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Sales Benchmarking: What to Measure in a Tough Economy?

To turn the tide on sputtering revenue numbers, sales organizations ratchet up pressure on sellers to hit targets.

Many will seek a fool-proof formulaic antidote. The more scientific it feels, the more control it gives over success–or so they presume.

Some swear by sales benchmarking.  Landslide Technologies’ SFA (sales force automation) application ensures you can “govern the sales process in an effort to drive large deals through the sales pipeline in a consistent manner."  Just use the SFA application to track your big deals and they’ll pump out new accounts like a canning machine on an assembly line.

Do benchmarks work?  Or are they a desperate attempt to CYA at each level of the food chain in the event of a day of reckoning?

One recent article from a worldwide sales training company described benchmarking as “a sales rep’s GPS, helping to map out routes that were either successful or time-consuming in the past in order to devise a more efficient course”.

Here’s their GPS system:

To simplify this already-simple model: all things being equal, if you make more calls per day (CPD) or increase your close rate (CR) or increase the average size deal (ADS) or if you have more salespeople (SP), you will increase your AS (Annual Sales).

The author of the article lauds this wildly lagging indicator of performance stating, “their (sellers) improved time management efficiency as the result of this benchmarking model will free themselves up from dependence on marketing departments for leads, support and differentiators.”

I couldn’t make this stuff up.

Feeling liberated yet? What a relief! Without burdensome leads, support and differentiators from marketing, sellers can work the levers on the benchmarking formula and land on their AS (don’t pardon the pun).

Some of the largest sales organizations tell their team to abide by their model – or else.

Now, let’s stipulate that tracking and measuring sales activity is critical to success. Still–too many sales organization have a knee-jerk response to sluggish short-term performance, namely engaging in short-term solutions.

There lies the slippery slope of micromanagement.  Knee-jerk short-term solutions to short term indicators.  It’s a recipe for low trust and high turnover.

Eventually, quality selling activity gives way to “prettying up” the spreadsheet. “My, that’s a good looking chart,” says the visiting exec from HQ.  Meanwhile, the team is thinking, “those numbers are bogus; plugged into Excel the night before to impress the brass.”

GIGO.  Garbage in, garbage out.

When I managed a regional sales organization, corporate decided to split the sales force into hunters and farmers–to improve the “cost of sales” ratio of gross comp to revenue.

We lost a $10.5 million deal. Why? We severed the relationship between their rep and the procurement director.   They, in turn, severed us.

We broke their trust, plain and simple.

What benchmark tracks lost accounts and missed opportunities due to relationship issues? None I know of–yet their impact is an order of magnitude bigger than what benchmarks mark.

Harvey McKay (author of Swim with the Sharks without Being Eaten Alive) offers a better predictor of selling success than all the formulae, algorithms and sales funnels combined. It’s a list of questions he calls the McKay 66.  He suggests that relationship-oriented information is king (mostly centered around the client relationship – not their stated needs).

For example:

* #39. On what subjects (outside of business) does the customer have strong feelings?
* #55. What is he/she most proud of having achieved?
* #58. What moral or ethical considerations are involved when you work with this customer?

Doesn’t it make intuitive sense that knowledge of answers to these kinds of intimate questions reveal more about our progress with a prospect or account than the number of dials, appointments or calls?

Selling always was and always will be, first and foremost, a referendum, not on process and statistics, but on the loyalty developed between sellers who can build relationships with buyers.

The Science of Management Revisited

How far have we come in 100 years?

In 1911, Frederick W. Taylor published “The Principles of Scientific Management.” (read it directly at that link for free, thanks to the Google scanning initiative).

It makes remarkable reading today.  Taylor’s proposition was simple.  We need to stop just looking for talented people, and better train and organize normal people.   Management is a science—the science of efficiency.  It applies to all jobs, and all who use it benefit.

Workers themselves are incapable—“stupid” is his preferred word—of understanding the scientific principles that maximize their efficiency.  Ditto even for initiative.  The job of management is to define people’s jobs in extraordinary detail, and to provide initiative. 

“Workmen will not submit to this more rigid standardization and will not work extra hard, unless they receive extra pay for doing it… management must inform [the worker] at frequent intervals as to the progress he is making, so that hey may not unintentionally fall off in his pace…the workman alone even with full knowledge of the new methods and with the best of intentions could not attain these startling results.”

