The 2015 Sales Trend 7 that I have identified sees our focus shifting to how we can get closer to the moments of truth and measure sales effectiveness in a complex world, which aren’t captured by KPIs.
In a nutshell, this trend is showing leadership moving from a deficiency orientation (i.e. performance management when things go wrong) to a competency orientation (i.e. coaching people to achieve their best performance). It is important to note that this trend also requires a mindset change amongst the managers involved.
Most companies at some stage have struggled with identifying the most appropriate way of measuring sales success. In more recent times customer satisfaction, customer attrition, repeat business and other factors have been included in sales measurements, and Key Performance Indicators (KPIs) were created.
Ever since sales paradigms such as Solution Selling and Value Based Selling, or segmentation approaches like Strategic / Key Account Management were developed, sales strategists and managers have been eager to find ways to measure and ensure their effectiveness.
The biggest challenge we face today when trying to measure the performance of our sales teams and ensure they are actually implementing real Solution Selling or Key Account Management practices, is the ability to measure the quality rather than just quantity of our sales results.
The advent of KPIs seemed to promise a solution as they focus not only on the quantitative results (number of deals, turnover, profit, etc.) but the actual performance required to get there.
A KPI defines itself, to a large extent, by its name; it is a performance indicator, i.e. the performance of the process it is measuring should be clearly indicated.
However, there is an additional important, yet often overlooked, aspect of a KPI: it is supposed to monitor a continuous or discrete, repeated process and report it without time lag. Thus, the fine print for KPIs should be that they are about monitoring ongoing activities and not just the consequential results of these activities.
In sales this means trying to answer questions such as:
- Does the sales team regularly and accurately identify the needs and priorities of its clients?
- How does the sales team present solutions to its clients?
- How explicit and relevant are the solution recommendations put forward by the sales team?
- How thoroughly does the sales team follow up with prospects and clients to advance and close sales, build relationships, stay in touch?
- How effective are the sales team at executing the overall sales process to delivering viable results?
One of the key goals of identifying and measuring salespeople’s performance levels is to ensure you are able to influence qualitative performance before the resulting measures are taken, when the subsequent opportunity to alter performance and change the course of events is gone. To stretch this thought even further: With KPIs and the myriad of other measurements taken and considered, the challenge still remains to some extent on how to forecast performance results.
Given the inability of current measurement methods to effectively predict performance, the current trend is now shifting away from using just KPIs, metrics and traditional performance “reviews”, and moving closer to the moments of truth, or actual act of performance. If you try to improve performance after an action, you’re too late.
To get closer to these actual performance moments, many organisations have been shifting from reviewing efforts at the end of the year to quarterly, monthly or even weekly reviews. We have observed cases where sales teams had to report at the end of each day; however, the only result of this is adding more load to salespeople’s already busy schedules.
Getting closer to moments of truth
When we say let’s get closer to the ‘moment of truth’ (i.e. the review and improvement of someone’s performance), we are not suggesting you turn the hamster wheel even faster and undertake more frequent reviews. Instead, we suggest that by moving from a review of performance after the event to managing an activity while or even before the event, you will be able to take a lot of the controlling and reporting pressures off your sales team, and better support them to enhance their performance before it happens.
Obviously this means that performance management can’t be done in a tick-the-box fashion at the end of a given period of time. In order to ensure that the agreed performance targets and objectives are in fact the focus of everyone’s day-to-day efforts, management has to be able to continuously observe these things happening whilst they happen!
A manager stating “I told them to…” and later realising “…but they didn’t” has failed. What was he/she doing while the sales team was supposed to perform?
Instead, sales managers are becoming, and need to become, sales coaches for their teams. This in itself is also great for ensuring continuous and practical learning (see: Trend 5 – The New Accountability in Holistic Learning).
The context of effective KPIs, however, adds another purpose to coaching salespeople; it makes it possible on a regular basis to be present during ‘performance’ to observe, assess and help improve it on the go. Coaching salespeople in this fashion adds more meaning to the coaching side of the management function, and reduces the need to evaluate and interpret potentially inappropriate or unhelpful performance figures (which often turns into a guessing game when the figures can’t transparently indicate what the actual performance in a given situation was).
So far, this trend has also shown that this softer approach (i.e. coaching) is less about creating a system of cascading, reviewing and aligning targets and measures, and more (if done right) about developing leadership, inspiring and having conversations that engage people on an emotional level. Leadership, in this sense, creates a vision—it inspires and motivates, but also creates a sense of commitment and accountability. The management role needs to be filled with rigor, alignment and discipline as much as with empathy and the desire to help and support.
However, many organisations committing to this approach very soon reach one remaining limit—time constraints.
Being a leader and performance coach needs extra time, especially in the beginning of such a process. Whilst there are time-saving factors in the long run, the initial time investment can be a deterrent to many.
There is still, of course, one more option for managers, or one more opportunity for them to try and influence key performance – not while it happens, but before.
It is not necessary to sit next to your salespeople to ensure that they are making enough prospecting calls.If planned and prepared properly, there should be time allocated for such activities in the same way that there is time for client meetings. A quick, daily look into the calendars of the sales team helps identify the upcoming activities (or lack thereof). A quick morning huddle or an individual chat (Management by Walking Around) helps ensure all potential hurdles are out of the way, support is given where needed and the direction of activities is reconfirmed and transparent.
Instead ask HOW
The questions we ask should not be “Why did you only get 10 and not 15 leads?” but “How did we get to those 10 leads? What can we learn from that that will help us move on to the next five leads?” It is about management moving from being the (feared) controller to a supporter empowering their sales teams.
Managers who feel threatened by an empowered sales team and/or are fearful of change are unlikely to take up the challenge of this trend. On the other hand, managers who are following this trend clearly show a closer co-operation with their team that includes involving and aligning the sales team with immediate management and business objectives with the sales strategy.
Remember everybody lives by selling something.
Sue Barrett will be speaking at the SmartCompany ‘Growing Your Business Seminar’ August 12th.