, I would create strong entry statements that sparked interest.
At first this will be challenging as you learn to gather this information and sharpen your message. If you can increase your close ratio to 10%, you only need 60 connects to make your MBO. Your choice is obvious, either increase your activity by 50%, or increase your effectiveness by 7.5%. I know what I would do.
Tags: , , , Ask the Coach, blog, business consulting, closing, coach, learning, management, marketing, mentor, Pipeline, Prospecting, Qualifying, sales, Sales 2.0, sales coaching, sales consulting, sales management, sales training, selling
This entry was posted on Wednesday, May 28th, 2008 at 6:58 am and is filed under Ask the Coach. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
May 28th, 2008 at 7:31 pm
Karl, this is a very complete explanation of the process. Once again, “beginning with the end in mind” is key (I keep running into instances where “beginning with the end in mind” solves lots of problems).
I especially like your explanation of closing rate. That’s where sales skill development comes in. By fine-tuning the script and using an appropriate sales methodology, that number can work wonders on the end result. I once had someone tell me that working on conversion was a waste of time. I disagreed strongly with that idea. In one particular company, one salesperson had a conversion rate of 48%, while another had a conversion rate of 74%. All it takes is some math to figure out the revenue implications of that difference.
May 30th, 2008 at 12:55 am
Hi Karl,
The other benefit of working on conversion rates of course is that you don’t burn through your prospect list so fast to get the meetings. At the rate your previous team member is going through the prspect list and getting “no”s with a weak entry it won’t be long before he has no one left to call.
Ian
May 31st, 2008 at 12:51 pm
Great post Karl. I worked for a manager who in his years of wisdom commented that I currently made 40 prospecting calls per day and was the number one guy despite making half the dials the rest of the team was making. He insinuated i was lazy and suggested I could double my pay if I were to simply step it up and work as hard as everyone else.
I followed his expert advice and had the worst month I had ever had!
I had switched from focusing on the quality of every activity to the volume and the results were disastrous. After looking at my ratios for the 8 stages of our sales cycle I was ahead of the rest of the team in almost every stage. I wasn’t making 40 calls per day because I was lazy… It was because I was busy selling!
i think your advice is spot on Karl. Break your process into measurable steps, and carefully examine how many prospects move from step to stem and then focus your efforts and training on the areas you are weak.
Forcing more watter into a funnel doesn’t get always get more into the bottle. Sometimes you over flow the funnel and spill water all over the place. The net result is less efficiency… Just a thought…
-Brad
June 16th, 2008 at 8:57 am
The Entrepreneurial Salesman » Time for Selling by First Border says:[...] the Startup Sales Mentor, is answering a question from one his readers about metrics… number of calls to leads and how to improve the ratio. While Craig, the Trigger Event Selling evangelist is talking about [...]
August 20th, 2009 at 12:08 am
Interesting post, and I really like the comment left by Brad, its not the amount of calls you are make but the amount of converted leads to sales that should at the end of the day count.
August 21st, 2009 at 12:31 am
Sue that is so true, numbers are not as important as converting that lead. Thats were the importance is