August 10 by Bob Marsh
There’s no way to put this gently: Revenue is not a manageable metric.
Some people will battle this notion. Don’t get me wrong – revenue is still the vital measurement for any sales organization. It provides the ultimate measure of success, it’s how salespeople should be paid, and tells you if the market is interested in what you have to offer.
But revenue, like any other business result, is an outcome. And because of that, we cannot directly control it. What we can control are the inputs that result in revenue. For sales organizations, these are the day-to-day activities of sales reps.
This is the premise behind a growing methodology: activity-based selling. This sales management strategy recognizes the cause-and-effect relationship between sales activities and business results, and tells us that sales is a cascading chain of behaviors that result in a desired outcome – closing business. The most modern sales leaders are adopting this approach. Here’s why:
- Improves sales rep decision-making on where to spend their time.
Sales reps are busy. Between prospecting leads, answering emails, drafting proposals, hosting discovery meetings, handling customer support issues and more, it’s easy for them to get lost in the day-to-day shuffle.
Without clear direction, salespeople admittedly get lost in the day-to-day noise and end up not spending their time on the behaviors and activities that matter. Ask any sales rep if there are activities they know they need to be doing more often, but just don’t seem to prioritize and you’ll always get a clear answer. Things like prospecting, having ROI discussions, or securing more face-to-face meetings seem to slip to the wayside. Without some guidance and reminders on where to spend their time, salespeople end up wasting a lot of time on things that won’t result in closing more business – and they know it!
- Provides objective data for consistent coaching sessions.
Too often, sales coaching is only focused on discussing what’s closing this month. But nothing has as much of a direct impact on salespeople’s skills as their direct managers. A special training event might provide them with new information, but sales leaders have the ability to train and reinforce sales skills in real time.
With activity-based selling, you’re equipped with objective data that allows you to engage in precision sales coaching. Instead of guessing where reps get stuck in the sales process, the activity metrics reveal what behaviors they aren’t performing well at or enough of (or both).
- Aligns global sales organization around key initiatives.
Ever feel like your sales teams are working in silos, not collaborating and sharing best practices? There are pockets of success, but do you struggle to spread that across all of your teams? You’re not alone.
Activity-based selling provides a common set of activity metrics and helps you track progress toward your larger sales goals. When a metric falls behind, you can tap into the competitive energy of your sales reps: Rally the team around the slowing metrics with competition or incentives. Recognize collaboration and share best practices throughout the organization.
- Delivers predictable revenue with activity-based forecasts.
Unpredictable sales forecasts are undoubtedly a major challenge for sales leaders, CEOs and investors alike. But activity-based selling provides you with insight into funnel conversion rates. You know how many proposals it takes to get one deal; how many meetings are required for a proposal; how many calls needed for one meeting; and so one.
What that also tells you is how much revenue your sales reps will bring in based on their current activity levels. Let’s say you need 30 proposals this quarter to close 10 deals, but your team sends more than 40 before the quarter ends. You’ll know that you’re on pace to close more than 10 deals and exceed quota. Can you even imagine that? It’s the premise behind the activity-based forecast: a directional sales forecast that ties directly back to the controllable actions by your sales team.
- Allows for real-time monitoring and course-correction.
There’s nothing worse than looking at a sales report at the end of the month and wishing you had known sooner that you weren’t on pace to meet your goals. Because activity-based selling focuses on controllable metrics, you are able to track and measure them in real time. You’ll know how much of each activity your reps need to perform, and therefore you can assess when your pacing behind, so you can course correct in real time.
This is a powerful insight. In enables you to take control and steer your team in the right direction when metrics get off track. Reps spending too much time drafting proposals? Direct their attention to the call metrics that are falling behind pace. Remind them that in order to work with prospects at the bottom of the funnel in future quarters, they must continue to fill it with leads at the top.
A sales activity management system easily automates these processes for you. It’s well worth the investment, as activity-based selling removes the confusion and pressure of a result-oriented sales team and creates an army of precision sellers equipped with the battle plan for success.