Five Sales Performance Metrics Key to Successful Business Growth

Five Sales Performance Metrics Key to Successful Business Growth

by | 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

HR Essentials – 5 Things to Have in Place

HR Essentials – 5 Things to Have in Place

by | 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!

Eliminating HR and Recruitment Bias with AI

Eliminating HR and Recruitment Bias with AI

by | Artificial Intelligence, World of Work

Some of the biggest challenges in the field of recruitment stem from HR (Human Resources) bias, which impact the crucial aspects of diversity, inclusiveness and equality in the world of work. These issues can be hard to resolve since a lot of times certain prejudices or biases are so deep-seated and normalized, that one doesn’t even realize they are being biased. With a judicious use of AI in recruitment and HR, we can hope to create and sustain a more equal and diverse work space. And here is how.

  1. Using AI to root out bias during recruitment

    This by far is one of the best uses of AI. While AI learns the patterns of recruitment by analyzing the past history, it is possible to mould the algorithms in a way so that while playing the necessary filters of finding probable candidates, it doesn’t stick to the past biases in recruitment. In this case, the result is having a much greater chance at a diverse work force, and at a fair recruitment process which keeps in mind only the necessary qualifications which defines the successful candidate. Thus, keeping at bay any and all biases related to gender, caste, class, religion, et al.

  2. Using AI to identify gender biased job descriptions

    Here is something Amanda Bell, Director of Recruiting at Lever, has to say about Gender biased job descriptions:

    “Luckily, this can be pretty easy. Review your job descriptions with the lens of “Who is the audience here?” If your answer is “any qualified candidate, regardless of gender,” you’ve done a good job! It’s not just about the presence of gender-specific pronouns – it’s also about using language that is inclusive of all genders. Stay away from phrases like “kick ass,” “ninja,” and, believe it or not, “brah.” You can also ask a few employees of various genders to read the descriptions and solicit feedback.”

    In fact, this problem is deeper and more pervasive than we think. Even seemingly harmless words have an impact on how gender inclusive the descriptions are. With the help of AI, we can move a step closer to creating gender inclusive job descriptions. This is often the very first step of recruitment. And getting the beginning right, helps ensure the standards of fairness all through the process.

  3. Using AI to see the “invisible bias”

    While bias in recruitment, and the way job descriptions are crafted can be identified to a certain extent, there are multiple other forms of biases which aren’t visible. These are often the more insidious ones. And are also often the mound of biases leading up to the formation of the glass ceiling.

    Turns out, it is very much possible to sniff these biases out with the help of AI. For example, Joonko, a new application powered by AI, acts as a diversity coach. Based on experiential learning of CEO and Co-founder of the product, Ilit Raz, she designed it after becoming aware of the several forms of unconscious biases she as a woman faced in her everyday work life. In contrast to the available AI tools which mostly look at recruitment biases, this tool aims at illuminating unconscious bias in workplace situations where very few people even think or feel it exists.  “We try to catch these ‘micro-events and point them out to managers and workers immediately.”, says the co-founder on what the product aims at.

    This is a beautiful way of blending technology and human understanding to create a truly inclusive and fair workplace.

  4. Using AI to eliminate biases from Performance Management Systems

    It is no secret that performance assessments are often shrouded by conscious and unconscious biases of the individual entrusted with the task. An unfair assessment of an individual’s contribution to the organization definitely impacts the overall work space environment, making it a less happy place for people to thrive and work in. A way of dealing with these biases is by using AI in performance management systems. It can take care of two main things that are often said to influence a manager’s decision making with respect to performance assessment:

    – Regency Effect: i.e., when a manager bases the performance of an individual on a recent event, rather than looking at his/her performance over a period of time, cumulatively.
    – Contrast Effect: i.e., when a manager compares or contrasts an individual’s performance against someone else’s, instead of comparing it to the pre-set standards for the given task role.

While the role of humans in the world of work can never be completely over taken by AI, there are things that AI can help humans do better. With the right balance, and insights, AI powered technology can help us move towards fairer, equal, diverse and happy work spaces.

Key Employee Engagement Strategies for Talent Retention

Key Employee Engagement Strategies for Talent Retention

by | Management, Performance

For any business to be successful, it must have three things: a robust overall strategy, exceptional leaders, and engaged employees. This society has moved from an economy driven by the agricultural and manufacturing industries to a service oriented, personally connected economy.

One hundred years ago, employees were tasked with manual labor and had no vested interest in the business that employed them.

Today, with the demand for highly skilled talent, it is essential for employers and leaders to engage their employees and make them feel as if they are an integral part of the business.

In the past we wrote a blog post on employee engagement which was received with a lot of positive response by our readers – Five Must-Dos to Improve Employee Engagement – Transform the Zombies into Humans. We follow-up, with this guest post which analyzes employee engagement in a more recent context, and does so quite effectively.  John Hawthorne backs his insights with research on the key employee engagement strategies that stay relevant today.

