Dan Perry is a Principal at Sales Benchmark Index.
More
than 40% of all Sales Managers don’t make their yearly quota. Their bosses’ first thought is to fire
those sales managers because “Who needs a Sales Manager if they can’t make
their number?”
How
are you measuring your sales managers?
Of course quota attainment is critical, but is it only that?
In fact, the biggest single mistake Sales VPs make is to just look at
quota attainment.
Imagine
if you were one of these idiots:
- Walt Disney was fired while he was a reporter at a Kansas City newspaper. They said that Disney “lacked imagination and had no good
ideas.”
- Michael
Bloomberg
missed his quarterly number and was terminated. His former manager said
the current New York City Mayor “lacked leadership.”
- After an
unsuccessful product launch, Lee Iacocca was sacked at
Ford. Henry Ford Jr. rationalized his firing by saying “You are too edgy
for the car business.” Iacocca went on to found Chrysler.
- Both Arthur Blank and Bernie Marcus were relieved
of their positions at a home improvement chain when they missing their
sales numbers. “They can’t sell,” said the owner. The two went on to found
Home Depot.
- Mark Cuban was once a
sales rep at a computer store. When he failed to open the store on time
because he was upselling a customer, Cuban was let go for being “lazy,”
according to his former manager.
These
were shortsighted decisions based on subjective perceptions of what defined
lazy, incompetent, and poor leadership.
When
it comes to evaluating your sales managers in your talent management
program,
consider metrics other than quota attainment. We recommend considering 5-7 additional metrics. This will
allow an objective view of overall performance. Additionally, it allows you to fairly gauge
future performance. We’ve put together some popular not quota-based metrics
below.
Popular
Non-Sales Quota Metrics:
- Turnover: The #1 reason employees
leave is their boss, but how do we measure that? We found that looking at
the following questions helped to determine turnover impact: What is the
total turnover for their team this year? And how many have voluntarily
turned vs. involuntary? Are you losing strong performers due to a poor
sales manager? The lack of
great coaching and development is the number one reason sales
managers lose top performers.
- Lost Selling
time (a.k.a: Open Selling Weeks): You can’t make your quota if you
have more than 6 lost selling weeks in a quarter? If you do, then you have
a problem. The number of selling weeks has a direct reflection whether
your team hits their quota.
- Ramp to
Productivity: Ramp
Productivity
starts when your sales reps receive their offer letter to when they hit ramped productivity level – and the
time that it takes for them to hit their ramp quota is also an important
factor to look at. Are you aware of your “ramp to productivity” or “ramp
failure” rates? Looking at your ramp
to productivity and sales cycle
length will help you better identify the times to hire. You can’t sit
and wait to ‘see’ if the Sales Manager will make it. Time is money –
especially in the sales cycle. If your sales managers can’t ramp new
hires, this will have a direct negative impact on future performance.
- Sales Team Quota
Gap:
Are the majority of your sales people making their numbers or is it one superstar
saving the day? This is a tell-tale sign of a root problem. Just don’t
look at the numbers, see where the numbers are weighted.
- Historical
Performance:
A history of hitting one’s quota is critical. One or two quarters missed could
be just be outliers, especially with factors that are out of their
control. Inconsistency though, usually signifies deeper problems.
- Percentage of
Sales Team Career Advancement: How many sales reps on the team were promoted to other
positions? And those in the past 18 months? Coaching and developing are critical components of any
sales manager. Are your sales
managers developing people?
- Forecast
Accuracy: Submitting accurate and consistent
forecasts are telling. Do
your sales managers submit these types of forecasts? They do if they have a command
over their business.
The
important factor here is to measure with non-quota metrics and compare
them to quota attainment using our Sales Manager Score Grid. You can see an
example below. This tool allows a Sales VP to evaluate their sales staff both
quantitatively and qualitatively using a weighted formula based on your set objectives.
You
can use different metrics in your equation
tied directly into your sales and company strategy. If developing people is important, use the metric mentioned
above. Replace it with another
metric if people development is not important as something else.
Utilize
more than quota attainment when evaluating Sales Managers. Remember that your
best Sales Managers may actually be the ones who don’t make their quota on a
consistent basis.
