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Five Sales Performance Metrics Key to Successful Business Growth

Five Sales Performance Metrics Key to Successful Business Growth

by | Jul 13, 2021 | Business, Business Operations, Leadership, Management, Performance, Productivity, World of Work

Every metric has a story to tell. Dig in over a period of time, break apart all that goes into the metric calculation, join the dots and there you have your story. But then you also have to ACT – your success depends on what you do after you figure out the story. What do you need to do more of? What do you need to eliminate? With the budget season in progress, sales performance metrics are on my mind again. In this Accenture analysis of Sales Performance Optimization Study, sponsored with CSO Insights, sales leaders say their top priorities for the past year was increasing sales effectiveness (56 percent), followed by increasing revenues (52 percent) and improving up-selling/cross-selling (39 percent). The Operations team can play a big role in increasing sales effectiveness with their clear understanding of the various moving parts and inner workings that contribute to high sales performance. These insights can help determine which levers (metrics) can actually help improve sales efforts and align the sales organization to the business strategy.

When it comes to sales metrics, one size definitely does not fit all. The key is to select a good mix of lagging and leading indicators – a set that not only helps you to measure results but more importantly, gives you the ability to predict outcomes. Going beyond the standard booking or quota achievement vs. target, here are five other metrics that I believe go a long way in ensuring sales effectiveness:

Sales Performance Metrics #1 – Funnel or Opportunity Pipeline:

In the current quarter, there is not much you can do to increase sales radically but you can still implement steps to make the sales grow for the rest of the year if you know where to focus efforts. This metric helps determine the nature of funnel and sales expected in future quarters/months. Organize and record each opportunity the sales team is prospecting and assign them a status such as “qualified” or “suspect” or “proposal” along with an estimated value associated with each of them. Assign probability percentage to each status based on your past performance at each stage. The sales people can then prioritize their time according to the probability of a win (status) and the impact of a win (estimated value). This metric is a dynamic metric and will keep changing as new opportunities come in or old opportunities move out as delayed or lost. The value of sale multiplied by the status percentage gives estimated total sales that you can expect at any period in the future provided the opportunities and stages of each opportunity are diligently tracked and recorded.

Sales Performance Metrics #2 – Sales Mix:

Based on the sales strategy of the year, one can come up with different mixes or ratios that need to be tracked as metrics for the year. This is essentially categorizing your funnel into different fields – say by nature (new, renewals or farming), by market segment (products, services, maintenance), by demographics or geography (Americas, Europe, Rest of World), by channel (direct, indirect). The ratios are arrived at by dividing the mix value by total funnel value. This gives a view on how far your strategy is being implemented at the ground level or if there is a possibility of good returns on investment made in any particular area. The sales mix ratios help zoom in on decision areas and decision types and can change from time to time based on the granularity of information available. Again, here is where the operations team can play a big role in ensuring that data strategy, quality and integrity is maintained in all systems – and garbage in-garbage out decision making is avoided.

Sales Performance Metrics #3 – Cost of Sales to Revenue Ratio:

This is a metric that used wisely and measured as a trend over time can show the overall efficiency of the sales team by segment, market or any other growth area that is in the strategy plan. The calculation should be based on the total costs for the selling efforts of each area of business. Total Sales Costs includes salaries, commissions and expenses for sales management, sales people and sales support. Divided by the revenue in the same period from the area of business, you can arrive at the ratio. I like this metric better than sales productivity (Revenue by number of sales people) as, in a global organization, salaries vary across regions, so does the revenues based on the nature of the business area. Measured over a period of time, it can give useful insights into where sales investments in terms of people is needed to get higher revenues, how long it takes for additional sales headcount to generate revenues and other such trends.

