It’s the first day of the month and the entire sales leadership is looking at the Sales Results for the previous month. What’s the overall team quota attainment? Which segments did better? Which segments grew the fastest?
While these are undoubtedly important metrics to monitor as a company, they are considered Lagging Indicators because they measure sales teams’ performance “after the fact”. They tell you information at the end of the road and there’s nothing you can do about it.
You can’t course-correct at the end, and as a sales manager, you would rather be leading while looking through the windshield and not looking in the rearview mirror. Sadly, many leaders of sales teams do this. They are the ones asking questions like: “can you tell me why you didn’t get to your quota this month?”.
In contrast, high-performance sales teams monitor, manage, and coach, with Leading Indicators – those that help project the end results and enable teams to “take action” if performance is looking off-track. Most sales leaders I admire pay obsessive attention to the inputs of the team and seem to never focus the conversation on quota attainment.
Let’s compare the behavior of Sales Managers focusing on Lagging Indicators vs. those focusing on Leading Indicators:
Lagging Indicator Leaders
- In team meetings, these leaders tend to highlight what the quota is and how the team is tracking against quota, both as a team and as individuals.
- 1:1s focus almost exclusively on pipeline review and reporting on which deals have moved forward and which ones are projected to close this month.
- “Coaching” managers who use this style will discuss what needs to happen to advance the deal to a close. Therefore coaching is focused heavily on negotiation and closing skills.
- Role-playing exercises are usually focused on specific deals that are currently in the pipeline (later deal stages).
- Satisfaction with their individual team members is mostly a reflection of quota attainment. If the quota was achieved, then there’s not a ton to talk about, if the quota was missed, then all the “corrective measures” meetings need to happen.
- They feel less control over outcomes which can result in more micro-management of their reps. They will increasingly join “closing calls” at the end of the month to make sure the rep “doesn’t drop the ball” and to make sure the deal closes since this is the only way they can feel more control on their team achieving sales quota.
- These managers are more stressed and intensively involved at the end of the month or sales period.
Leading Indicator Leaders
- In team meetings, these leaders tend to highlight how the team is tracking in terms of their inputs. At HubSpot, Sales Leaders will address net new opportunity creation per rep, team rankings on the number of activities (calls/emails), meetings, discovery calls completed, and demos delivered. They provide a map to the level of these inputs required for success (e.g. 2x net new opportunities created per rep per day)
- 1:1s focus is on pipeline “creation” – are we still talking about the same 5 deals we spoke about last week? What’s new in the pipeline? How much time are you investing each week in sourcing and prospecting?
- “Coaching” managers who use this style will address time management – is the rep allocating a good balance between advancing deals, closing deals, and creating new deals? While coaching runs the gamut from deal creating to deal closing, most of the emphasis is on better prospecting and qualifying to improve the quantity and quality of deals coming INTO the pipeline.
- Role-playing focuses on Customer Discovery and mapping pain to a solution (earlier deal stages)
- Quota attainment is not the main signal these managers track. When a rep has a great performance in a given month, these managers will look into the strength of the remaining pipeline – is the pipeline for the new month depleted, or has this rep found a consistent way to generate a robust new deal pipeline? If a rep does not get to quota – is it that they need coaching moving deals past the discovery stage (which may be the case) or is it that their pipeline was too weak and they had to chase deals that were never going to close? How can these reps be generating enough pipeline coverage the next month to avoid chasing bad deals?
- Because they focus on controlling the inputs of their sales teams, these managers have more time to spend on coaching and improving their team’s skills and execution and are more trusting of their team’s ability to execute.
- These managers are more stressed and intensively involved at the beginning of the month or sales period.
How to define Leading Metrics for your Sales Teams
By now, you’re probably getting a good sense of the type of manager you feel more comfortable being/working with. If you’re leaning toward the Leading Metrics management style, one of the challenges is figuring out exactly what these input metrics would look like. Does your team need to be creating 2 net new opportunities a day or a week? Should they be prospecting 1 hour a week or 3 hours a day?
One way I’ve found to get to these numbers is to reverse engineer your pipeline. This is harder in the beginning and you’ll have to make some assumptions, but then it becomes easier as you gather more information with each sales cycle.
You basically start at the end with the amount of revenue you want in a sales period (the shorter the period the better). You then work back to the amount of prospecting.
- Monthly Revenue Goal = $50,000
- Average Deal Size = $10,000
- Deal Close Rate = 20% (you may need to make an educated assumption here)
- Lead to Opportunity rate = 10% (you may need to make an educated assumption here)
With these in mind then you have a better idea of the inputs
- Deals Closed target = 5
- Pipeline Coverage (how many deals to close 5) = 25
- Net new deals per business day = 1 (this would be my north star for the team)
- Leads worked per day = 10 (1 in 10 leads end up in an opportunity)
- Prospecting time per day = 2 hours
This is a roadmap I can share with my team. If I have a team of 5 reps then every week I want to see 25 net new deals. If the team is at 10, then that is something we need to address. I’d rather know that on day 9 of the month than at the end of the month.
I can monitor and share reports on team activity both as a way of enabling the competitive spirit in the team, but also as an example of where the highest watermark is. Who on the team is creating more deals per week? Who’s making more calls? Who’s sending more emails? Or the most effective emails (those with the highest meeting booking rate)? Who has the highest lead to opportunity conversion rate?
I strongly believe this leads to a consistently high-performing sales team. I believe it because I’ve been part of a team like this. It became the fastest-growing team in all of HubSpot. You may want to give it a try.
This blog post was contributed by Jose Martins from HubSpot. Introvert Entrepreneur and Engineer. Jose had to really get out of his comfort zone to learn sales and marketing. He claims he does not have a Sales personality AT ALL but has read, studied, and learned on the field for the past 10 years. Consequently, he became a Top 1% sales performer at HubSpot and a Sales and Growth Coach and Mentor for Startups. Jose is a proud father and husband, loves progressive rock, and all sports, especially Soccer and Football (Go Seahawks!)
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