Revenue, number of total sales, and number of sales to new customers are the sales metrics that managers and executives typically track. They are focused on the final result of the salesperson’s efforts. However, applying Lean to sales will show that they are missing opportunities and their sales teams may be spending time with prospects that will never close.
Without looking at the whole sales process and tracking metrics at each phase, they may find themselves reacting to a crisis. The competition may take a significantly larger market share, or competition may be far along the sales cycle with a prime prospect. In addition, they may have invested time and money in both the sales team and in prospects that will not buy. These situations impact the bottom line and6 the attitude of the sales representative. The revenue or the number of closed deals tells management what has happened but those metrics do not predict what will happen. Nor will those metrics help a manager to find a root cause of lack of sales or revenue. That is why it is important to gather the right metrics at each phase of the sales process. Notice I said the right metric. Gathering too many metrics can frustrate salespeople and cause them to lose focus on the ultimate goal: a sale.
Metrics and Fixing Problems
Gathering the right metrics can improve your revenue, ensure you are applying the right sales skills and tactics at the right time and you are effectively moving valid prospects through the sales cycle. Applying Lean will allow you to map the sales process and set gates and activity checklists for each phase. A review of the status of each prospect before moving through a gate will ensure you are spending time with a valid prospect that is moving toward a purchase decision.
Remember that before you can apply a solution that fixes the problem, you have to locate the real problem. Many managers think that mandating a CRM process will solve their problems and ensure increased revenue. However, a CRM is only as good as the information you input and it focuses only on sales activities., Also most CRM packages are generic when delivered. They must be customized to your industry and company to track the right elements and to provide valuable insight.
How to Begin
To begin, you need a clearly documented and communicated sales process that is adhered to by everyone on the team. A CRM will provide helpful information but everyone must consistently input valid information. Once these are in place, applying Lean and the right sales metrics can help you identify where in the sales process you have a problem or if the problem lies elsewhere. It will also help the sales team to use the tools and processes to fix the problems and celebrate the resulting successes
The problem could lie anywhere in the end-to-end process. Only with data and facts can you analyze the cause and effect of each activity. With this information, you can see if an activity contributes to sales success, causes problems, or influences the customer not to make a purchase.
To get the salespeople engaged in the Lean or Lean or Continuous Improvement process, you must make the process easy and show them how it can help them make more sales easier and faster. It may also confirm their hypothesis that all or some of the problem lies elsewhere. If that is the case, you can take action to resolve the problem.
Measuring Activities in the Sales Process
In this blog post, I am discussing the Measure part of the Define, Measure, Analyze and Control Lean tool. Therefore, I will not discuss the problem-solving processes. Let’s start with mapping the sales process and then identifying the phases and related metrics which can be KPIs or key performance indicators.
Typical Sales Process
Prospecting Phase
In phase one, it is important to track where the leads are sourced. Is it from a marketing event, a mailing, a prospect inquiry, a referral or from a sales rep research? The metrics in this phase indicate the success of your marketing efforts. If the sales rep is sourcing prospects, the metrics can indicate the percentage of time spent on prospecting. A good sales process has a gate that only allows leads to pass through to the qualifying phase if they meet a list of criteria such as complete name, address, industry, how the lead was obtained, contact information and area of interest.
Looking at the prospecting metrics with the qualifying metrics can indicate if you are sourcing prospects in the right areas and if you are asking the right prospecting questions. If there are too many leads that do not become qualified prospects, that metric indicates you need to use the Lean tools to perform some problem-solving in this area. The gate to exit this phase should allow only prospects that meet the items on the qualification checklist. If they do not meet the items, further research must be completed before moving forward or they must be eliminated from the prospect list. One caveat here is to move prospects with a time parameter issue to the backburner but keep them on a tickler list for update messages and future contact dates. Ensuring you have qualified prospects exiting the gate will provide a higher return on investment as fewer prospects will fall out of the process later when more time and money has been invested.
Development Phase
The development phase is an area where many companies do not track activities. However, long times in this phase of the cycle can be an indication of a future no decision or no sale. In complex sales, the time is typically longer but it too should be monitored to ensure the prospect is moving forward. Items to track in this phase are C-suite calls, webinar attendance, demonstrations, meetings with other managers or departments regarding integration with current systems, executive communication exchanges, and solution presentations to decision makers. When I was a production products sales rep, I used a simple chart with items such as date, type of activity, attendees, outcome and next steps. The exit of the gate in this phase must endure everything has been uncovered and the prospect is ready for the presentation and proposal of the final solution and to make a decision.
Gain Commitment Phase
In the Gain commitment phase, the final solution presentation and proposal submitted. Tracking here can indicate the dates, elements for negotiation, technical information required and any legal steps to be completed. This phase can also get stalled. It is important to track the elements and the associated dates. Applying pressure in this phase sometimes leads to a no sale or has a negative impact on the relationship. It is important to respond to all questions and remain in contact but used car dealer tactics here can be disastrous especially in large dollar complex sales. These sales often require legal review at headquarters or meetings with finance for purchase method discussions based on current tax status. As long as it is moving forward, don’t rock the boat.
Implement and Extend Phase
Finally, future sales and testimonials are often lost because of lack of contact after the sale. I have visited with many customers who told me their rep forgot about them after the sale was made. It is important to track the customer care calls to ensure the solution is still the right fit and here are no unresolved issues. I was delighted when a customer of mine continued to add applications and grow his business. Keeping in touch allowed me to get an upgrade sale from a half-million dollar machine to a million dollar machine. I loved making the customer care calls as they were an upbeat and friendly engagement after several qualifying calls.
As you can see from this post, every phase should have a gate with requirements for moving forward. Lean metrics do not have to be complicated. However, they should be employed to provide insight into the progress of sales and any problems in the process or the sales rep behaviors.
One last note for today, metrics are not beneficial if they are not used correctly. The resulting KPIs for a rep can be the basis of good discussion in review meetings. As a sales manager, I sought to get to the root cause of a poor metric in any area. Perhaps the salesperson needed training or coaching to improve performance. Asking questions such as how the rep and manager can work together to move the sale forward. The rep can also provide insight into problems in other areas such as marketing, service or billing. The conversation may result in discussions with other sales team members or other departments.
When salespeople and management apply Lean tools and track the right metrics, sales soar and customers are delighted.
Next time I will continue with the next section on Analysis in the sales process.
Resources for getting started with LEAN:
Liker, Jeffery K, (2004). The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer. New York: McGraw-Hill.
Mann, David, (2010). Creating A Lean Culture: Tools to Sustain Lean Conversions (3rd Edition), Boca Raton: CRC Press.
Rother, Mike, (2010). Toyota KATA: Managing People for Improvement, Adaptiveness, and Superior Results. New York: McGraw-Hill
George, M., Rowlands, D., Price, M., Maxey, J. (2005) The Lean Six Sigma pocket toolbook: a quick reference guide to nearly 100 tools for improving process quality, speed and complexity. New York, N, Y: McGraw-Hill
About the Author:
Phyllis Mikolaitis is a sales coach, author, and speaker with over 30 years’ global experience. She takes you beyond the typical “how to” courses to the heart of persuasion techniques. You’ll learn how to incorporate insights and stories to win the sale. Phyllis has also had training in Leadership Through Quality, Six Sigma and Lean. She is certified in Process Improvement in Print and is now working with organizations on Lean and People-Centered Leadership. Visit other pages on this site www.salestrainingsolutions.com. The links on our website allow you to listen to our podcasts or catch up on past blog posts. For Lunch and Learn sessions, face-to-face or virtual training and coaching contact us at 703-819-5872.