Just like any other sales VP, I’m concerned about results, so the sales metric that’s most important to me as a sales leader at a SaaS company is monthly recurring revenue (MRR). I closely track what percentage of quota my reps have achieved, and if we’re up or down on MRR and by how much.
But I’m also concerned with the opposite end -- the input metrics. As the VP of HubSpot’s corporate sales division, I’m dedicated to helping mid-market and enterprise businesses reap the benefits of inbound marketing. However, I know that won’t happen without tracking the mini milestones that dot the way to the bottom line. And this is where many sales leaders fall down in my opinion: They focus solely on results, and totally ignore the inputs that lead to the results.
Our sales process starts with our business development representatives (BDR). Their goal is to generate a set number of exploratory, qualifying calls -- termed inbound marketing assessments (IMA) -- per month to hand off to their sales rep, called an inbound marketing specialist (IMS). At least one third of those meetings should lead to a demo. From there, we expect approximately 25% of the prospects who receive a demo to adopt HubSpot.
If a sales rep can sign a few new average-sized customers per month, they’ll make their quota. If all sales reps meet their quota, MRR grows, and I’m a happy sales VP.
I also focus on pipeline development, which is a function of the BDR and IMS activity mentioned above. Reps try to have 4x their quota in their pipeline at all time. So for a rep with a quarterly quota of $10 MRR, they should be showing $40 of MRR in their quarterly pipeline.
All of those input metrics -- BDR and IMS activity, number of IMAs and demos, and pipeline health -- matter to me almost as much as the ultimate results. After all, the monthly MRR is just the culmination of all the smaller activities and successes along the way.
But I find that measuring input metrics isn’t the standard at sales organizations. Why not?
There are a few reasons. First, sales leaders are so trained to be outcome-focused that it’s hard to remember to track the activities that get you there. In some cases, sales leaders can’t get the input data easily. Some flat out don’t know the key input metrics.
However, the most dangerous reason from my perspective is the tendency for sales teams to rest on their laurels in times of success. When the numbers are strong and sales are great, it seems as if there’s no reason to look into the input metrics. Revenue is up, so who cares about how it got to be there? It’s only in the bad times that sales leaders dig into the deeper data to find the root cause of a negative trend.
This might work for a little while. But if you want to build a scalable organization with sustainable sales performance, you need to track input metrics on a consistent basis -- whether it’s a great month, or a terrible month.
Is tracking input metrics micromanagement?
It might seem like tracking BDR and rep activity on an individual basis is micromanagement. I admit, it’s a fine line. But for me, two important caveats make all the difference.
First, while we give our BDRs and IMSes several activity numbers to hit besides quota, we give them room to be creative and figure out the method that works best for them. Second, we don’t track every metric available -- only a few key data points.
I’ll give you an example to the first point. A BDR could book their IMAs per month by being very good at the calls they make -- carefully personalizing their phone demeanor and researching the prospect extensively. Another could opt for the approach of taking on a larger volume of calls and spending slightly less time up front. As long as each schedules the necessary amount of IMAs at the end of the month, both methods are fine.
But what if they don’t? Another benefit of tracking input metrics on an individual rep basis: It makes it easier to identify development opportunities.
By looking at number of IMAs against number of successful demos, we are able to tell if a rep isn’t qualifying their leads properly. Another rep might have a very high close rate for their demos, but they’re not doing as many as we’d like. Is it because they don’t have enough IMAs lined up by their BDR? By looking at the numbers, we can easily pinpoint the problem.
Outside of coaching, sourcing the root cause of a sales issue is a larger advantage to tracking input metrics. Not getting the results you want? I’d encourage you to get prescriptive and look at the activity that leads to the outcome. Identify the deeper inputs, and monitor them.
I look at input metrics at least once a week, and my sales managers look at metrics every day. Don’t wait for a bad month to diagnose and address the issue. Start monitoring today. Your input and output metrics will be healthier for it.
Originally published Sep 24, 2014 11:00:00 AM, updated September 24 2014