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Leverage Your Leading Indicators
Sales force optimization requires a grasp of what drives revenue.
Posted Nov 25, 2008
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While every sales force is different, there are factors that ring true when trying to understand what is behind the success of your sales organization. When leading indicators are understood, they can often be used to predict and affect outcomes.

There are some obvious analogies to this thought process including predicting the fate of our economy. Indicators such as unemployment benefit claims, building permits, stock prices, an increase in jobless claims, an index of consumer expectations and vendor performance are excellent examples of leading and trailing indicators. The problem in this situation is that the information can be used to predict but not affect the outcome.

A school-grade report is another excellent example. When the final grade is given, it cannot be affected (much like sales results). When several periods are put together, you can predict the year-end grade, but you cannot affect it. However, during the course of the school year, a number of factors make up the final grade including quizzes, projects, attendance, classroom participation, attitude, tardiness, and work ethic. These are leading indicators to the outcome and if understood during the term can be corrected through coaching, tutoring (training), and interaction to have a profound impact on the final grade.

Selling is very much like the above example, when a company fully understands the leading indicators and can draw parallels to the trailing indicators then manage, coach, train, and lead, they can affect the outcome in a positive manner and achieve the results they are seeking.

It is very typical for a company to produce sales reports at the end of the month that illustrate results, often product, profitability or past trends in revenue. Companies must start looking at the leading indicators they can affect, if they truly want to achieve optimum results.

The number of sales calls made, calls by type of customer or prospect, pipeline fluidity, pipeline accuracy, forecast accuracy, number of orders in the pipeline, number of deals pending, compensation plan statistics, product knowledge, selling skills, customer interaction, peer and support involvement, and training are just a sample of the many leading indicators that should be measured, monitored and coached on each and every day.

The more fluid the measurement of the leading indicators, the more often managers can coach on these indicators and the greater the probability of hitting their targets. The process starts with identifying possible indicators that are believed to have a strong link to revenue and group these indicators by category.

From there, the company must prioritize and narrow down the key indicators that if coached on and managed properly will drive the behavior that will drive more revenue. With the proper technology, the data can easily flow to a scorecard where it can be displayed and managed.

Rankings and ratings by leading indicators -- not just the trailing ones -- should be tracked by profile, group, or team to illustrate who is doing the best at which indicators compared to peers. And coaching on the areas that need improvement should happen daily.

With this information, the sales manager has what they need to work with salespeople to coach, train and change behaviors that are impacting the indicators. While it is a training issue for some and a focus issue for others, the opportunity to improve salespeople is now present, action just has to be taken to begin the journey.

Overall, the process to achieve the best results is one that relies on measurement, monitoring and coaching on the indicators that are connected to driving revenue. Once this is accomplished, companies will see a dramatic difference in driving revenue.

About the author
Patrick Stakenas is founder and chief executive officer of ForceLogix, a provider of sales performance management solutions. Stakenas is a frequent guest lecturer on sales performance, CRM, and enterprise technology.

Please note that the Viewpoints listed in CRM magazine and appearing on destinationCRM.com represent the perspective of the authors, and not necessarily those of the magazine or its editors. If you would like to submit a Viewpoint for consideration on a topic related to customer relationship management, please email viewpoints@destinationCRM.com.

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