Does Moneyball Work for the Sales Force?

Posted by Dave Kurlan on Sun, Sep 25, 2011 @ 23:09 PM

moneyball.coverThe movie was great - much more drama than the book - but the book contained many more insights about the revolutionary new way to see performance through statistics.  More on that in a minute...

Billy Beane, the Oakland Athletics GM who was featured in Moneyball, shook up his team during its 2002 slump by turning off the music (with a baseball bat), putting a stop to the fun, knocking over some tables and saying, "THIS is what losing is supposed to sound like!"  Later the same day he traded and released players and put his manager on notice that he must play the team that was assembled for him.  That Oakland team then proceeded to set a major league record by winning their next 20 games.

Compare Billy Beane's managerial style with that of the Boston Red Sox' GM Theo Epstein, whose team has been mired in a month long slump that caused their 9-game lead shrink to as little as 1/2 a game [Update - the lead was eliminated on 9-27-11 when the Red Sox lost again and Tampa Bay tied them for the playoff spot]. This slump was much worse than the A's of nine years ago, who weren't expected to contend.  What did Theo do to shake up his team?  Nothing.  How did the team respond?  They continued to lose!

Back to Moneyball.

The basic concept of Moneyball was to find a way to win with undervalued players so that a small market team with a comparitively tiny payroll could compete with the enormous payrolls of the Yankees and Red Sox.  They identified how many wins were required to make the playoffs, how many runs they would have to score for the season, and what it really took to score runs.  They agreed that On Base Percentage (OBP) would be the primary criteria for the Oakland team and identified players who reached base often but were overlooked and/or underrated by other teams.

If we apply the concept of Moneyball to the Sales Force we must identify what constitutes a sales Win.  If your top salesperson sells $1.5 million to the same 8 accounts each year it is important revenue, but is that salesperson really delivering any wins?  If another salesperson brings in 8 new accounts worth $750,000, could that possibly constitute 8 wins?  

It's funny - the way those statisticians arrived at the new baseball statistics are similar to the old sales metrics we used where we calculated the number of attempts, conversations, first meetings, presentations, and proposals required to close 1 deal.  But those metrics are not enough anymore and attempts and conversations are no longer the default method for how sales opportunities come to be.

What if we included the following new KPI's as the Sales Force's version of Moneyball?

NFM - The percentage of first meetings that are new (new customers, new opportunities with existing customers, or a new group or division of an existing customer)
Traction - The percentage of first meetings that progress from Suspect to Prospect
Quality - The percentage of opportunities that progress from Prospect to Qualified
Effectiveness - The percentage of opportunities that progress from Qualified to Closable
Run Efficiency - The percentage of First Meetings (Suspects) that Close 
Wins - Closed Deals from New Opportunities
DAIM - Deals Closed at Ideal Margin or Better 

It would seem to me that salespeople who deliver more Wins, have a higher NFM, and a better DAIM would be far more valuable to have on your sales force.  What do you think?

Topics: Dave Kurlan, Moneyball, KPI for the sales force, sales metrics

Baseball's General Managers versus Business' Sales Managers

Posted by Dave Kurlan on Tue, Mar 30, 2010 @ 05:03 AM

The 2010 Major League Baseball season officially gets underway this Sunday evening with its greatest rivalry, the Boston Red Sox versus the New York Yankees, at Fenway Park.  It gives me a great excuse to write a baseball themed article.  But hey, what else would you expect from the author of Baseline Selling - How to Become a Sales Superstar by Using What You Already Know about the Game of Baseball?

This week is one of the most active weeks for General Managers because they need to trim their rosters to 25 players.  The best 25 players.  The 25 players that give their teams the best chance to win, the greatest depth, and the best protection in case of injury.  General Managers have several tools they can use to evaluate who gets those final roster spots.  They can go by what they witnessed, first hand, during Spring Training.  They can go by the players' statistics from the Spring Training games, or they can use a player's statistics from the last year, two years or three years to make their decisions.  There are dozens of statistics being used these days, with the traditional stats of HR, RBI, BA, and ERA being overtaken by newer stats like OPS, OPB, and WHIP. I'm all for the newer stats because of the insights they provide.

You should be evaluating your sales team's performance as the first quarter of 2010 comes to a close.  You have many ways to evaluate sales performance.  Observation, statistics, sales force evaluation, performance, etc.  As part of a sales force evaluation, sales force optimization - the optimal number of salespeople for your sales force - should be considered.  Unlike baseball, the number is probably not 25.  But once you have the number, it becomes much easier to determine who the best salespeople are. The ones that give you the best chance to win, the best depth, and the best protection in case of injury.  Baseball doesn't award roster spots for tenure, appreciation, or effort.  The spots go the best, period.  You should do the same.  

You have one huge advantage over baseball General Managers though. Forward looking indicators. Except for observation, all of the statistics they use in baseball are lagging indicators.  They tell the story of how a player has performed in the past, not how they will perform in the future.  And while past performance can be an indicator of future performance, it can't be relied upon.  Too often, companies rely on lagging indicators to evaluate sales performance by citing revenue.  While revenue is important, forward looking indicators are more significant.  They can accurately predict future sales performance in a way that would make baseball's General Managers drool!  I wrote this comprehensive article on What to Do With Your Useless Sales Pipeline for AlisterPaine.com.