Sales Performance Metrics #4 – Conversion Rates and Ratios:

Conversion rates are very useful in identifying sales methodology or process issues, including poor proposal preparation, inaccurate forecasting or funnel categorization efforts, insufficient research into customer buying behaviors, core strength and weakness of sales persons. Conversion rates need to be measured at various steps of the sales process – the most common one is the win ratio –what percentage of qualified opportunities get closed as won. Other useful rates could be the percentage of deals that get lost after responding to proposals, percentage of qualified opportunities that show no movement over a long period of time, percentage of opportunities that are lost without any reason for loss – to pin point where the improvement is needed in the process and is useful in the qualification and prioritization of opportunities.

Sales Performance Metrics #5 – Gross Margin % by Sales Person:

This metric is a bit controversial as it is not generally used to measure performance of the sales team nor used in sales incentive plans. The general idea is that sales team is responsible for getting in the bookings and revenue and the rest of the organization has to ensure that margins are made. I am of the view that unless we track and reward sales people based on not only the volume of the bookings but also the quality of bookings, the organization cannot achieve its margin mandate. Discounting practices, pricing, “value” selling, terms and conditions on scope, timelines, milestones all affect gross margins and sales team has the highest influence with the customer to ensure favourable terms in these areas. So why not measure not only the actual gross margins of revenue by sales person but also future margins based on the funnel details? This will help the entire organization to plan and also help the sales teams to make the “right” (read profitable) sales.

“Gut feel” is all good but you also need the right data and indicators to validate your gut feel. On the other hand, no sales leader will want to go overboard on metrics and measurements that put additional load on the bandwidth of their teams taking time away from “selling” to filling in all sorts of data requirements. So, it is important to choose the right set and number of metrics to help focus strategy and efforts based on not only past performance but also through a rationalized view into the future to enable course corrections as necessary for the success of the business before it is too late.

So what is your story? What sales performance metrics do you think are must have leading indicators to improve forecasting accuracy? What are some of the more creative sales metrics that you have seen ? I would love to hear back and learn from you.

Pic courtesy: http://www.flickr.com/photos/ericparker/1537862310

Five Key Characteristics of Good Project Governance: Towards Better Decision Making

Five Key Characteristics of Good Project Governance: Towards Better Decision Making

by | Jul 8, 2021 | Business, Business Operations, Leadership, Management, Performance, Productivity, World of Work

Effective project governance is in demand now more than ever before. According to studies, more than 80% of investors now are willing to pay a share price premium for well-governed organizations. Why? Because Governance addresses the needs to establish structure, hierarchy, sponsorship, ownership, accountability and communication to support enhanced consistency in execution, ownership and delivery. When governance is working correctly, decision-making is no longer the stalling point and the organization performs at an optimal level.

Decisions are the coin of the realm in business. Every success, every mishap, every opportunity seized or missed stems from a decision someone made or failed to make. Yet, in many firms, decisions routinely stall inside the organization, hurting the entire company’s performance. The culprit? Ambiguity over who’s accountable for the decisions. (Harvard Business Review by Rogers and Blenko, 2006)

There are multiple definitions available for ‘Governance’:

  • UNESCAP defines ‘Good Governance’ as the ‘Process of decision-making‘ and ‘Process by which decisions are implemented (or not implemented)’.
  • As per Turner (2006), governance of a project involves a set of relationships between the project’s management, its sponsor (or executive board), its owner, and other stakeholders. Project Governance provides the structure through which the objectives of the project are set, and the means of attaining those objectives and monitoring performance are determined.

Very generic definitions? Let us then go through some more details of Governance concept to understand it well. There are 3 levels of ‘Governance’ in any organization:

a)     Executive layer: This layer is considered as the highest level of Governance addressing the ownership, accountability and strategic alignment of initiatives with the organizational goals and identifies the corporate governance.

b)     Context/Execution layer: This layer sets up the context in which project is being executed and addresses two main components: (i) Establishing right infrastructure of program and portfolio management to link projects to corporate strategy, which ensures the right projects are executed. (ii) To make sure that organization has the capability to deliver the projects successfully so that projects are done right.

