08 Jun MEASURE What Matters
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You’ve heard it said that sales is a numbers game. And in many respects, that’s true.
You can tie numbers to everything you do as a salesperson: the number of prospecting emails you send and outbound calls you make each day, the number of meetings and business conversations you have each week, the number of proposals you send out each month, and the number of deals you close. But, it is the big number at the end of the month, quarter or year, your sales target, that is the ultimate measure of sales success, and it is usually pretty black and white: either you made the number, or you didn’t.
Sales goal attainment doesn’t start with making your monthly goal, however. Revenue is a lagging indicator of the effort you put forth every month, every week, every day. In order to make goal attainment habitual, measuring your daily and weekly effort, the leading indicators that show the relative progress toward a goal are important measures of future success. When you know where you stand and what you need to do each day to close the gap between where you are and where you want to be, you can focus on developing daily habits to automate the behaviors that lead you closer to your goal.
But, it all starts with knowing what success looks like for you and your business.
In this article, you will get tips for how to:
- Clarify your definition of success
- Define what good looks like for your business
- Explore how to make goal attainment a habit
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The Multiplier Sale© Step 8: MEASURE
You’ve probably heard that what gets measured, gets done. Or, that what gets measured gets managed, or some variation of this statement, falsely attributed to modern business management guru Peter Drucker.
The problem with this statement is that it doesn’t provide any guidance as to what should be measured.
Precisely because what we measure directs where our focus goes, and where focus goes, energy flows – we should be extremely careful about choosing what we measure. Measuring the wrong things results in directing energy toward the wrong outcomes, which can have disastrous consequences not only for business, but for life.
More often than not, what is important to our lives and to our business is difficult to measure. How do you measure purpose, for example? How do you measure happiness or fulfillment?
How do you measure the true impact of your life and work?
“When what is important is difficult to measure, what we measure becomes important.”
What we measure becomes important. Think about that for a moment.
Why is this statement significant?
In the chaos of each day, we often get so caught up in the day-to-day grind that we forget why we do what we do. We forget what caused us to initiate certain projects, take particular actions or spend time on specific activities in the first place. When work becomes about action or activity for its own sake, it loses its meaning.
What is easily measured is in theory easily done. What is truly meaningful can be very difficult to measure, so the challenge is to find meaningful measurements of the elements of our work that advance our purpose, increase our impact and lead to meaningful results.
“Finding the appropriate measurement is (…) not a mathematical exercise. It is a risk-taking judgment.”
– Peter Drucker
Clarify Your Definition of Success
Goal attainment begins with knowing what success looks like for you and your business. When you know what success means, you can set meaningful, incremental goals toward that success, and measure your progress toward those goals.
So, what is success, exactly? And, how can you measure it?
To answer these questions, you must look inward. How you define success for yourself is likely different from how someone else defines success.
What images does the word “success” conjure up in your mind?
Do you focus on success in monetary terms, or in the type of lifestyle you envision for your future? How about relationship or family success? Job or team success? Success for a given project?
How you define your specific vision of success will direct your energy, how you spend your time, and what goals you achieve.
Having a sense of purpose, in other words, being fully aware of the WHY behind what we do, is an important key to lasting fulfillment and joy in our work. This goes beyond financial incentives and even lifestyle. It has to do with knowing that our work matters, that we are significant in some way, and that our lives have meaning.
Beyond the numbers, your WHY is what motivates you to get out of bed and start your work each day. When you know your WHY, you can make a more significant impact, and selling becomes an authentic part of who you are.
- What is truly important about your work?
- Why do you do what you do?
- For you, what is the most meaningful measurement of whether or not you are fulfilling that WHY?
- For your, what is the most meaningful measurement of whether or not you are being successful?
Reflect on these questions. Make them part of your daily practice, ideally spend some time on this every morning before your workday begins.
Define What Good Looks Like
Putting numbers on things does make them easier to measure, which is maybe why sales focuses so much on numbers. And, sales goal attainment is one of those quantifiable domains that does have numbers tied to it, making it relatively easy to measure.
Let’s talk about YOUR numbers.
Know Your Numbers
In order to know if you are on track to make your numbers, it is important to be very clear on exactly what your numbers are. You should be able to recall at any moment what your annual, quarterly, and monthly target is, and know how you are tracking toward those metrics at a given time in the month, quarter, or year.
- What do you need for your business to be solvent (your annual break-even point)?
- What profit margin do you want to operate at?
Determine your annual target by multiplying your break-even with your profit margin percentage, and then break this target down into quarterly and monthly targets.
When you know what your break-even, or threshold number is, and you have identified your target based on your acceptable average profit margin, consider what a good stretch goal would be. If you are on track to meet your target, how can you stretch yourself further, and by how much would you like to exceed your target each month?
Having a way to know off the top of your head exactly where you track for the month, quarter, and year is critical to measuring success by the numbers.
So, let’s say you’ve established your numbers, but where exactly are these numbers going to come from?
Staring at a number and wishing it were real doesn’t make it so. To give you a starting point, break down your book of business into new and existing, and into maintenance and growth:
- What is your existing monthly revenue?
- How much of that existing revenue is in maintenance mode?
- Where is there potential for upside, or growth to existing revenue?
- Where will new business come from?
Think about how these numbers tie back to the WHY, and anchor them to your business purpose. It can also be helpful to think through what impact meeting your goals will have for your life, and how your life will be affected if you don’t meet your targets.
Key Performance Indicators (KPIs)
In most sales organizations, success is measured by the extent to which one meets or exceeds sales targets. There are also many other values that are useful in describing how one is tracking toward those targets. These types of measurable values are often called key performance indicators (KPIs). This term is used and abused a lot, but at their best, KPIs suggest how well a business is meeting its objectives.
