Monday, February 22, 2010

How Do You Know Your Sales Effectiveness Initiative Is Successful?

To determine the success of a sales effectiveness initiative, you need to define measurable objectives and a baseline where you currently stand relative to these objectives. The most common objective use to measure success is a revenue objective. It can easily be measured. So can the base line easily be established. Yet judging the success of the initiative by the attainment of the revenue objective, can lead to much debate. According to “The Complete Guide to Accelerating Sales Force Performance” by Andris A. Zoltners et al. the degree to which a sales force can influence revenue varies widely. This source also warns about using only one indicator (e.g. revenue per sales person) to measure performance.

Donal Daily in a recent post on the Sales 2.0 Network blog, has suggested to also include 'non revenue objectives' when judging the success of sales effectiveness initiatives. Examples given for such objectives were among others : Better qualification or common sales language across the organization.. The reasons given for this suggestions are very plausible. Revenue is a lagging indicator. Especially when your revenue creation requires long sales cycles, it is too late for corrective actions with short term effect when you notice a deviation from the revenue objective. Tracking the behavior of the sales people through 'non-revenue' objectives along the sales cycle has a bigger chance for corrective actions impacting the outcome on short term..

Yet, I doubt that result oriented sales leaders would buy into this concept. They believe in outcome based sales force control systems. You recognize this type of leader by their actions They try to push sales people to higher performance by aggressive quota setting, lucrative incentives and tough and frequent forecast reviews.

Even with sales leaders seeing the value of the alternative use of behavioral based sales force control systems, I would not recommend the objectives as stated. As the objectives are not measurable, the success of an initiative is solely determined how these leaders judge 'better qualification' and 'common language'. of the cited 'non-revenue' objectives.

What is needed is the transformation of these qualitative objectives into measurable leading indicators that sales leaders can accept as being unambiguous with respect to their impact on productivity. Presenting a logic how these productivity indicators can lead to higher revenue, might further help with their acceptance. To stay with the example of 'a common language'; establishing a common language shortens the time sales managers need for example for deal reviews. Reports adhering to a standard template can be interpreted faster than reports structured as every salespersons feels best. Salespeople also profit from this gain in time. They spend less time in review meetings explaining their deals they are working on to sales management.

How this time (productivity) gain influences revenue is though up to managers and sales people. If managers use the freed up time for coaching and salespeople use the extra time for meaningful interactions with clients, it is plausible that at term this will lead to higher revenue. There are also many studies demonstrating the higher impact on performance of behavioral based sales force control systems compared to outcome based systems. Sales leader adhering to this type of systems should now be able to accept this additional objectives.

For people primarily adhering to outcome based sales force control systems, an extra effort is needed. They will first have to accept results of such studies and include at least some behavioral elements into their control systems before they will be able to better track the success of their sales effectiveness initiatives.

I am curious what practitioners have to say on this topic.

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