B2B Moneyball – Sales Productivity MetricsFeb 03, 2022
With its extended season and its fundamental "One-on-One Matchups" game structure, Major League Baseball has long been the most advanced team sport for metrics optimizing player performance, roster composition, and in-game tactics and strategies. The purpose of this paper is to apply the power of individual metrics to the Business-to-business (B2B) sales world – metrics driving individual seller behaviors.
Baseball uses a staggering number of statistics – a potential rabbit hole of information. Let's take pitchers as an example. If you asked Major League Baseball managers about managing their pitching staff, they would tell you they have individual performance metrics on all their pitchers. If we tiptoe into this topic, you will soon hear things like 'ERA.' I get a headache just thinking about the definition of ERA, but I did look it up. (# of earned runs they have allowed divided by # of innings pitched multiplied by 9).
They also track run prevention metrics for all their pitchers – how many innings they can go with only giving up three earned runs. They have statistics for how their pitchers fare against individual opposing hitters as well.
We are not suggesting that B2B sales managers get anywhere near using the level of metrics and statistics used in baseball. Still, we believe the best way to guide salespeople to achieve their full potential is by individual (not group) productivity metrics. Ideally, sales managers should use 'custom' metrics to manage each seller to help them consciously leverage their strengths and overcome their weaknesses.
Philosophically, I want to make an important point. Learn from your "Eagles," but do not try to over-manage them. Your Eagles are your top 20%. They are your most valuable selling resource. The vast majority of Eagles do not want to be 'managed.' Most Eagles will opt for the choice of having you leave them alone unless they ask for your help. Also, be very clear with them that they help you decide how you will 'manage' them. If they have sales management aspirations, you can offer them the opportunity to mentor new reps. Let your newly hired sales reps serve as apprentices for your Eagles. Sales productivity metrics are also a fabulous tool for teaching and helping new promoted sales managers learn to manage and motivate their journeymen sellers.
Again, we want to individually use our best Eagle metrics for use in managing our Journeymen. Do not impose metrics on your Eagle sellers without their expressed written permission.
Identify your Eagles
The first step is to learn the metrics that best identify your 'Eagles.' Your Eagles are the top 20%, who bring in 80% of your revenue. Most Eagles are intuitively competent. Once you identify and codify the best practices of your Eagles, you can choose 'B2B Moneyball Metrics" to shape, influence, and optimize the behavior of your 'Journeymen.'
Step one is a ranking report on all sellers in your organization who have been on quota for the past twelve months. Sort this report from who sold the most to who sold the least – best to worst. Next, count down the top twenty percent of your sellers and draw a horizontal line. Your Eagles are above this line. Now calculate the percentage of your revenue generated by your Eagles. (The odds are ALL your Eagles attained their quota for the past year.) Next, compute the ratio of Journeymen sellers below the line who achieved their targets versus those who didn't.
Learn from your Eagles
All Eagles are not created equally. We recommend you learn as much as you can about your Eagles before you decide to adopt any new sales productivity success metrics. Compare your Eagles to your Journeymen in each of your identified metrics. Metrics for managing B2B Hunters will be different from metrics for managing B2B Farmers. Your business's particulars and personal management style will dictate which of the metrics below you will decide to implement. You might also discover some exciting metrics that are not on the list below.
Amount needed in their pipeline to meet a specific revenue goal
The ultimate individual sales metric – a calculation. Divide the percentage of 'qualified' deals (forecasted deals) each of your sellers was able to close the previous year. For example, if a seller closed 78% of her forecasted deals last year, and her quota is $1M, to set the proper current year goal, divide her quota by her close rate of 78%, and her current year personal pipeline goal becomes $1.28M. The higher the close rate, the lower the total pipeline goal necessary for the following year.
Average Eagle deal size
This one may or may not be relevant in your selling world. You might find an extensive range of deal sizes among your Eagles. Some will be high volume, small deal size; some will be elephant hunters. The very best have a mix of big & small.
