Peter Drucker has shared many wise business acronyms and “What gets measured, gets managed.” is one of his best. This is especially true for sales organizations and this time of year is a good time to rethink how performance is measured.
We are spending our time here at PipelineDeals working on measuring and managing. Both for our own business as well as designing improvements to the application for 2011 that will help our customers measure their business. Knowing your business and deciding first what to manage then how to measure it is the key. Ignorance is not bliss when it comes to managing your company. Ignorance will ultimately lead to your downfall.
We have found it beneficial to take some time to look at our business from an external point of view. The best route for us, is to take a cold, hard calculating point of view that attacks the ugly lingering problems while not being distracted by the easier, shinier problems.. This should be done more often but for some reason the end of the year lends itself nicely to this task. We highly recommend spending some time during the last few weeks of the year digging into your business.
Here are some tips we have learned that can be used to help you identify what to measure for you business:
1. Conversion Events – These are critical points that each prospective customer must pass through in order to become a full-fledged, paying customer. Examples of conversion events include: moving from a trial account to a paid account, moving from negotiation stage to contract stage, moving from phone/email conversations to an in person meeting,
2. Ratios – Choosing the right ratios will help you gauge whether the business if fundamentally sound or not. Ratios can be misleading too so choose wisely. Examples of ratios include: contacts per order, total number of calls per physical meeting, number of meetings per day, calls placed per day and number of responses per email sent.
3. Progress – Moving towards a goal is important, making sure you are moving to the right goal is more important. And having a goal is only half the battle, the other half is measuring progress. Choose your goals wisely and then track progress daily, weekly or monthly. Many people set goals but fall short on reviewing their progress on a regular basis. This creates the vital feedback loop that will give you a reality check and help you prioritize your time.
Measuring the right aspect of your business also helps troubleshoot. Of course, things do not go according to plan, circumstances change and markets shift. That is why you have a job – if the company or the sales efforts could run on auto-pilot, believe me, it would. The fact is that you will need to troubleshoot, triage and put out fires. Measuring the right metrics will help you get to the problem quickly, analyze the situation and put remedies in place to get back on the path to where you want to go.
Think about what to measure, how to measure and how you will really use the information your metrics give you. Do this and you will be well on your way to a prosperous and productive 2011.
(Photo of Measuring Tape courtesy of Tomasz Sienicki)