Rely on your forward looking indicators - your sales pipeline and the metrics that keep it filled and balanced - and you can accurately predict your revenue before, instead of after the fact.  Not only will you be able to predict revenue, but you'll be able to impact it as well.  Don't like what you see?  Change something!  It's just a lot easier to change the numbers before they happen than after.

Topics: Dave Kurlan, sales management, sales pipeline, Baseball, red sox, sales metrics, yankees

Lance Armstrong's Metrics Applied to the Sales Force Equals Results

Posted by Dave Kurlan on Thu, Dec 03, 2009 @ 21:12 PM

Recently, I completed Lance Armstrong's 2001 book on how he became a champion cyclist, was diagnosed with Cancer, beat the cancer, and then returned to become the greatest cyclist in the world.  It was an inspiring, fast-reading book.  While this won't come as a surprise to my cyclist friends, I was quite surprised to learn how metric-intensive competitive cycling is.

While training for races, Lance uses a heavy and expensive power meter that measures output (wattage). For the big race, he uses a smaller and lighter top of the line cycling computer to track speed, heart rate, incline, cadence, altitude gain, and power output. He simply adjusts his cycling until the numbers are where they were when he was training at peak performance and he figures the rest will take care of itself. Wow.

Sales is exactly the same.  You train hard and once the metrics have been established, you simply continue to meet those numbers and the rest will take care of itself.  Simple.

There are only a few problems with this:

  • Most companies, sales teams and salespeople do not train hard.  As a matter of fact, a significant percentage of companies provide no training at all. They mistakenly believe that their salespeople won't benefit from it.  My feeling is if it doesn't address root problems then salespeople won't benefit but in this day and age every company should be able to find a proven sales development expert who consistently gets results for clients.  Do these companies not need lawyers, accountants, insurance and benefits advisers, marketing and advertising experts and consultants either?
  • Many companies don't have metrics and even more companies have metrics that are contextually irrelevant.  They pull numbers out of the sky, establish them as baselines, and then can't understand why their salespeople don't hit those numbers.
  • Most companies don't know how to correctly calculate the metrics.  Even more incredibly, they don't even know what to measure!
  • When companies do have metrics, know what to measure and analyze the ratios to calculate the correct values, most can't get their salespeople motivated, disciplined, committed or consistent enough for it to matter.

So what do companies do?

  • They discontinue the effort.
  • They provide training on closing skills - by the way, you can't imagine how much of a waste of time this is.  The problems salespeople have at closing time have nothing to do with closing skills.  The delays, put-offs, stalls and think-it-overs are directly related to how inept they are at the early stages of the sales process!
  • Provide training on cold-calling - this isn't as much of a time-waster as closing skills but it's a close second.  Why?  How about:
    • they train on scripts but their scripts are ineffective.
    • they train on presenting but pitches cause resistance.
    • they train on getting through but there isn't anyone to get through to anymore.  Now it's voice mail and the key there is on how to get a call returned, not on how to get through.
    • they don't train on overcoming the fear, discomfort and rejection - the real reasons salespeople don't work the phones.
    • they don't talk about how to gain a prospect's attention and engagement - prerequisites to a conversation.
    • they don't teach salespeople how to converse with as opposed to pitching a top executive 
  • Revert to pulling numbers out of the sky
  • Change strategies
  • Change sales managers
  • Change salespeople
  • Change markets
  • Realign territories
  • Change compensation plans
It should be obvious that if you identify the proper things to measure, properly determine their values, get the salespeople committed, and hold them accountable, the results will follow. Add in a dose of consequences for failing to remain disciplined and consistent and you can maintain those results.

(c) Copyright 2009 Dave Kurlan

Topics: Dave Kurlan, sales management, Sales Force, accountability, sales metrics

Sales Systems and Processes - 8th of the 10 Kurlan Sales Management Functions

Posted by Dave Kurlan on Tue, Dec 01, 2009 @ 07:12 AM

Today I will present the 8th in my series of the Top 10 Sales Management Functions but it is #10 on my list.  Why am I going out of order?  Last week was the Thanksgiving Holiday, I have a non-stop week, I'm behind on this series and #10 corresponds with the upcoming (12/3/09) webinar.

#10 - SYSTEMS AND PROCESSES

Systems and processes are your sales infrastructure - everything that is not your people. A lot of us use the two words interchangeably. So what is the difference between systems and processes? Wikipedia says that a system is a "set of interdependent entities forming an integrated whole". Wikipedia has dozens of context-specific definitions for process.  I have adapted their Business Process definition for sales and came up with "activities or tasks that produce a specific outcome".