Average Eagle sales cycle length
Again, expect a range, even among your Eagles. Sales cycle length variables include the complexity of assigned products, team selling, team buying, size of deals, market segments, etc. The length of the sales cycle can be a crucial metric to manage your Journeymen. I have encountered too many Journeyman sellers over the years that were very good at losing slowly. Let your Eagles define your ideal sale cycle length for your business. This standard will allow your first-line sales managers to help your Journeymen 'pull the plug' on low probability deals. Journeymen sellers typically hate prospecting and know that they will have to increase their prospecting activity if they pull out of a deal. Most Journeymen will need their manager's 'help' pulling out of low-probability deals.
If you use metrics to help you pull out of low probability deals, many of your pre-sales support resources will thank you. Nothing kills the morale of a pre-sales engineer faster than having to support a weak salesperson on a low probability deal!
Average Eagle win rate
In addition to calculating win rates by forecasting (in)accuracy, I like to track the ratio of proposals to contracts for each of my sellers. I have known many Eagle sellers over the years where this ratio is close to 1:1. Great salespeople don't do proposals unless they genuinely believe they will win the business. Proposals don't sell; salespeople sell. Proposals provide "column Fodder" for your competition.
Actual Eagle "cost of sales"
By cost of sales, I mean selling costs – Include transportation, food, entertainment, and lodging and the big one – the money you spend per deal for pre-sales technical support. We encourage you to track engineer/application support costs per closed deal. Then, compare the selling costs
of your Eagles to that of your Journeymen. If you have the guts, start tracking the cost of resources on deals that did not close. Be prepared to lose your appetite for a couple of days.
Cost of an empty territory
Although it is an unpleasant topic, metrics can help you make the 'keep or let go' decision on a sales rep. If your sales rep is not performing, it is not just your sales revenue goal in jeopardy. Your brand, your local company reputation are also at risk. How many sales calls were made leaving potential buyers underwhelmed by the person you sent to represent your organization? Decisions about people's lives are incredibly emotional and painful. Sometimes some logic can help us decide to do the best thing.
Eagle conversion rate at each stage in your pipeline
I am a fan of buyer-oriented pipeline milestones, but whatever your pipeline milestones are, again, don't be surprised to see significant differences in stage/step conversion rates between your Eagles and your Journeymen.
The ratio of demos to contracts
Don't be surprised to find that your Eagles also have a superior ratio of proof sessions per contract. Your Eagles will not bring in sales engineering/support resources until they have documented pain and buying visions for each key player on the buying committee. Less talented sellers typically overuse expensive pre-sales resources to compensate for their lack of customer solution expertise.
Historic time from date of hire to 'customer expertise.'
This metric is tricky. Many companies track the time from date of hire to first 'solo' sale. I prefer to track time from date of hire to customer expertise. Customer expertise is when your new sellers can diagnose a buyer's 'pain' with a bias toward the capabilities of your product offering and then help their buyers visualize how they would use your offering to improve their job performance. Sellers demonstrate their customer expertise in their written correspondence with their buyers. Correspondence documenting specific buyer pain(s) with the desired enablement being particular problems to be solved, goals to be achieved, and ideally, goals of money to be saved and made. This metric gets dramatically impacted by the way you choose to train and onboard your new sellers.
The average number of Eagle first calls
This metric demonstrates how good your sellers are at finding qualified suspects. Qualified Suspects are potential buyers who should be looking at your offerings.
(The primary two reasons your potential buyers are not looking are ignorance and rationalization.) This number will be significantly enhanced if your CRO and CMO have agreed on the definition of a 'Qualified' lead and your CMO has taught your intelligent website to qualify new potential buyers.
The ratio of first sales calls to second calls
This metric demonstrates the ability of your sellers to connect and build trust emotionally. Buying is an emotional decision supported by facts. A critical public display of buyer trust is sharing their pain with your seller. People don't share problems with people they do not trust. Most buyers will not schedule a second call with sellers who lack situational fluency and fail to stimulate their peer curiosity and peer envy.
Systems improve performance
An Information Technology industry mantra is that systems improve performance. So, make individual sales metrics part of a system that can help you institutionalize profit-increasing policies and best practices!
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