My colleague, Stephen DiFranco, shared a perspective that resonated with me. It was his perspective on how the car dashboard is an analogy for measuring the performance and health of a sales organization. Applying the dashboard analogy to sales, there are many indicators and instruments to examine. Let’s focus on three common ones that lend themselves to B2B sales including the:
Odometer = Sales Productivity
The car odometer measures the distance traveled. In a way, this is what has been achieved or produced. Through a sales lens, productivity is measured by revenue, contract value and other similar financial measures. Unfortunately, it cannot be the only measure used as it is a lagging metric. Plus, it helps to explain what but not why.
For example, if your productivity increases by 20%, you may not know if the growth has come from headcount, winning more deals, larger deal sizes, etc. It’s a necessary descriptive metric, but great sales leaders look at other data points as well.
Tachometer = Sales Efficiency
The car tachometer shows the working speed of an engine. It’s a signal of effort or energy exhausted. Sales efficiency is measured in terms of coverage ratios, seller capacity and costs of sales metrics. Typically, as efficiency improves so do things like sustainability and margin.
Returning to the example of a 20% productivity increase, if your efficiency metrics are static or improving, sales leaders should feel relatively good about being able to maintain that level of performance – i.e., the health of the organization is stable. As productivity and efficiency improve, the sales organization’s health is growing strongly.
Speedometer = Sales Effectiveness
The speedometer is perhaps the most well-known gauge of a car. It displays the current speed of travel. Similar to the tachometer, it’s an instant measure of real-time events. It’s similar to the tachometer in that it’s a different indicator of health that helps predict future performance. Sales effectiveness measures vary from deal stage velocity to onboarding times. The faster deals move through the pipeline the better, assuming deal sizes and win-rates remain the same. In this period of the Great Resignation, onboarding sellers is another example of an effectiveness measure that sales leaders must be tracking.
To help predict future productivity, effectiveness helps reveal whether sales targets are attainable with the existing headcount. As effectiveness declines, with all other health and performance metrics remaining the same, growth must come from additional headcount or price increases.
As a bonus car gauge, I’d keep an eye on the gas gauge. This applies to both sales talent and demand generation. You need deals coming into the top of the funnel and sellers to work those opportunities. It’s hard to maintain success without a full-funnel of deals and full-roster of talented sellers.
As with all operational and performance metrics, sales leaders must leverage a basket of measures to ensure they track productivity, efficiency and effectiveness. Equally, if you are someone producing metrics, take a look at a recent blog called 4 Tips To Help Stakeholders Consume Sales Analytics.