This layer mainly identifies the project governance and includes the decision and analysis boards, which take adjustment and corrections from Executive layer and understand the needs for adjustment and correction from the Delivery layer. This layer also takes into consideration partners, vendors and third-party participants in your programs and projects.

c)     Delivery/Individual project layer: This is the lowest working layer where set project objectives are actually executed and attained. Resources at this level are the daily work efforts owners. At this level, program and project management office (PMO) are responsible for the collection and accumulation of the data that support performance reporting. It is critical to keep a daily understanding of decisions, risks, issues and activities that will ultimately impact the delivery of initiative’s outcome. The main stakeholders at this level are Project managers, Technical architects/Engineers and PMO resources.

This three-layered structure, enables linking Project Governance to Corporate Governance and delivery capability. In a way Project governance is the bridging mechanism between corporate governance and project management.

So, how do you ensure that you have an appropriate project governance model and it is good enough per above definitions? Here are the key governance characteristics, identified by United Nations ESCAP, for achieving good governance:

Project Governance Characteristic #1: Sponsorship and Accountability

Recent research has shown that project failure is often not directly attributable to the performance of project managers and project teams. Sometimes, project failure is caused by contextual factors, such as the breakdown of sponsor governance and support.  Project sponsor holds a critical position of power being the Governor who owns the business case and provides a link between project and organization’s management, leading ultimately to the Executive Board.

Weak sponsorship not only in terms of resources but also in providing clear and timely direction, investing required time to the projects they sponsor and appropriate project management experience to have good understanding of their own role, are the common problems seen in sponsor governance failures. Your project/initiative should have a solid buy-in from the sponsor (can be executive management) and should be aligned to the organizational goals to make it a success.

Clear definition of roles and responsibility brings accountability. Who is accountable to who varies, depending on whether the decisions or actions are taken internal or external to function/organization.  In general each defined role is accountable to those who will be affected by its decisions or actions.

Project Governance Characteristic #2: Transparent with well-defined communication channels

Transparency means the decisions taken and the enforcement done is in an open and easily understood way. It means that information is freely available and directly accessible to those who will be affected by such decisions and their enforcement. It also means that enough information is provided and that it is provided in clear and concise forms and  through the right medium of communication.

Accountability (Characteristic #1) cannot be enforced without transparency.

Communication is the vehicle that powers the entire governance model. Establishing structured communications will maintain linkages throughout the three levels of governance and assure that the organizational strategy, mission, vision, and desired outcomes are maintained and aligned with the execution. This alignment can provide assurance to the organization, knowing that the outcomes of the performing initiatives are meeting its goals, as the predefined process provides the proper oversight to the responsible people. Well defined PMO (Project management office) reporting process to communicate on the initiative performance across three layers of governance plays a key role here.

Project Governance Characteristic #3: Responsive, Effective and Efficient

Good governance requires that institutions and processes try to serve all stakeholders within a reasonable timeframe and produce results that meet the needs of stakeholders while making best use of resources at their disposal i.e. decision making processes, to be supported by timely, reliable and relevant information. The requirement for timely information indicates that the reporting effort should be minimized. And reliability of information should be ensured by exposing correct current project status. Efficient project management and PMO processes are very significant to maintain the integrity of the information used to keep Project dashboards up-to-date for keeping stakeholders informed about the progress, metrics, performance, change requests and results of the project/initiative.

Project Governance Characteristic #4: Participatory, Equitable and Inclusive

Participation is a key to good governance and as such needs to be communicated and organized. At project level governance, main participants can be the Sponsor, Middle management, PMO, Project manager, Third party vendors, Partners and Customer. Ensure that all the participants feel that they have a stake in the decisions and do not feel excluded from decisions taken. Since there are several actors and as many view points, good Governance requires mediation of the different interests to reach a broad consensus. Communication of the consensus reached, to all stake holders, should be done in transparent and timely way. In general for project governance, your PMO is a crucial body for defining and managing project processes to deliver the business case outcome, defining how the project will be monitored and controlled and in keeping stakeholders involved as well as informed.

