Critical Sales Performance Indicators or Metrics

The Situation

A medium-sized technology training company business owner was getting ready to retire and hand over to the sons. The market was good. For the last two and a half years, the company had been cleaning everything up and repackaging itself to ensure that the exit strategy worked. Its growth and market positions were right where it wanted them to be. Then the company’s revenues started to slip jeopardising the exit strategy and retirement.

Analysis

The company had a four-month sales cycle due to the way it acquired its clients. The company, however, was looking only at traditional sales performance indicators – i.e., deals booked and what the  “training attendees.” The problem that the company didn’t recognize was that a lot of time and energy had been taken away from the normal routine of running a business. In addition, they were not looking at their early sales performance indicators, which would had identified a decline in sales early enough to take corrective action with little or no negative consequences.3161

Changes Made

Unfortunately, the MD had asked Sales Partners for only a little consulting in his early exit strategy preparation and had not used us on an ongoing basis. At the early stage, I had helped him to define some early sales performance indicators. But the MD had a sales Manager who chose to ignore the advice, and the MD failed to hold the sales Manager accountable. If he had, the MD would have spotted the problem months in advance!

The Result

The company’s revenues dropped significantly, which made retirement impossible and the retirement holiday never happened. Instead, the company spent another year working with Sales Partners to establish and implement sales performance indicators, undergo sales training and review the sales personnel. After this the Business Owner was able to retire, take his extended holiday and be certain that the sons would continue the company so that he would have a pension.

The Common Mistake

The biggest mistake is not defining and paying attention to your early sales performance indicators or metrics. To help illustrate this, think of a dashboard in an airplane cockpit. The pilot in the cockpit must always look at all the different gauges and make constant adjustments to reach the airplane’s destination. If your company has a six-month sales cycle and you follow the traditional sales performance indicators, you won’t know you have a  problem for four months, and then it will take another six months to ramp back up. That is like waiting for your car to run out of gas before doing anything about it. If you do what I suggest, your sales and cockpit gauges will always tell you where you are!

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