In The Journey to Sales Transformation, crafty old messenger Benjamin Delaney directs Chief Sales Officer Phillip Evan Hawthorne’s sales transformation journey. Ben reveals truths of becoming a trusted advisor and partner to his customers through observations and stories. In this second of a series of excerpts Ben is discussing formulas to set goals that drive numbers and accurately forecast sales.
“First practice of the year, what do you think Coach does?” Ben asked, pointing his head toward first.
“Probably starts with practice drills, working on fundamentals. Probably batting practice. Let the boys shag fly balls.” Phillip recalled his first practices each season as a kid.
“Nope. Coach doesn’t even have the boys bring their equipment. He sits them down and talks about their individual goals.”
“You know, sales and baseball both have numbers, Phil. To get to the championship, it’s wins and losses. But to get to wins and championships, a variety of numbers come in to play: Batting average, earned run average, on-base percentage, number of stolen bases, errors, and assists. It’s coaching the behavior that causes those numbers to happen, driving some higher and others lower, that produces a winning team.
Phillip tried to mentally translate Ben’s words into business terms as he wrote what he heard. “So how does this relate to our managers, Ben?”
“There is a formula for what you do,” Ben said as he rubbed his hands together as if he were about to grab a bat. “Activity times proficiency equals sales. Remember, sales are output, and therefore impossible to manage, just like it’s impossible for Coach to manage runs. So to be an effective manager and coach, you have to look at the metrics for activity and proficiency and work with both.”
“For activity, you’ve got two: the number of new opportunities and the number of proposals. For proficiency you have three: Closing ratio, average sale value, and proposal ratio.”
“I want you to think about your demand that all of your sales reps keep four times their quota in their sales pipeline,” Ben said. “You see any problems with that?”
“We just figured we close about one out of four deals we propose, so mathematically it made sense,” Phillip said as he leaned back. “Do you see problems with it?”
“Well, if everyone were average and closed exactly one out of four deals, you’d be right on, but look out there on the field. Can Coach expect all his players to finish the season with the same batting average?”
“Nope. Some will have a higher batting average and some lower, just like some of my reps will close a lot higher percentage of their deals and some a lower percentage.” Phillip took a note.
“Now we’re getting to what a good coach does at the beginning of a sales year. They look at each player’s metrics and customizes a plan just for that player. What is their closing ratio now and where does it need to be? Based on their individual skill level, how many new opportunities do they have to uncover? How many new proposals do they have to generate from those opportunities? Some people may need five times their revenue target in proposals, some just three.”
“Based on the metrics, each player’s plan will be a little different. But the plan becomes more than just hitting a final sales number or final score. It’s focused on changing the behaviors that impact activity and proficiency. Make sense?”
“Absolute sense, Ben. The final score is the result of setting goals early and working on the incremental improvements needed to reach them. That’s how a coach wins.”
Phillip added the note “Clearly define goals for activity and proficiency” to his list of revelations.
Excerpt from ‘The Journey to Sales Transformation: 25 AXIOMS for becoming a trusted partner to your customers.’ Available at AMAZON.com.