Cracking the Sales Management Code

1. Sales metrics are not created equal: Understand the hierarchy

Activities can be managed—outcomes can't.

The sales metrics hierarchy. Sales metrics fall into three distinct categories: Business Results, Sales Objectives, and Sales Activities. Business Results, such as revenue and profit, are ultimate outcomes that cannot be directly managed. Sales Objectives are intermediate goals that contribute to Business Results. Sales Activities are the day-to-day actions of salespeople that can be directly managed and influence Sales Objectives.

Importance of understanding the hierarchy.

• Allows managers to focus on what they can control
• Helps align daily activities with broader business goals
• Enables more effective sales management and performance improvement

2. Business Results: Measure overall company health

Business Results are the most important numbers on the wall. They are the corporate endgame.

Key Business Result metrics:

• Financial: Revenue, Profit, Market Share
• Satisfaction: Customer and Employee Satisfaction ratings
• Market Share: Percentage of total addressable market captured

Understanding Business Results. These high-level metrics provide a snapshot of the company's overall health and performance. While they cannot be directly managed, they serve as the ultimate guide for setting Sales Objectives and directing Sales Activities. Business Results are typically determined by leadership and communicated to the sales force as targets.

3. Sales Objectives: Set clear goals for your sales force

Sales Objectives are often the missing link between what the leadership team wants and what the sales force does.

Four key Sales Objectives:

1. Market Coverage: Ensure sufficient selling capacity
2. Sales Force Capability: Develop effective salespeople
3. Customer Focus: Target the right customers
4. Product Focus: Sell the right products

Importance of clear Sales Objectives. Well-defined Sales Objectives provide guidance to the sales force on how to achieve Business Results. They help align salespeople's efforts with the company's strategic goals and provide a framework for measuring progress. Sales Objectives should be specific, measurable, and directly linked to desired Business Results.

4. Sales Activities: The only metrics you can directly manage

These five processes are the levers and pulleys that control a sales force.

Five fundamental sales processes:

1. Call Management
2. Opportunity Management
3. Account Management
4. Territory Management
5. Sales Force Enablement

Managing Sales Activities. These processes encompass the day-to-day activities of salespeople that can be directly managed and measured. By implementing and managing these processes effectively, sales leaders can influence Sales Objectives and, ultimately, Business Results. Each process serves a specific purpose and is suited to different selling roles and situations.

5. Align processes with roles for effective sales management

The specific sales processes you need in your sales force are determined by the nature of each individual selling role.

Steps to align processes with roles:

1. Identify distinct selling roles in your organization
2. Determine the key activities for each role
3. Select appropriate sales processes for each role
4. Implement processes with the right level of rigor

Importance of alignment. Different selling roles require different sales processes. Misaligned processes can lead to frustration, low adoption, and ineffective management. By tailoring processes to specific roles, companies can ensure that salespeople are engaged in activities that directly contribute to their success and the achievement of Sales Objectives.

6. Implement the right sales processes for each objective

To achieve certain Sales Objectives, you have to manage certain sales processes.

Process-Objective matrix:

• Market Coverage: Territory Management, Sales Force Enablement
• Sales Force Capability: Call Management, Opportunity Management, Sales Force Enablement
• Customer Focus: Opportunity Management, Account Management, Territory Management, Sales Force Enablement
• Product Focus: Call Management, Opportunity Management, Account Management, Sales Force Enablement

Using the matrix. This "treasure map" helps sales leaders identify which processes to focus on to achieve specific Sales Objectives. By managing the right processes, companies can more effectively drive desired outcomes and improve overall sales performance.

7. Use A-O-R metrics to drive sales performance

Given the ability to influence sales performance, which metrics on the war room wall do you want to change?

A-O-R (Activities-Objectives-Results) framework:

1. Identify desired Business Results
2. Select Sales Objectives that lead to those Results
3. Choose Sales Activities that drive those Objectives

Implementing A-O-R metrics. This approach ensures a clear causal chain from daily activities to ultimate business outcomes. By setting quantitative targets for each level and focusing on managing Activities, sales leaders can more confidently drive towards desired Results. The A-O-R framework provides a structured way to align and manage sales performance across the organization.

8. Manage different sales processes differently

You must manage different sales processes differently.

Process-specific management approaches:

• Call Management: Focus on tactical, call-level planning and execution
• Opportunity Management: Emphasize strategic pursuit of complex deals
• Account Management: Concentrate on long-term customer value maximization
• Territory Management: Prioritize efficient allocation of selling effort

Tailoring management styles. Each sales process requires a different management approach and cadence. Sales managers must be able to shift their focus and style when working with salespeople engaged in different processes. This flexibility ensures that management efforts are aligned with the specific goals and activities of each process.

9. Let go of outdated metrics to maintain focus

Removing metrics from the war room wall is extremely difficult to do.

Benefits of metric pruning:

• Maintains focus on current priorities
• Reduces confusion and conflicting goals
• Increases effectiveness of sales management efforts

Implementing metric pruning. Regularly review and update the metrics displayed in your "war room." As strategies and objectives change, remove outdated metrics to keep the sales force focused on current priorities. This practice ensures that salespeople are not trying to achieve conflicting or irrelevant goals, and helps maintain clarity in sales management efforts.

Last updated: September 28, 2024