Are You Measuring Activity Or Productivity?

Can you easily answer these 3 questions?

• Is this glass half empty or half full?

• What came first – the chicken or the egg? 

• What’s more important when managing a sales organization – quality or quantity?

Me neither. The best answer to question 3 is “both.” But you knew that. What you may not know is how to measure both. We all know measurement is important. In my 20 years of experience of working in, leading, training and consulting sales organizations, most of them do a good job of measuring results – revenue. But if your company sells solutions that can be complex or has a sales cycle longer than 2 weeks, how do you know if your reps are on track for good results? If you focus on how many meetings or calls they make per week, you and your rep might get blindsided at the end of the quarter.

Activity is Easy to Fake

Can a rep be successful if he doesn’t see or talk to customers? No. Reps have to pick up the phone, set meetings and have a high level of activity. However, if all that that activity does not result in finding, closing or at least moving opportunities forward, that activity is not very productive.

I work with a client that is very focused on “banging the phone.” They set a clear expectation of 100 outbound dials per day for their inside sales team. Every morning, the call report is circulated among managers. If the rep didn’t make 100 calls, they will know about it right away. This activity measurement helps ensure that the reps are at the desk and make the dials. Yes, they regularly find a few opportunities with the luck of timing and lots of calls. But other things happen that would make the VP of Sales cringe.

I was listening to a cold call a rep made to the CIO of a large university. There was a good conversation and some potential needs that represented a significant sales opportunity for later in the year. After about 10 minutes, the rep started to abruptly wrap up the call and told the prospect that he’d send him an e-mail and follow up in a few months. In our coaching session, I asked the rep why he wrapped up the call before he really understood the customer and was able to set a next step. “Because I needed to get off the phone so I can hit my 100 calls,” he replied. Another rep told me he “makes a lot of calls between 11:30 and 12:00 because nobody answers their phone right before lunch. I can make 30 calls in that half hour.”

Although I’m talking about specific reps, these are not isolated stories. They might be hitting their 100 calls, but they are missing the opportunity to be a more effective sales rep focused on prospecting and finding new business.

What Does a Good Week Look Like?

The real answer to the quality or quantity question is to measure productivity.

Some weeks, the rep may have a lot of productive sales activity: a few presentations to prepare for; a couple of large proposals to write; a flight and overnight trip to the HQ of a large customer. These take time. If they take the time to adequately prepare for these important activities, they probably won’t have time to hit their required number of meetings for this week. But that’s OK. Other weeks, the rep might not have anything scheduled. So they have the time to “bang the phone,” send some prospecting e-mails, or go on a bunch of cold calls. This is when activity counts. Which week is better?

Both weeks represent good, productive weeks for the sales person in helping him or her reach their quota at the end of the quarter. But if you set a goal for a consistent activity level each week, these weeks might look very different on paper. The week with only a few, high-level, strategic and lots of time-consuming activities might reflect poorly on the rep’s scorecard. Worse, they may not take the time they really need to be effective because they are worried about keeping their activity high.

Put it Into Practice

To make the shift from measuring activity to productivity, you need to follow these 3 steps. 

• Determine the 3-5 key steps in your sales process. In other words, what are specific events that need to happen to close a sale? For example, contact the customer, have a Discovery meeting, do a web presentation, have an on-site presentation with the decision-maker, complete an assessment, have the customer do a 30-day evaluation, etc.

• Perform a sales analysis. From historical experience with your company, determine the relative value of each of these steps. An analysis of sales data might tell you that a rep needs to make 100 contacts to make one sale. The same analysis might tell you that when a customer takes delivery of one of your products for a 30-day evaluation, 85% of them buy. So, 1 evaluation is worth 85 contacts. Do this for each of these 3-5 key steps.

• Implement a points system. From this example, a contact is worth 1 “point” and an evaluation is worth 85 “points.” Do some math around their revenue targets and average sale to determine how many contacts, Discovery meetings, presentations, and evaluations reps need to do each quarter, month, or week. (By the way, if you as a sales manager can’t figure this out, how do you expect each rep to know?) Set a weekly points goal. If 100 points is a good week, it’s not important if that means 100 contacts or 1 evaluation or some combination of all of the above.

You are now giving your reps a clear, simple way to know if they are on track or not. You are teaching them how to be productive. You are not micromanaging. You are not forcing them to artificially inflate the activities. Instead, they are focused on doing what is necessary to complete high-value activities. And, if history repeats, they will exceed their sales goals.

Try it. You will be amazed at how simple and effective this change can be.

PS – The glass is ALWAYS half full.