Align Your Sales Force and Reach Your Goals
This is the fourth and final installment in a series introducing research from the best-selling book Cracking the Sales Management Code. In our final installment, we explain how thoughtfully selecting performance metrics creates field level alignment with C-suite targets.
In Search of Organizational Alignment
One of the biggest problems we see in many sales forces is a lack of direct linkages between corporate goals, sales strategies, and sales force behaviors. The three are frequently allowed to operate independently with the tacit (and often faulty) assumption that they are all in alignment and working toward a common end. In fact, this absence of ‘organizational alignment’ is a commonly cited as a top concern of senior executives.
We believe that the key to aligning an organization from top to bottom is to align the metrics that each level uses to measure success. We conducted research into how leading companies measure and manage their sales forces which provided us with some fresh insights into how to tackle the challenge of organizational alignment through the use of an integrated set of metrics.
The Vehicle for Alignment: Metrics
As we explained in preceding articles, a key finding of our study was that there are three distinct levels of metrics that can (and should) be used to measure and manage a sales force.
First, there are metrics of Business Results. These measures such as revenue, profitability, market share, or customer satisfaction are viewed at a company level and are used to report the overall health and success of the organization. These metrics are not ‘manageable’ per se, since no individual can directly control them. No matter how many times a CEO instructs a VP of sales to ‘make’ the revenue number, the VP cannot turn around and command the number to change. There are numerous factors that affect overall Business Results, and many of the factors are out of the sales force’s control.
Second, there are metrics of Sales Objectives. These are measures such as customer retention, new product sales, market coverage, opportunity win rates, or sales force turnover that constitute the sales force’s success at achieving specific goals. These metrics are not directly ‘manageable’ either, since you cannot, for instance, command a customer to buy from you. However, these measures do provide guidance for what the sales force should hope to accomplish.
Finally, there are metrics of Sales Activities. These are measures of activity such as the volume of sales calls being made, frequency of account planning, percentage of salespeople using CRM, or amount of training provided to the sales force. These metrics are directly manageable, since front-line sales managers are absolutely able to request more calls, ask for account plans, enforce tool usage, or increase training for their reps.
One of the most important insights from this research is that there are direct cause-and-effect relationships between the levels of metrics. That is, Sales Activities drive Sales Objectives, and Sales Objectives drive Business Results. For instance, if your salespeople are instructed to make more calls (a Sales Activity), they should be able to cover more of a given territory (a Sales Objective). All other things being equal, greater territory coverage should lead to greater market share (a Business Result). There is a clear chain of events from one level to the next, and there must be linkages between the levels to ensure that the activities of the salespeople will ultimately lead to the achievement of overall results.
The Role of Business Planning
To create organizational alignment, this chain of events must be reverse engineered – a task that is best performed during your business planning process. If your strategic goal for the year is to increase market share, then you could set an objective for the sales force to increase its territory coverage. To achieve this objective, you could instruct your salespeople to boost the number of sales calls that they make throughout the year. And, of course, you could use the planning process to set explicit targets for market share, territory coverage, and sales calls in order to measure and manage progress toward those goals.
However, our observation is that many business planning exercises never get to this actionable level of detail. In many companies, the planning process probably never moved beyond the top layer of metrics – Business Results. An effective planning process does not end with the dissection of Business Results. It proceeds to identifying the Sales Objectives that will lead to those desired results. For instance, if you intend to grow your revenues by 10% next year, you should identify how you will achieve that growth. Your new Sales Objective could become to acquire 10% more customers next year. Or sell 10% more products to your existing customers. Whatever your plan of attack, you must put a deliberately conceived one in place.
Once you have identified the Sales Objectives that you want to achieve, you then need to determine what changes in your Sales Activities will lead to the realization of those objectives. For instance, if you decide that your preferred objective for the year is to acquire 10% more customers, then you might need to generate 10% more leads. Or hire 10% more salespeople. Whatever your objectives, you need to make tactical changes in your selling activities, or else you are simply asking for results and hoping for the best.
Implications for Sales Leaders
Organizational alignment is possible, in fact assured, if everyone’s performance metrics are thoughtfully integrated. You accomplish this by starting with your desired Business Results and then identifying the changes in your Sales Objectives and Sales Activities that will ensure those outcomes. By designing a set of interrelated metrics, you can measure success at all levels of your organization and drive the specific behaviors that will lead to overall success.
This year, don’t just assign your quotas and assume they will happen. Instead, provide specific guidance on how to achieve them, then measure and manage progress along the path to success. Only then will you have done your job as a proactive sales leader.