While baseball’s sea change happened almost 15 years ago, sales managers are just starting to catch up. According to a 2015 study from The Bridge Group, only 66% of reps in a given group achieve quota. Clearly, treating sales organizations like black boxes has not been an effective sales management strategy. As sales managers, we need to guide our reps to success by providing a plan to achieve quota, and that plan should use data and clearly defined sales processes.
That’s right, I’m talking about activity-based selling. This methodology is based on the premise that sales is the result of a cascading set of activities. Activity-based selling enables you to better manage sales pipelines, which research from Vantage Point Performance shows is correlated with higher company growth rates.
One big caveat: An activity-based selling model does not equate more volume with better results. The idea is to understand how much effort you’re currently putting in to achieve a given set of results, then find areas to remove inefficiencies and improve performance.
Results-Based Sales Management Is Old School
Business results like sales, profit, market share, and revenue are out of our immediate control. If we could actively determine the amount of sales coming in each quarter, then we’d all predictably blast through our sales quota every single quarter.
But we can’t -- business results because are outcomes and are very much influenced by the customer. They occur as culminations of our daily inputs into the sales process. What we can manage are the daily activities of our sales reps. Leading indicators that a deal will close include VP-level conversations, ROI discussions, proposals sent, and so on.
Day-to-day activities are what influence business results. If revenue is our runs batted in (RBI), then activities are our on-base percentage (OBP). To be modern sales leaders, we must be like Billy Beane and switch our focus from commonly used metrics to the numbers that actually lead to sales -- activities.
Here’s an example of what the monthly activity metrics for an inside sales rep might look like:
1 deal per month
4 proposals per month
16 meetings per month
24 conversations per month
2) Calculate conversion rates between sales funnel stages
Now you can uncover the average conversion rates for your sales process by using the composite data from all of your sales reps. Let’s say our example below comes from a team of 200 sales reps. The activities for the entire organization might look like this:
167 deals per month
667 proposals per month
2,668 meetings per month
5,340 calls per month
To calculate conversion rates, divide the resulting activities by the activities that precede them, then multiply by 100.
By knowing your conversion rates, you can create an activity-based sales forecast that ties directly back to the controllable actions by your sales team.
3) Remedy bottlenecks
With real data on your team’s performance at hand, you can identify where you can most effectively improve sales performance.
In the example above, only 25% of the proposals sent by reps turn into closed deals. A sales leader can raise that conversion rate by coaching reps around writing proposals or improving the document generation process. If an individual sales rep’s conversion rates are way below the team average, sales leaders can have other sales reps with high conversion rates act as peer mentors.
You can also provide sales reps with personal scorecards to track their own performance, as studies have found that people who set and regularly update goals are much more likely to achieve them.
By using data to identify, analyze and improve the day-to-day activities of your team, you’ll undoubtedly create a team of top performers. Curious what kind of return you could get from a Moneyball approach with sales activity management? Check out this ROI calculator.
Originally published Nov 3, 2016 7:30:00 AM, updated July 28 2017