Employee Engagement Most Recent Data

In 2017, Gallup’s State of the Global Workplace report revealed that only 15% of employees worldwide are engaged in their jobs – meaning that they are emotionally invested in committing their time, talent, and energy to adding value to their team and advancing the organization’s initiatives.

This means that the majority of employees show low overall engagement. Workplace productivity was low and employees and organizations are not keeping up with workplace demands fast enough.

More Gallup research shows that employee disengagement costs the United States upwards of $550 billion a year in lost productivity. As employee engagement strategies become more commonplace, there is an amazing opportunity for companies that learn to master the art of engagement.

Jacob Shriar, in a piece on OfficeVibe, tells us that

  • Disengaged employees cost organizations between $450 and $550 billion annually.
  • Highly engaged business units result in 21% greater profitability.
  • Highly engaged business units realize a 41% reduction in absenteeism and a 17% increase in productivity.
  • Highly engaged business units achieve a 10% increase in customer ratings and a 20% increase in sales.
  •  Companies with engaged employees outperform those without by 202%.
  • Customer retention rates are 18% higher on average when employees are highly engaged.

These statistics are just the beginning of why employee engagement is so important.

Why Is Employee Engagement So Important?

The term “engagement” has been used so often and in so many different situations that it’s become hard to define. Many people think it means happiness or satisfaction, but it’s much more than that.

According to Gallup, who has been collecting and measuring employee engagement data for nearly 20 years: “Though there have been some slight ebbs and flows, less than one-third of U.S. employees have been engaged in their jobs and workplaces.”

Imagine if every employee was passionate about seeing the company and its customers succeed. The only true way to ensure that your customers are well taken care of is by taking care of your employees. This is known as the service-profit chain, a concept first introduced by Harvard Business Review in 1998. It’s still as relevant today as it was then.

Profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal, and productive employees. Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers.

The service-profit chain is the flow from the culture you create to the profits you generate and every step in between. The key is to start internally. When you create an environment where employees are happy, productive, autonomous, and passionate about what they do, they’ll provide better service to your customers.

That amazing service will create many loyal customers, leading to sustainable growth and profits. That’s why it’s important for every leader in an organization to understand the service-profit chain and how each step impacts the other.

Key Employee Engagement Strategies

Organizations need to pay attention to specific priorities to engage employees. Employees are more likely to become truly engaged and involved in their work if your workplace provides these factors.

Employee engagement must be a business strategy that focuses on finding engaged employees, then keeping the employee engaged throughout the whole employment relationship. Employee engagement must focus on business results. Employees are most engaged when they are accountable, and can see and measure the outcomes of their performance.

Employee engagement occurs when the goals of the business are aligned with the employee’s goals and how the employee spends his or her time.

The glue that holds the strategic objectives of the employee and the business together is frequent, effective communication that reaches and informs the employee at the level and practice of his or her job.

Engaged employees have the information that they need to understand exactly and precisely how what they do at work every day affects the company’s business goals and priorities. (These goals and measurements relate to the Human Resources department, but every department should have a set of metrics.)

Employee engagement exists when organizations are committed to management and leadership development in performance development plans that are performance-driven and provide clear succession plans.

When businesses actively pursue employee engagement through these factors, employee engagement soars to a ratio of 9:1 employees from 2:1 employees with concurrent improvements in the business success.

Employee Engagement Examples

There are of course many ways to show your employees they are valued, and to keep them focused and engaged on company success. According to Forbes, there are certain items in the benefit package that will help in creating employee engagement:

  • Health Insurance
  • Company Parties (social engagement)
  • Gifts (new babies, appreciation luncheons)

Employees go home to different roles–parent, caregiver to a loved one, a church or civic leader, spouse, bandmate, freelancer, artist, neighbor–and the people they are closest to impact their lives and perspectives about work in meaningful ways. Acknowledging those relationships and showing they are a priority will increase employee engagement.

How to Improve Employee Engagement

In a recent article in Forbes, Brent Gleeson, a former navy seal and successful businessman, gives solid advice on ways to improve employee engagement.

When managers are engaged, their team members can confidently state the following:

  • I know what is expected of me and my work quality.
  • I have the resources and training to thrive in my role.
  • I have the opportunity to do what I do best – every day.
  • I frequently receive recognition, praise and constructive criticism.
  • I trust my manager and believe they have my best interests in mind.
  • My voice is heard and valued.
  • I clearly understand the mission and purpose and how I contribute to each.
  • I have opportunities to learn and grow both personally and professionally.

The steps for improving engagement aren’t complex, they simply must be prioritized. This means engagement must be a core function of the manager’s role. The following steps can help the manager to accomplish this.

Step 1 – Put Everyone in the Right Role

Again, get the right people on the bus and make sure they are in the right roles. This means that all talent acquisition and retention strategies have to be aligned with meeting company goals.

