(Photo Credit: Austin Distell)
Set metrics around sales activities you can measure and coach.
“Revenue is the only metric that matters.” Somebody actually wrote that in a recent blog post. If that’s how he manages his team, I’m glad I’m not one of his reps.
Sure, revenue is our goal in sales. Beating our numbers is our passion and getting to Club is our reward. But in terms of sales metrics, revenue is a lagging indicator. We can measure revenue, but we can’t manage it. We can, however, measure and manage the key sales activities and behaviors that drive revenue.
Some execs promote giving reps a sales quota and letting them figure out the activities that will help them meet it. Bad idea! Perhaps that’s why 56.9 percent of salespeople missed quota in 2019, or why seller attrition rose to 18 percent, according to CSO Insights’ World-Class Sales Practices Study.
Not only does this strategy let sales leaders off the hook for coaching and training salespeople—which is their No. 1 job—but it also puts the emphasis on quantity of leads, rather than qualified lead generation. As a result, reps waste time on ineffective cold calling techniques. Worse yet, sales teams are put in a position to compete with each other, when they should be collaborating.
Sales is no longer a lone ranger business. That went out last century.
The Lone Ranger Rides No More
In the not-so-distant past, when salespeople called on accounts, they walked in a client’s front door, and all decisions were made under one roof. Today a system is built in one part of the world, implemented in another, and marketed in another. The selling process has become more complex, and the number of people involved in buying decisions has risen dramatically. To sell in this new environment, we need to understand the needs and wants of people (and buying committees) around the globe.
This requires a shift in metrics and in the seller’s mindset.
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Salespeople of old were mostly lone rangers. They viewed data as power and didn’t share information. They had their zip codes to call on, and they did so alone. Now salespeople often depend on getting relevant client information from colleagues in multiple locations around the globe. This means we must trust our teammates, and they need to trust us. When we share data, account strategies, and best practices, everyone wins bigger—including the client, who gets a better solution.
As one sales executive told me: “If you work as a lone ranger, you might close a million-dollar deal. But if you work as a global team, that could be a 20 million-dollar deal.”
Yet, if sales leaders don’t set clear goals for their teams and create environments where teamwork is rewarded, people will never trust each other, let alone collaborate.
Getting on the Same Page
Once your sales team trusts each other, everyone must understand, live, and breathe your sales strategy. If they don’t agree, don’t hire them in the first place. If people on your current team won’t get with the program, set them free to find a sales organization that’s still stuck in the Wild West with lead generation.
Once everyone is on board with referral selling, set revenue goals for each person. Your veterans expect their goals to increase year-over-year, so there should be no surprises.
Now it’s time to set KPIs for activities and behaviors that drive revenue. The last thing you want is salespeople engaging in mindless activity.
Focus on the Sales Metrics That Matter
Setting the right KPIs is your biggest competitive differentiator. Measure the right sales activities, manage to those activities, and coach your reps on the behaviors that turn those lead generation activities into revenue.
Obviously, what we’re doing isn’t working when reps consistently miss sales quota by more than 50 percent year over year. The 2019 Salesforce State of Sales Report found that sales professionals only spend 34 percent of their time actually selling. The rest of the time, they’re struggling “to keep up with data entry, quote generation, and other tasks that take them away from customers.” Unsurprisingly, 57 said they expected to miss their sales quota last year.
The key to meeting sales goals is to generate more qualified leads—the only leads that really count. The rest just waste salespeople’s time. So how do you fill your sales pipeline with nothing but hot, qualified leads? With a measurable referral strategy.
Referral selling is, hands down, your most effective and efficient prospecting strategy. A referral program addresses the two biggest lead generation challenges that sales organizations face: getting every meeting with the right people at the right level and ensuring qualified leads in the pipe.
How to Set Referral Sales Metrics
Measuring referral activities is simple. Weekly sales metrics for each rep roll up into monthly and quarterly metrics. Measure the number of:
- Referral introductions requested: How many people did you ask for referrals this week? If you don’t ask, you don’t get. (The weekly minimum should be one.)
- Referrals received: How many introductions did you get from the people you asked?
- Meetings scheduled: How many meetings are on your calendar based on referral introductions? This is an important milestone between referrals received and actual meetings.
- Meetings conducted: You did it! You got an introduction to your ideal client. Now you can forecast that deal at a minimum 50 percent close rate.
- Deals closed from referrals: That’s the revenue number you’re looking for. But it only matters if you’ve measured the referral activities to get there.
Coaching to Your Referral Sales Metrics
Setting the right sales metrics is important. So is actually coaching reps based on these activities. Keep your reps accountable and on track by asking specific questions, such as:
- Who are the people you’ll ask for referrals? Get names
- What are the outcomes you expect? Get numbers
- What are your discussion topics? Get these in writing
Before reps meet with referred prospects, provide coaching tips and discuss the following:
- What did you learn about the prospect from your referral source?
- Have you checked out the prospect’s LinkedIn profile? What have you learned?
- What are your other connections to this prospect?
- What interests do you have in common?
- How will you use this information in your meeting with the prospect?
When you measure and coach referral activities and behaviors, you don’t just meet your revenue goals. Your sales process shortens (time is money), your cost of sales decreases, and your competition disappears. Typically deal sizes are larger, and these clients willingly refer you to their networks.
If You Build Referral Sales Metrics, the Revenue Will Come
Revenue isn’t the only metric that matters, but it’s certainly the end goal. To reach it, set sales metrics around activities you can measure and manage. Then adjust your KPIs to match. Want your reps to get more qualified leads? Put down that ice-cold phone. Commit to referral selling as your primary outbound prospecting tool, build skills in referral selling, and coach and reinforce referral activities.
It’s simple, but it’s not easy. However, referral introductions are your biggest competitive differentiation. Isn’t that a journey worth taking?
Want to talk to Joanne about referral best practices? Choose a date and time to schedule a complimentary 30-minute call.
This post was originally published on May 21, 2015 and updated July 9, 2020.