Other than revenue, what metrics would you recommend to measure sales?

Great answers already. I'll do my best not to duplicate.

1: Flip your CRM stages to point not at sales activity, but at observable evidence of a buyer moving forwards, and measure progress based on this. But you can't cheat. No tangible evidence, no progress.

2: Number and value of marketing generated opportunities accepted by sales that turn into revenue. I agree that marketing should be rewarded, but not by reducing sales commissions. This should come from the overall reward pot.

3: Deal velocity. Depends on getting (1) right, but tracking the velocity of deals as they move from stage to stage in the buying journey is one of the most powerful leading indicators of future revenue success.

4: Reward your sales people for qualifying OUT - or at least, don't punish them for reducing the apparent value of their pipeline by qualifying out no-hoper opportunities. The real value potential of the pipeline will go up as a result.

5: Yes to referrals that turn into revenue. Or at minimum, that turn into a qualified opportunity, accepted by sales, with some real evidence of buying intent.

Hi Dan

Sales being the face of the business to the customer makes many other impacts especially important to the role besides just revenue. Among them:

1. Referrals. If a customer is willing to recommend your company to a colleague based on their buying experience, that is a strong indicator of their satisfaction and a job done right.

2. Repeat business. When we've provided substantial value, customers will return for more. It's much more cost effective to sell to an existing customer than it is to find new ones.

3. Helpfulness and alignment with other internal groups (not just marketing, but also service, production scheduling, support, etc.) The cost of sales and the success of sales can be dramatically impacted when groups are working toward the same outcomes in an amiable manner. Conversely, infighting and silo mentality can take down a company in a flash.

4. Profitability. Cash flow is important, but without a careful eye on returns, what does it matter? Sales should be run like a business in and of itself, responsible for the bottom line, but closely partnering with the other parts of the business toward common goals.

5. Sustainable growth. Recent bailouts of corporations in the news should serve as vivid reminders that it's not enough to be always looking at this quarter. Sales teams need to build strategies that will provide renewable income for years to come, not just developing get rich quick schemes designed to pump up market valuations and then handing out parachutes.

Sales being compensated solely for revenue attainment doesn't make much sense. Teams should be compensated according to their achievement of all the metrics that make up a solid business plan. Like any other human endeavor, their behavior will largely be a result of how they are incentivized.

Great question!

Hi Dan:

Don is right on about referrals. Since we work with clients to implement our referral program and get referrals, here are the metrics we use. They are all based on my belief that results are great, but we must measure the sales activity that gets those results.If we validate the activity, then the results follow. Here goes:
- Number of people you ask for referrals each week
- Number of referrals received
- Number of referral meetings scheduled
- Number of referral meetings conducted
- Follow-up with Referral Source completed
- Amount of new business closed
- Cost of sales (Should decrease)
- Cross-sell and Up-sell
- Penetration with new products/new markets

I also believe that everyone in a company is part of the sales team--whether they have sales in their title, or not. Therefore, planning a reward and recognition system for referral marketing makes a lot of sense.

Dan: I'm tempted to say "marketing leads converted to sales"---but I'll resist;-)

Revenue is a necessary but troublesome metric. It's value is historical, so from a performance management point of view, it's like driving by looking in the rear view mirror.

I like to look at metrics starting at the individual level, then rolling up through the organization. Within that I look at metrics in four areas:

1. Business management: These can include revenue, growth, profitability, other classic measures.
2. Strategic/customer: These can include product goals, specific market or customer goals. Example might be prodcut mix goals, new customer acquisition, customer retention, share, growth, etc.
3. Operational: These are leading indicators that can tell you whether you are on target for meeting the Strategic and Business Management goals. Here is where many of the metrics you and I have spoken about fall into. They can be as simple as activity goals (calls per day, proposals per month, etc.) They could include pipeleine metrics (win rate, velocity, sales cycle, average transaction value, etc.) These are typically leading indicators, so if you find you are off target, you can take corrective action in time to achieve your business goals.
4. Personal development: Each business professional must seek to continously grow and develop, Managers and individuals should establish personal development goals and metrics that focus on this development--improvint the overall contribution they make to the organization (and their career development).

Within those 4 areas, there should be no more than 2-3 key metrics in each. Each needs to be in place for a period of time (i.e. annually).

And, in case you were going to ask, I think it is critical that across functions (e.g. marketing/sales) there are some shared goals, to help align these functions, reducint the silo's--it's a little off topic, but you and I have had great discussions on this.

It's really a fantastic question Dan! Thanks for posing it.

I like Joanne and John's comments above.

Revenue is not actionable information. You and your team do not have direct control over what customers spend with your company, the customer does.

You should measure and manage the things you CAN control.

Number of prospecting calls, prospects identified, presentations done to qualified prospects, etc.

Leads in, number of leads qualified by sales, etc.