KPIs can be described as leading or lagging indicators. Let’s take a look at each in turn:
Leading Indicators (Input)
In the sales context, a leading indicator is something that leads up to a sale. So, not the sales numbers themselves, but the activity or effort put forth that lead to closing sales. By setting goals for leading indicator KPIs with clear measurements, you can get a good sense for how well you are tracking toward the overall sales goal.
Knowing how you are tracking on these leading indicators is an important tool to be able to predict or forecast your sales revenue at some incremental point in the future: this month, next month, 90 days from now, etc.
Examples of leading indicators could be:
- Number of phone calls in a day
- Number of contacts made
- Number of meetings in a week
- Number of proposals submitted in a month
- Size of sales funnel
You could think of leading indicators as the input needed to arrive at specific sales outcomes.
What are the measurable leading indicators that predict sales success in your business?
Lagging Indicators (Output)
A lagging indicator is something that is a result of this activity, such as a closed sale, monthly revenue or closing ratios. Lagging indicators could be, for example:
- Number of signed proposals
- Number and value of new deals closed
- Monthly recurring revenue
You could think of lagging indicators as the output you get as a result of your leading indicators.
What are measurable lagging indicators of sales success in your business?
Make Goal Attainment a Habit
In order to meet and exceed goals, it is important to recognize that the process for achieving them begins with clearly identifying and articulating goals and that this is not where the journey of goal pursuit ends.
Goal setting is not enough!
Pursuing goals is a lot like a road trip. Which means, there is first planning and preparation involved, then comes the stage when you are hitting the road and “getting out of dodge,” and finally, there’s the easy highway driving when you turn on the cruise control and coast. Thinking of it in this way helps us account for the emotional and social factors that drive and perpetuate action toward meeting and exceeding goals.
This road trip has three phases, and motivation is important at each phase throughout the goal pursuit process:
- Plan the trip: Ready, set, go! Identify and articulate your goals. Prepare for HOW you will meet them.
- Hit the road: Driving and striving. Take action toward meeting the goals. Integrate the cognitive, emotional and social aspects of pursuing your goals.
- Activate cruise control: Highway speed. Form habits to automate your behavior and free up energy.
Because the integration or goal striving phase is cognitively costly and requires a lot of energy, it becomes important to automate actions as habits for them to stick. If we can automate behavioral self-control through habits, we are able to free up cognitive and emotional resources for focus in other important areas.
Anatomy of a Habit
What habits will you cultivate to automate success within your business?
Every habit consists of a trigger, a behavior loop, and a reward. Any habit can have many different triggers. For example, brushing your teeth may be triggered by feeling a film on your teeth, finishing breakfast, getting ready to leave the house, or getting into bed. The behavior of brushing your teeth typically follows a similar pattern, and the reward is a tingly, clean feeling in your mouth.
A habit is essentially a pattern: a specific cue triggers a behavior, which yields a reward.
Once a pattern or neuropathway is formed in the brain, it cannot be erased; it can only be overridden with new paths. We can’t always change the cues that trigger a particular behavior. What we have the most control over, are the rewards we assign to that behavior.
How will you implement your new habits?
A great way to plan for HOW to develop new habits, or override old ones, is to set an implementation intention. This is an intention that is pre-planned and written out as an if/then statement. When breaking old habits, it can also be useful to include the default response and replace it with a new action:
- “When A happens, then I will do B”
- “If X happens, instead of Y, I will do Z”
Put simply, this means that in addition to writing down your goal, you also want to plan for specific circumstances that may arise where you might get off track, and how you will respond in order to implement your new behavior.
Approach or Avoidance Motivation?
Recognizing that there are individual differences in how people are motivated, is important. Some individuals are strongly motivated by rewards or the “gain” (positive outcomes) of attaining a goal, while others are more motivated by punishment or the potential of “loss” (negative consequences) if a goal is not achieved. This can be measured via a brief assessment called the BIS-BAS scale.
Hierarchy of Goals
Goals exist in a hierarchy. The insight that goals exist in a hierarchy in the brain means that they operate on different systems, and implies that we are unable to access different levels in the hierarchy at the same time – because the brain can only perform one function effectively at a time. The WHY (motivation) for caring about goals reside higher in the hierarchy, and the HOW (instruction & action) for activating on goals is lower in the hierarchy. The WHY and the HOW use different brain systems, which means that you cannot hold both the WHY and the HOW in your mind simultaneously.
What might some implications of this insight be?
Often, we are just busy figuring out HOW to achieve our goals, we are on the ground in the middle of the action, which makes it difficult or impossible to simultaneously focus on the WHY, the motivation behind achieving those goals. Therefore, it is critical to continually point ourselves back to “why,” the motivation for caring about the goals in the first place.
- WHY – Motivation
- HOW – Action
- WHAT – Goal
This is a perfect opportunity to practice building a habit of starting each day anchoring to your WHY. Before you start each workday, before you get caught up in the fray and busyness of the day, with all the effort that goes into learning and doing the HOW – create some space to reflect on your purpose, your motivation for making progress toward your goals.
This practice will help you prioritize your energy while providing clarity and focus so you can measure what truly matters at the end of your day.
 Berkman & Rock, AIM: An Integrative Model of Goal Pursuit, NeuroLeadership Journal, 2014
Further Reading – if you would like to dig deeper, consider these books:
- Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs by John Doerr
- Mini Habits: Smaller Habits, Bigger Results by Stephen Guise
- The Power of Habit: Why We Do What We Do in Life and Business by Charles Duhigg
This article was originally published on 6/5/20 at https://multipliersale.com/blog/
Join me for a FREE webinar on this topic on Monday 6/15 at 12pm CST