So, the following processes would make up our primary system:

  • Sales
  • Recruiting
  • Sales Management
  • Metrics or Measurables
  • Pipeline
  • Compensation
  • Territory Management
  • On Boarding
  • Development

We would also have additional systems:

  • Sales Force Automation (I like Membrain)
  • Lead Generation or Inbound Marketing (I like Hubspot)

In the (December 3, 2009) webinar I'll be discussing Pipeline - How you can close more sales simply by managing it more effectively.  There are several little understood components of the pipeline. I'll talk about staging it, having criteria for each stage, and the advantages of making it Visual.  I'll also discuss the importance of the first stage, how you can guarantee you'll hit your numbers every month, how to make it more accurate and predictive, and the crucial metrics you'll need to make it all work.

The important thing to understand about systems and processes is that you must have them in place, supporting your sales organization, prior to the start of any development program.  You can't start training and coaching salespeople before a sales process is in place.  You can't hold salespeople accountable before the metrics and pipeline are in place.  You can't hire salespeople and expect them to perform before you have recruiting, compensation, on boarding and sales management processes in place.  You don't have to get them perfect on your first attempt, getting it close perfect makes a huge difference!

Here are some articles I've written with more details about the various systems and processes:

This article talks about the sales process and has been nominated for article of the month for December 2009 (I wrote it in November of 2008 - they must be behind too!) You can vote for it here.

Top 10 Sales Articles - Article of the Month - vote here
 

This article is about sales metrics and the sales pipeline. This article talks about how to make the sales pipeline more accurate and predictive. This is my favorite article on the insights that can be captured from an well managed sales pipeline.  Finally, this recent article talks about Sales KPI's or metrics. Metrics are the numbers we can measure that drive revenue.  We're talking performance here. Accounting has EBIDTA. Manufacturing has Quality. Business has Revenue, a measure of growth, not performance. In sales there are literally dozens of numbers we can choose to measure but revenue is never a number that measures performance and it's always, without exception, a lagging indicator.  To measure sales performance, you must look at future indicators.  What are they?  This article examines how sales metrics can be used. This article examines sales metrics in the context of recruiting where efficiency is the goal.

 

(c) Copyright 2009 Dave Kurlan

Topics: Dave Kurlan, sales process, sales management functions, sales system, recruiting process, sales metrics

Do You Need Your Salespeople to Love and Respect You?

Posted by Dave Kurlan on Sun, Oct 04, 2009 @ 21:10 PM

I was coaching a sales manager whose reps were all under performing, even though many of them have a history of achieving and over achieving during less difficult times. Many salespeople with prior success have been struggling to match their past performances. The truth is that most of them just aren't good enough to overcome the resistance that they face right now. The question is, what percentage of those struggles are due to the ineffectiveness of the salespeople and what portion lies with the ineffectiveness of their sales manager?

The sales manager I coached had some very human needs. When he connected with his salespeople, they shared details of their lives, plans for their weekends and he felt loved. When salespeople praised his coaching or said that his advice helped them on a sales call, he felt respected. And when he assured the higher-ups that good things were happening, he truely believed that business was on the way.

Unfortunately, the sales manager measured the success of his salespeople using two irrelevant values - love and respect - rather than the more important metrics or KPI's - performance indicators - that most of us use.

The relationship is important. Their respect is important. Performance is important too.
Measure the performance by the numbers. Use the relationship and the respect you have earned to improve it.

(c) Copyright 2009 Dave Kurlan

Topics: Dave Kurlan, sales management, Sales Coaching, sales performance, sales metrics

Getting Excited About Sales Metrics

Posted by Dave Kurlan on Wed, Oct 15, 2008 @ 23:10 PM

As we encourage our clients to do each day, both of my companies have daily huddles for their salespeople.  The purpose of the daily huddle is to keep everyone focused on the measurable activities that drive results.

During the last couple of weeks, I've had our six-year old son in the car for about 6 of these conference calls and it only took one huddle to get him hooked.  He wants to report his numbers - and he has them ready - each time he's with me.  It makes him proud to participate and he wants to report numbers that are better than theirs.

I get a lot of push back from clients when it's time to implement the daily huddles.  They don't think it's necessary.  It will take too much time.  It's too much of a burden. It's redundant.  Yeah, right.

It only takes about two weeks until even the most resistant clients figure out that they not only have more control over their future revenue than ever before, but their salespeople are more productive than ever before too.

The thing about our son?  If you're a regular reader of this blog then you know I've written nearly twenty articles that have a Salespeople are Like Children Theme and this one is no different.  Your new salespeople will be just as excited about being part of that huddle as our son.  Your veteran people will like the boundaries, expectations, attention, peer pressure and relentless focus on doing what's important to drive sales - every single day.  Why? It's good for them and when it's good for them they'll make more money.

(c) Copyright 2008 Dave Kurlan

Topics: sales, sales management, selling, accountability, sales behaviors, sales numbers, sales metrics

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Best-Selling Author, Keynote Speaker and Sales Thought Leader.  Dave Kurlan's Understanding the Sales Force Blog has earned medals for the Top Sales & Marketing Blog award for eight consecutive years. This article earned a Bronze Medal for Top Sales Blog post in 2016, this one earned a Silver medal for 2017, and this article earned Silver for 2018. Read more about Dave.

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