Get the edge on your competition by looking at the right sales numbers
In "Moneyball," author Michael Lewis describes how the Oakland A's management built a successful team by looking at the numbersl differently. They had to: Theirs was the smallest payroll of all the teams, and if they calculated potential the same way as everyone else, they would have been outbid for every player.
It's fascinating to me that a sport that had been around for more than100 years and is one of the most statistically studied still had secret gems to be discovered and exploited for remarkable performance. The same is true for sales management. There are gems of information to be gathered in your current systems that will give you winning insights you can exploit to improve your performance.
It has been my experience that companies who only track activities and outcomes are only getting a portion of the data they need to make decisions.
In traditional baseball, statistics such as batting average, earned run average and runs batted in (RBIs) were the gold standard. However, the statistics that hold the real gems included on base percentage and slugging percentage which, added together, makes the on-base plus slugging (OPS) statistic.
In sales, those gem statistics need to include:
1. Margin contribution -- Most organizations measure sales people on sales revenue, but that does not really represent value, just like batting average does not represent the same benefit as your on base percentage. Look at total margin contribution by representative to understand their economic contribution. Companies who look at the effective margin contribution of a sales rep get a much better understanding of true sales effectiveness throughout the sales process.
2. Number of new, above-threshold customers -- Often we measure sales people on total dollars generated rather than separating out their growth from current customers versus the number of new customers that they are adding. Not all customers are created equal, so we encourage companies to set a floor, or "threshold" in margin contribution from a customer to qualify to be counted. Using that threshold, you can determine what is the growth value a sales rep brings to the company by looking at the number of new customers who are above threshold margin contribution that a rep adds to the company.
3. Margin growth of existing customers -- When the margin dollars and margin percentages are examined on a sales representative's book of business, important trends by account and portfolio of accounts are revealed. Sometimes top line growth hides many sins and this is a way to look at those senior representatives who have established account bases to determine what their real productivity is for the firm.
Just like baseball, there are lots of numbers to watch. Watching what everyone else watches and missing the numbers I've included won't make you smarter than your competitors. Keep a close eye on the sales stats, and you will have an edge you can leverage.