Management guru Peter Drucker said, “What gets measured, gets managed.” Telephone sales business-to-business can be measured in many ways, and the successful manager crafts a dashboard of metrics which are the best indicators.
The first set of measurements are activities. These are the measurable parts of the job sales reps do every day. Examples include: the number of dials and the minutes of talk time. The second set of measurements are results. Examples include: sales closed and leads generated. In many business-to-business sales roles, results are a lagging indicator. Activities happen first, and results happen after a sales cycle. In my experience, many sales cycles in business-to-business may last around sixty days. In other words, from the time the sales rep first contacts the customer until the deal closes is about two months.
If today’s activities are poor, it is likely results will be unsatisfactory in the future. If sales cycles aren’t started today, they won’t be there to close down the road. By watching activities daily, the sales manager can avoid a costly future downturn.
Which activities and results should be monitored? It all depends on your business model. First, calculate your allowable cost-of-sales. This is what you can spend on the phone sales effort per sale generated or leads produced or whatever the results you require. Next, work backward. What is the sales cycle? For example, a telephone sales conversation, a webinar demonstration, a proposal and close – probably 3 steps in this example. Most reps can make about 60 dials a day, and usually the connect rate is 20%, so the typical rep calling business-to-business may talk to 12 people a day. Next, what is the attrition rate during the sales cycle? Say with 100 initial prospecting conversations, 20 folks say yes to the webinar. And out of 20 folks who go through the webinar, 8 will ask for a proposal. And say out of 8 proposals you’ll close 2.
Lots of math. But what does it mean? For one sale, the rep needs to have 50 prospecting conversations and 14 within the sales cycle for a total of 64 conversations. At 12 per day, the sales rep should close ideally about 3.75 sales a month. But this is not an ideal world – customers will miss the webinar and need to re-schedule; the rep will call with the proposal and the customer will not be able to take the call. The prospect may want to buy but needs to check with a manager. A beginning estimate would be 3 sales a month. Do three sales a month meet the cost-of-sales requirements? If not, can marketing generate webinar leads directly avoiding the cold calling, or maybe half?
In this example, the manager would probably want to measure dials, talk time (to make sure the rep was having real conversations), webinars held, proposals generated and of course sales. The sales funnel would also be tracked as customers move from prospect to webinar to proposal to close. Are some reps better at different stages at moving customers through? If so, coaching may help bring up laggards at each step of the sales cycle.
What gets measured, gets managed.