Step 2 – Give Them the Training

No manager or leader can expect to build a culture of trust and accountability — and much less improve engagement —without setting the team up for success. This means providing the proper training and development while removing obstacles.

Step 3 – Task Meaningful Work

Engaged employees are doing meaningful work and have a clear understanding of how they contribute to the company’s mission, purpose and strategic objectives. Again, this is why they first have to be placed in the right role. I’ve made the mistake of hiring great talent just to get them in the door – but didn’t have a clear career path or role for them. If you don’t sort those details out quickly, they will leave.

Step 4 – Check in Often

The days of simply relying on mid-year reviews for providing feedback are long gone. Today’s workforce craves regular feedback — which of course leads to faster course correction and reduces waste. Use both formal and informal check-in strategies — and use them every week.

Step 5 – Frequently Discuss Engagement

Successful managers are transparent in their approach to improving engagement — they talk about it with their teams all the time. They hold “state of engagement” meetings and “engage” everyone in the discussion — and solutions.

Again, these principles are not complex, but must be prioritized. Companies that get this right will drive greater financial returns, surpass their competitors, and easily climb to the top of “the best places to work” lists.

Are Your Employees Engaged?

Employee engagement is critical to the success of any business. When a business has engaged and invested employees, it is in their best interest to protect the productivity and profitability of the business, and the image the business has in the community. Engagement also results in employee retention, which saves the business money in turnover and training. There is no downside to getting your employees engaged and invested in your business.

John Hawthorne is a health nut from Canada with a passion for travel and taking part in humanitarian efforts. His writing not only solves a creative need it has also lead to many new opportunities when traveling abroad. This article was originally published on Floship.com, you can read it here.

Giving Negative Feedback – 5 Methods that Will Help You

Giving Negative Feedback – 5 Methods that Will Help You

by | Management, World of Work

It is always difficult to have a conversation about something someone is not doing well enough, at work. However, without these conversations, and appropriate avenues to facilitate these conversations, getting better would never be an option. Giving Negative Feedback is something that can get uncomfortable for either of the two reasons: 1. not being sensitive enough, 2. for being too sensitive and not putting across your point clearly. However, if you are in the shoes of someone who is expected to help your co-workers grow – by providing them with timely and accurate feedback, you will have to familiarize yourself with the process of delivering feedback. And it won’t always be positive feedback.

Here are 5 methods that will help you deliver negative feedback in a more structured, professional, and hopefully pleasant way:

  1. Take the help of self-assessments

    If you use self-assessments, your job is already half done. Using a pre-made self assessment checklist, and asking your team member to complete it before the feedback meeting helps both of you gain perspective about the current situation. In a lot of ways, it also helps both concerned get on the same page. By taking the help of a self-assessment you help prepare yourself for the meeting, and also give the concerned person an opportunity to rate himself/ herself honestly. During your meeting, this can be used as a yardstick to discuss the feedback you have.

  2. Use their job description as a basis

    Another “tool” apart from the self-assessment checklist that you can use to facilitate the feedback session is the job description of the team member. A job description is an outline of the expected roles and responsibilities of an employee. By using it as a basis of comparison to the actual tasks and objectives being met by the individual, you will have an idea about if he/she is aligned with the job description or has deviated from it. This will also help you point this out to your team member.

  3. Support your feedback with examples

    The basis for your negative feedback would be specific. And it is important to say out loud the specifics of the feedback. In other words, if your feedback comes with an example of a specific situation, bring it up. By doing so, you are able to be clear in your communication and this will also help you tackle the next steps of thinking about a solution to the problem. When you speak in vague terms, finding solutions to problems become difficult. As a result of which the problem may keep occurring.

  4. Speak about strengths

    It is important to support or balance your negative feedback with positive feedback. Remember that the objective of the feedback session is to bring to the notice of the team member what is not working, and to motivate him/ her to do better, and not the contrary. If it were the contrary then this would have been a meeting to discuss the individual’s termination from the organization. Therefore, it is important to also speak about the skills and the strengths of the individual. It is also important to be careful about how you speak. Adopting a tone that is firm, yet kind is the best bet. Do make sure that the session is a dialogue. Listening is as important as speaking!

  5. Remind yourself that this is your job

    No matter how hard it is to carry through this session, you need to because after all, it is your job. Before the session, it is important for you to orient yourself about it so you can be as professional as possible. Remember that it is not a personal reason being discussed, but a professional one. Hence, you must remain objective through out. It is also important to keep in mind that the team member concerned may not view the feedback as objectively as you provide it. In which case, you would have to remind yourself to hold your ground and tell yourself that you are doing your job.

Have you been in a position where you have had to discuss or provide negative feedback to a team member? What worked for you and what didn’t? Hearing from you always motivates us to write better, so do write back!