Project Governance Characteristics #5: Follow a rule of law.

During the decision-making process, law of land should never be ignored and to ensure that, good Governance requires fair legal frameworks that are enforced impartially. This is where a good understanding of contracts and agreements with customers becomes important. Accessibility to these and project terms and conditions need to be in place along with well-defined guidelines for dos and don’ts.  All decisions also need to be made considering the mission, vision and values of the organization so that the spirit in those words is reflected in all the action on the ground.

With knowledge of these characteristics, it is clear that governance is an ideal which is difficult to achieve in totality; however, actions must be taken to work towards this ideal with the aim of making it a reality because as Napoleon Bonaparte said – Nothing is more difficult, and therefore precious, than being able to decide.

So, review your current project management governance model, see if these characteristics are well-built in and if there is room for improvement. I hope that these characteristics can serve as guidelines for you to make your project a model for Good Governance.

What are your experiences with project management governance and what challenges have you faced in good governance model establishment? Please share with us so that we can learn more from your experiences.

References:

http://www.unescap.org

Eamonn V. Kelly(2010) , “ The principles of effective project governance” retrieved from http://www.pmi.org

Picture Courtesy: http://dilbert.com/strips/comic/2009-09-06/

Business Operations Performance Challenges – Five Barriers to Operational Excellence

Business Operations Performance Challenges – Five Barriers to Operational Excellence

by | Mar 8, 2021 | Business, Business Operations, Leadership, Management, Performance, Productivity

~A company can seize extra-ordinary opportunities only if it is very good at the ordinary operations. – Marcel Telles~

Top-line (Revenue) and bottom-line (Profit) growth are the two priorities that consistently show up in all reports on 2012 business trends. So, how do you ensure that your profits are growing while staying focused on achieving revenue growth? This is where excellence in Business Operations  becomes critical. Operational Excellence is a philosophy of leadership, teamwork and problem solving resulting in continuous improvement throughout the organization by focusing on the needs of the customer, empowering employees, and optimizing existing activities in the process (From Wiki). When people, processes and systems in a business are operating at 100% efficiency and productivity, excellence becomes a given and business goals and priorities no longer remain a wish-list.

In an ideal world, this should be an easy to achieve state – after all why would anyone not want their organization to succeed or why would systems and process not work at 100% efficiency?   I have written about how Business Operations can drive strategy to implementation in earlier posts. Today’s post is focused on the barriers within the organization that limit companies from achieving operational excellence:

Barrier # 1 – Organizational Silos (or Lack of Collaboration): Continuous improvement can only occur and be sustainable if there is a well-coordinated exercise that combines discrete steps into a combined effort. This is very difficult to do if each function in an organization acts independently and does not take into account how and where other functions can contribute to their improvement plans. Duplicate efforts, battles for credit and “left hand does not know what right hand is doing” scenarios become common-place leading to confusion and counterproductive results. If only everyone could sit together and collaborate to build and act on one plan that has a common goal and clear accountability for the steps necessary to achieve that, operational strategies would be so much easier to execute.

Barrier # 2 – Lack of Granular Information: As Sir Arthur C, Clarke said, it is vital to remember that information — in the sense of raw data — is not knowledge, that knowledge is not wisdom, and that wisdom is not foresight. But information is the first essential step to all of these. Financial systems crunch revenues and costs into categories that work well for financial reporting but are not granular enough for effective operations management. Not knowing what you don’t know is a big barrier to do any kind of realistic performance management. Multiple data sources and non-transparency in the sharing of information lead to conflicting information and thus to incorrect planning.  A year-long data and knowledge management strategy is a must for the successful creation of any plan that depends on trends and analysis.

