Are you using the 80/20 principle when measuring sales productivity?
I am a numbers gal. When I look at a report or request an online query and can see measurable results, I get a warm and fuzzy feeling. When data is involved in decision making, I feel more confident. But sometimes, even number driven folks like us, have to take a step back and consider activities and qualitative information- and feel just as good.
I was reminded of this important fact when I recently read the thought provoking, entertaining book, "The 4 Hour Workweek: Escape the 9-5, live anywhere and join the new rich" written by Tim Ferris, in 2007 (before the economy tanked). Tim walks us through his personal adventures of success & failure and financial ups & downs- adding his blunt, sometimes hilarious commentary.
One of the things Tom discusses is the 80/20 rule, also called the Pareto principle. The concept, which most of you know, is that 20% of activities drive 80% of your results. In some cases even 10%, drive 90%. (For Tim, if you can achieve 80% of results in 20% of your time, you can use the remaining 80% to focus on what you enjoy.)
Let's apply the 80/20 rule to your sales organization.
- 20% of your team members drive 80% of your top line revenue
- 20% of your customers drive 80% of your profit
- 20% of your sales activities drive 80% of your results
My guess is that most of you agree with these concepts. The 80/20 rule can apply to most situations. Then, why do we ignore this when it comes to measuring sales productivity?
Do More Calls = Higher Quota Achievement?
At one of my prior companies, we had one employee who consistently blew away his sales quota. Did he make the most calls? No. Did he have the highest phone time? No. In fact, he had some of the lowest, measurable productivity stats out there.
When asked about the reasons for his success, this employee shared that he spent a good part of his day completing research, creating his strategy and refining his approach. He also found that starting his contact with a well crafted email, worked better than a telephone call.
Although he was far exceeding his quota, his very low productivity stats, brought down the team average and the Regional Manager was questioned about why the team stats were so low. When upper management heard about this employee, their response was something like "if X employee made even more calls and spent more time on the phone, he would bring in even more sales for the business. That's why we pay him an hourly rate in addition to his bonus. He is a telesales rep- by golly. He should be on the phone!"
Ok.. does this make sense? If this employee begins making calls, just to make calls, he will spend less time on the activities that are currently driving his success. Ultimately, he may drive fewer sales and hurt the business and his own achievement of quota.
Conversely, I have seen many employees with the lowest achievement of quota, have the highest productivity stats. How can this happen? Usually for one of two reasons. The employees are trying hard, but not using the right approach or strategy. Perhaps they need more training or coaching.
The other reason, simply put, is if you ask for stats and reps can control them via a CRM system, you will see stats go up. Numbers like calls and phone time can be manipulated very easily. (I remember one situation where a rep was dialing 1-800 numbers for retail businesses, then waited on hold, just to make her phone time look better. Thank goodness for database analysis and cross-referencing.)
Are All Selling Days Created Equal?
One other point I want to make is.. sales success is not the same by day of week or by hour of day. Every business, depending on their customer base, has more success at certain times and less success at others. You could probably say that 80% of your closed sales, come from 20% of your selling time within a particular week.
For example, if you are targeting IT middle managers, calling them at 4PM on a Friday is very unlikely to yield positive results. Many IT middle managers come in very early and leave before 5PM, especially on Fridays. But, calling them at 7AM on Thursdays may be very fruitful.
With this in mind, are you holding salespeople to the same levels of productivity, for all hours and days of week? Are you asking them to make calls on Friday afternoons just to make your stats look good OR are you investing that time in more fruitful activities, like sales training or team meetings?
And…
The moral of this story, is that anything taken to an extreme can go from good to bad.. asset to liability. Measuring sales productivity is important and expected in any well-run sales organization. But, as leaders, we need to consider the 80/20 principle and add some common sense and flexibility into our measurement processes. All Reps, like all Leaders, do not achieve results the same way.
Rajeev Kumar | Head (EPM) - IT Solution Consultant.
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