What would your department leader do if you spent over a year working on a high-investment project that resulted in a missed quota and zero results? The answer may be obvious (think: ‘get your resume together’), but many sales managers not only waste a year or more on projects like this, they do it repeatedly. Sounds ridiculous, right? But it happens all the time.
It all starts with the hire
How many times have you seen this scenario play out? A highly qualified, seasoned first line manager has a tenure of success and subsequently hires a new sales person who has an impressive track record and gets paid a lot of money. The company’s sales cycle is nine months but with the rep’s Roladex of contacts and extensive experience, they expect the sales to start rolling in.
Three months down the road, their manager starts to see pipeline shrinking a bit. Then three months after that, they notice the pipeline has dried up completely, so they begin to dig in a little deeper to determine what’s really going on. After combing through the numbers and realizing there are no opportunities, what do you think they do?
You guessed it. They simply tell the salesperson to go get more business—or maybe even put them on a thirty-day performance plan. Not surprisingly, at the end of thirty days, there are no deals so they fire them and start over. The rep takes the full blame and the manager squawks about another bad hire.
But let’s do the math now, shall we?
90-day ramp up + 9 month sales cycle + 30 day sales plan = 13 months
Thirteen months with NO results. Calculate the average sales price and the quota missed and if this was your company, you might start to feel a little queasy.
So what happens next? They hire again and start all over, hoping for better results. (And we all know that the definition of insanity is doing the same thing over and over and expecting different results!)
Now, the good news (for the managers, of course) is that most won’t lose their jobs, as they will still make their numbers with the 40% of their team that is high-producing. But how expensive is this for the company?
There’s a better (less costly) way
What if you could identify all the risk and problems within in the first 30 days? You can. And I know that because I have done it.
I have been leading first line sales managers in small to multi-billion-dollar high tech companies for the past 10 years. As you go up the chain, executives put a greater focus on mitigating risk to hit their targets. (Mitigating risk can mean a variety of things, from hiring practices, to training to support in the sales cycles, etc.) But when you’re talking about front line (or even second line) managers, it’s a different story.
Too many managers focus on trailing indicators rather than leading indicators—and that’s why they aren’t hitting quota consistently. For example, most fixate on pipeline, which, contrary to popular belief, is a trailing indicator. It only documents what has been generated from the activities the reps have already completed. And by the time you realize the pipeline is drying up, it’s too late to course correct the activities that created the problem in the first place.
So what exactly, then, is a leading indicator? It’s everything before the pipeline that most people never even consider. Managers need to pay attention to the pre-pipeline activity and KPI’s and have optics into that. How many calls are the reps making? How many conversations are they having? How many emails are they sending? What process are they following? In other words, are they putting in the right activity prior to pipeline? The best frontline managers realize that paying attention to the details before pipeline is actually more important than the pipeline itself.
Understanding the metrics that matter will provide visibility into how reps are building pipeline, enabling the ability to better predict outcomes. And topline managers know that when you have a predictable pipeline, the ability to forecast, plan and adjust makes your job a whole lot easier.
Leading indicators are the metrics all managers and executives need. When the leading indicators point towards a full pipeline the focus can shift towards the sales reps’ ability to qualify and close those deals. This results in more sales, more revenue and a very happy CEO.