“Few, if any, forces in human affairs are as powerful as shared vision. – Peter Senge”

Barrier #3 – Not enough Senior Management Commitment and Buy –In: This is one area that needs the full support of senior management in terms of consistency in direction setting and the will to enforce the much needed discipline. The functions are usually not well-aligned to the overall business goals – for example, sales runs after revenue growth and does not care about profitable growth, finance pushes for bottom-line  at the cost of top line improvement, delivery gives meeting milestones priority over costs. The message from the powers above on the business priorities needs to be loud and clear and consistent throughout the organization to create a culture where responsibility for performance is pervasive, accountable, and aligned.

Barrier #4 – Poor Planning for Success: Flawed processes for the basic building blocks of planning, budgeting and forecasting throws the entire year out of balance. Too often, these processes are executed in a top-down manner with no tying-in of the strategic goals to the execution steps. People lose focus and direction when they can’t envisage exactly how they are contributing to the high level goals. Whether it be an annual or a quarterly exercise, clear guidelines for planning and execution of the plans goes a long way to ensure that you retain sufficient control over where and how operations needs to focus on during the period to meet the business goals.

Barrier #5 – Outdated Systems and Technology: Legacy performance management systems and spreadsheet-based processes bog down managers in endless detail and eat up large amounts of their time trying to shuffle between systems and sheets and integrate the output of multiple systems. They spend 80% of time getting the systems to work for them and 20% of time on actually executing on the information (Pareto at work again). This is a huge pain point, and one that champions of business performance management (BPM) initiatives often target first. Getting your technology updated to best support your business objectives is a good investment and worth every penny in the long run – as it frees up your resources to spend more time on analysis and execution.

That said, these barriers are not ones that cannot be overcome with a little bit of focus and a lot of effort. With the right tools in place supported by smart people, realistic planning, and the desire to catalyze positive change across the organization, it is indeed possible to make significant improvements to accelerate the journey towards operational excellence.

I would love to hear back from you on your experiences with performance initiatives? What worked and what did not? What were the barriers that you faced in implementing operational strategies?

Deep Work to the Rescue

Deep Work to the Rescue

by | May 8, 2018 | Productivity, World of Work

Focus and concentration are probably the two most scarce resources in the world of work. Well, the good news is, while they might be scarce resources, they are not in short supply. Because how we harness them depends entirely on us. If you are someone who works in a very distracting environment, or someone who is prone to distractions fairly often, or just someone who wants to achieve the most from every working day – the ‘deep work’ technique is something you must give a shot.

Simply put, and like the name suggests, deep work is when you delve into your work with utmost focus and concentration, and get things done. Fast. Sounds like a dream? Even I thought as much until I tried it out myself. Here are some easy action steps for you to start incorporating bits of deep work into your daily work routine, until it becomes a habit you can’t do without!

  1. Planning

    To get more done, the most done, the first step is to know what you have to do. That is, to plan your work well, and plan it well in advance. A lot of people believe that this is a waste of time, however, it is the very opposite of that. When you plan your work well, you know exactly what your deliverables and deadlines are. There is no way you are going to waste time thinking about what you have to do next, or feel intimidated about how much you have to do. Having a plan on paper, even if it is just a few bullets, will do the magic. Planning the week in advance is a great idea since it gives a good overview of what your week looks like and you can prepare and take stock accordingly.

  2. Doing one thing at a time

    Once you have a plan, you need to get to the next step, that is – to do. And whoever said multi-tasking is the way to go, couldn’t have been more mistaken. When you multi-task, you are doing the very opposite of deep work. Your focus is fragmented because you are doing too many things at the same time, in the bargain you don’t really get much done. Before you begin work, spend a few minutes reviewing your plan for the day, and tackle your tasks – one at a time.

  3. Schedule “deep work” slots

    We live in a world where connectivity is a must. A lot of people advocate turning off all devices and switching off the internet to get into the deep work mode. However, for some of us, this may not be a practical option since our work might be dependent on being connected. There is a work around for this. Use the first two or three hours of your day as “deep work” slots, during which you turn off your notifications and your phone. And also – like anyone who is good at what they do will tell you, don’t get to the emails first thing in the morning. The first few hours in the morning after you wake up is when your mind is at its peak. So make sure you make the most of it!

