Why knowing your numbers helps measure success

Grant Leboff: One of the things that’s really important in sales, is people being able to measure success, and not just in the end result, which of course, you know, about getting the deal, itself. What are the KPI’s that people can use within the sales process?

Phil M Jones: You say, “What are the KPI’s?” There’s thousands that you could reach for, but everybody should have a handful of metrics that they use for themselves, that are remarkably important. Activity always breeds results. I want to start with something at the very top end. Jim Rohn once said, “If you do something often enough, a ratio appears.” What I would look to do, is to work every part of what I call a waterfall, in terms of things working their way down that waterfall. Measure the ratios at every point.

First thing might be something as simple as, how many outbound calls did you make? Then added into the outbound call stats might be, how many inbound inquiries am I getting? How many meetings did I go on? From the meetings I went on, how many of those converted into first transaction?

Too many people get excited about first transaction, thinking they’ve got a customer. We should really be thinking about lifetime value of a customer. Then you want to measure, how many times does that person buy from me in any 12 month cycle? Then you probably want to measure what the average transaction value is, of each of those. Knowing all those base numbers would then be things I would then look to improve upon.

Then we might throw some others in the mix, some fun ones. Things like, what is my average number of referred opportunities from my existing customer base? Do they give me three more people to speak to, one more person to speak to, five more? That might give me a dashboard of maybe 11 to 15 key metrics. I don’t think you can push any more than that. If you’re running a team, you probably then want to expand that out to a point where they’re then reporting these back in to you.

Grant Leboff: What’s the best way, if you’re using these metrics … Let’s say you have got some metrics about calling and ratios to proposals, and those kind of things that you’re talking about. How, then, can someone use those best to start tweaking and improving … There’s one thing, just measuring it. I know it takes me 50 meetings to get the deal, but then how does someone use that to try and improve the process?

Phil M Jones: Firstly, you made a great point there. When you know your numbers, you know what it takes to make a sale. Sometimes that might throw you back some information that scares you a little. You’re like, “Man, I’ve got to make 50 calls to be able to get one sale. I can’t get around to doing that.” You’ve got to find where the maximum return is. I’m a big believer in high payoff activities. Go for the point where you’re going to get the biggest return quickest. As you look at those numbers, that waterfall presents itself.

If you think the first number is outbound activity at 100%, and you’re going to take that down and take a slice out of the pie every way you go down, where do you lose the biggest chunk? For many people, that biggest chunk is lost, say, at the point of closing the transaction.

If you find out closing skills are the challenge, then put your work into understanding, learning some new skills, seeing what you can do to influence that decision in the moment. You really need to look at where the biggest chunk is, and then refine your skills there. Only once you measure it, can you start to improve it. Make sense?

Grant Leboff: Absolutely. The other thing with the numbers, is that you can start to improve prospecting. If you start to see where sales are converting and where they’re not, start to tweak where you start to look. Is that something you preach to people?

Phil M Jones: You’ve hit a great point. A lot of people say, “I went on 100 meetings, and none of them converted.” It will be for one of two reasons. You’re either speaking to the wrong people, or you’re saying the wrong thing. Which one of those two things is it? You can find that out dead quick. Chances are, if you spoke to a hundred people and none of them buy, it’s probably not that you’re saying the wrong thing. It’s probably the wrong people. You might need to change where you’re prospecting, help understand who the people are.

I mention when I talk about target market, there is one criteria that many people miss off their target market description. One of the criteria that must be there, is the ability to pay for your product or service, needs to be in the description. Not just, “Like it,” or, “Interested in it,” or, “Could see benefit in it.” “Can’t afford it.” We could all love to buy a Rolls Royce and drive that on a daily basis, but if you haven’t got the £226,000 burning a hole in your bank account to pay for it, it doesn’t matter how much you like it. Finding that point out is key. Kick that to one side, and then what you can do is, you can work on your numbers with the right kind of people.

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