Build fields in your CRM for the sales team to enter the answers to the questions they ask the prospect at each stage in the selling cycle and measure how often they're getting those answers and what percentage are providing the "right" answers.

What a wealth of knowledge in these answers!

Yet when I put myself in the shoes of a sales manager looking for an answer to the original question, Einstein's quote: "Not everything that can be counted counts and not everything that counts can be counted." came to my mind.

Our hypothetical manager still has to:
First understand what counts to measure the performance of his/her sales force?
Second find how what counts and be counted or at least inspected.
Third reduce it to a set of a few coherent parameters to be tracked.

1. What counts depends on the nature and the rhythm of the business.
In transactional business, revenue can be a useful lagging indicator (metric whether goal is met) as well as a leading indicator (metric whether you are on track for reaching your goal.

In complex businesses, revenue with long sales cycles revenue is not a good leading indicator as potential problems are detected too late and there is not sufficient time for corrective action. Revenue might not even be a good lagging indicator. Ever more complex revenue recognition rules blur the direct contribution sales force behavior has on revenue.

2. To coach performance, one must understand what behavior influences indicators we can measure. This behavior cannot always be measured but it can at least be inspected.

Also here the nature and the rhythm of the business determine our possibilities. In a transactional business, activities by the sales force might be a valid metric, whereas in complex business there might not even be a correlation between activity and revenue. Soft factors such as business acumen might be much more pertinent. Business acumen can however not be measured. Behavior indicating business acumen can though at least be inspected. ( e.g. the ability to articulate a customer’s business challenges based on verifiable facts).

3. Tracking too many indicators might blur the essential trends. It also increases the danger, that the set of indicators becomes in-congruent creating difficulties to assign accountability.

Admittedly, I did not give you a fish but maybe some hints how to fish (finding your key indicators in the wealth of information above)

Great to read so many useful comments on what to measure. From working with different sales organizations the main lesson I learned is to keep it simple. Don't over measure. Select only 2 or 3 KPI's that measure the progress on achieving a specific goal. Which KPI are important for you depends on the specific sales situation and what you need to accomplish. I give you a list of different possible KPI's I have been using in the past to give you some ideas and perhaps you like to use a few of these to measure your own sales organization.
Laura

General
• Revenue per sales employee
• New revenue/sales FTE
• Existing revenue/sales FTE
• Sales costs/number of sales FTE
• Sales costs/sales revenue
• % of sales people that would know the company's main objectives for the coming 3 years
• Revenue realized in last year/target revenue last year
• Revenue growth/market growth
Customer
• Cost of making a new customer
• Profit per customer
• % of customers that quit/total customers
• % of complaints/total orders
• % customers that is satisfied with company's performance
• New orders with new customers/total orders
Sales organization/Quality of Sales Force
• Number of customers/number of sales FTE
• Number of prospects/number of sales FTE
• Customers/sales FTE
• Deals won/proposals
• Number of lost orders because of price
• % of customers that stayed with the company for more than 2 years
• Average length of customer relation
• Total sales training hours/sales FTE
• Total coaching hours by management/sales FTE
• Number of sales trainings day per sales employee
• Turnover sales people
• Employee satisfaction of sales people
• % of lost deals
Systems
• Cost per contact method/number f leads per customer contact method (phone, email , visit, IM, social network)
• Variable compensation/total compensation
• Realized variable compensation/variable compensation
• % of sales employees that uses CRM system
• Number of logins to CRM/active users
• Number of active users to CRM/total users
• % of out of date information in CRM
• Accuracy of the force cast
• ROI of systems
Execution
• Time needed to write a proposal
• Time needed to answer to a customer request/complaint
• % of orders that are delivered within the time agreed without errors
• Marketing support costs/customer
• Number of leads/prospects
• Number of leads/proposals

Don & Dave, Great answers. I like the ideas around referral and alignment with internal groups. Of course, I believe in the expression that most sales people do what you pay them to do, not what you want them to do - and coin operated mentality is tough to manage around. Dave - would sales people be willing to share commissions with marketing if marketing was perceived to have done a better job for sales?

Dan McDade
PointClear
@pointclearpd

Dan: The short answer is that sales people never want to share commmissions with anyone. There are a lot of issues at play, independent of the the sharing oc commission.

As a sales person, even a sales manager, I might be tempted to respond, "why should sales allocate some of it's commission money to marketing for doing their job?" Afertall, isn't the role of marketing to help sales and the business? Why do we need to compensate them, particularly out of sales budget for that?

However, at an overall commission planning level, a system that recognizes the role marketing plays can be done in a way that is budget neutral.

Better yet, executive management should think of putting marketing people on some sort of variable, performance related compensation and fund that--again, depending on the design it could be made budget neutral at plan.

Hope this stirs up some discussion!