  4. A strict “no social media” rule

    Whether or not you are working in a deep work slot, for consistent deep work, make it a point to not use social media during your work hours. You can start with going a week without using any social media at all, and then use it only for a few minutes during lunch, or breaks. The social media and screen addiction has an extremely detrimental impact on our productivity. Stepping away from our phones and apps, and turning all our focus to the task in front of us is the simplest mantra to being super productive!

  5. Remembering to shut down appropriately

    How you sign off from work does have an impact on your over all work life. When you shut down at work, make sure you leave everything that belongs to your work place at your desk. Don’t carry work home. Or for that matter, even feelings from work home. Treat your time after work as sacred and do whatever makes you happy so you feel recharged for the next day. Remember that tomorrow is a brand new day and you’ve got to be in your most mindful state of being to make the most of the day!

    Have your stories of productivity, deep work, or just about anything related to the world of work to share with us? Do write to us and we’d be happy to feature them!

HR Essentials – 5 Things to Have in Place

HR Essentials – 5 Things to Have in Place

by | May 4, 2018 | Management, World of Work

An HR department is indispensable to an organisation – regardless of how big or small the organisation is. While the overall nature of the role and responsibilities of an HR team remains the same across organisations, the finer details depend on the organisational principles. Aspects such as recruitment, training, professional development, employee relations, compensation and benefits, and labor law compliance form the core of an HR body. How efficient the HR team is has a direct influence on the efficiency and success of your overall organizational goals.The reason being, an HR department works closely with the employees who in turn are the lifeblood of any organization.

Regardless of what the details are of how your HR department functions, having these five things in place improves the efficiency of your HR department in a significant manner.

  1. Keeping Pace with New Technologies

    Constantly revising your HR strategies based on the latest technologies sounds tedious, however it is the very opposite of that. Keeping pace with the new technologies enables you to find more efficient ways which help you do what you do better, and faster. For example, using Artificial Intelligence for the initial process of screening potential candidates will save you a lot of time, as against screening all applications manually. Investing in new technology helps your HR staff become more productive and also gives them the time to focus on more important tasks.

  2. Integrating Online Systems

    Instead of having several independent applications to manage various tasks, it is much more efficient to integrate it all into one place. For example, a separate system for payroll management, another for employee review, or time management – managing these independently takes up much more time. By investing a little bit in a customized software, you will increase the efficiency of your tasks related to staff management and internal communication. This makes transacting every day business smooth.

  3. Having a Brand Profile for Recruitment

    The HR department plays a key role in the recruitment processes of any organization. While the individual departments will focus more on the skill set of the potential candidates, it is up to the HR department to source candidates whose ethos and principles match those of the organization. This is important in creating the kind of work culture you aspire to have in your organization. And towards this end, it is important to have a brand profile based on the guiding principles and goals of the organization.

  4. Having a thorough and fair performance review system

    In order to help your employees stay motivated, inspired and productive, you have to invest time in developing a thorough and fair performance review system. The only way to help your team do their best is to apprise them of their performance on a regular basis. Having a fair system of performance review is as important as having a system in the first place. Creating a space which encourages dialogue is an important aspect.

  5. Paying attention to the finer details

    It is always the finer details that make all the difference to the work environment of an organization. Taking a deep dive into the existing HR structure and changing things for the better is the best thing you can do for your organization. For example, do you still have outdated HR policies like a no reference policy, or the bell curve performance review policy, or an insensitive bereavement pay policy?  Have a look at the five outdated HR policies that need to go. Are your employees protected against sexual harassment? Do you have a POSH committee in place? How gender sensitive is your organization? These are all things that an HR department needs to address. And these are the details that set an organization apart from the rest.

Have more things to add to this list? Share with us! The best part of our day is definitely reading what you write to us!