“The average workman must be able to measure what he has accomplished and clearly see his rewards at the end of each day if he is to do his best…cooperation or “profit-sharing”…have been at the best only mildly effective in stimulating men to work hard.  The nice time which they are sure to have today if they take things easily and go slowly proves more attractive than steady hard work with a possible reward to be shared with others six months later.”

Taylor is most famous for his remarkably detailed time and motion studies of activities like shoveling coal and transporting pig iron to a rail car.   It’s easy to read Taylor as quaint.  To the objection that measuring coal-shovelers and pig-iron handlers is irrelevant to advanced workers, Taylor responds with—time and motion studies of lathe-cutters. 

But in fact, Taylor is very much with us today.

A recent emailing from Harvard Business School Publishing headlines, “If You’re Not Measuring Marketing, You’re Not Marketing.” 
It advertises a CD-ROM on Measuring Marketing Performance that tells you “how to create a marketing dashboard that can reveal the true performance of the company’s marketing activities. The dashboard can be used to inform boards of directors and senior leaders as to how well their marketing efforts are supporting customers’ needs.” 

The only thing Taylor would argue with is whether the shovelers are intelligent enough to provide the data on shoveling with which they are to be measured.  

The ubiquity of “if you can’t measure it, you can’t manage it” (see here, or here, or here),while transparently false and based on a misreading of Taylor, is testimony to the pervasiveness of his influence.
 
What we have taken—and kept—from Taylor is a passion for breaking things down into tiny tasks, measured in tiny units of time.  Technology and process engineering have enabled us to extend this philosophy to unprecedented levels.  We have come to believe that basically all management is a variation on workflow design—if we measure precisely enough, and mete out just the right carrots and sticks, we will produce a perpetual motion/money machine. 

It is easy to caricature Frederick Taylor, despite the ways in which we continue to emulate him.  But he was wise in ways we have conveniently forgotten.  The "management equals measurement" people treat measurement as both necessary and sufficient; Taylor only argued the former.

“The mechanism of management must not be mistaken for its essence, or underlying philosophy…when elements of this mechanism, such as time study, are used without being accompanied by the true philosophy of management, the results are in many cases disastrous….the really great problem involved in a change from the management of “initiative and incentive” to scientific management consists in a complete revolution in the mental attitude and the habits of all those engaged in the management, as well also the workman…this change…is a matter of from two to three years, and in some cases it requires from four to five years."

Plus ca change…

How Measurement Destroys Trust

Speaking with a marketing firm today, it struck me again how deeply embedded within the business culture has become the notion of measurement.

The obsession goes well beyond the mantra “if you can’t measure it you can’t manage it” (which is nonsense on the face of it). It has become a knee-jerk reaction to a new idea, concept, or perspective. In particular, ideas having to do with people.

Remember these workplace slogans?

  • The war for talent
  • People are our most important assets
  • Customer loyalty
  • Customer relationship management
  • People development
  • Human capital
  • Employee engagement

Every one of these ostensibly business buzzwords has been subjected by the business world to death by measurement. The prevailing wisdom asserts that if you can’t figure out a metric for something, it isn’t worthwhile; for all practical purposes, it doesn’t exist.

(For those amused by analogies, there was a school of philosophy in the ‘20s centered around the “verifiability criterion of meaningfulness,” which said if you couldn’t verify it, it sort of didn’t even exist. Which certainly ruled out god and poetry, probably trees falling in an un-peopled forest, and quite possibly any interesting sex life.)

The average view in management today is that none of those “humanistic” terms have any utility—or even any meaning—if they can’t be quantitatively linked to economic performance. Of the firm. This quarter.

Hence “measurement” becomes the handmaiden of a means and ends argument. The end is the strategic/financial performance of the corporate entity to which you swear fealty. The means are—well, any of those human-type things.

Hence you hear the most deeply human virtues “justified” by the numbers—as if they weren’t justified as ends in themselves.

Loyalty gets judged as valuable only to the extent it makes money. Employee engagement? Good because it benefits the firm. Attraction and? Cuts human capital costs to the firm.

Like Pavlovian dogs, we have come to substitute “measurement” as a proxy for “shareholder value.” Ring the “metric” bell and we salivate for sustainable competitive advantage. Because after all—how can you argue against measurement? If you can’t measure it, you can’t manage it—and so on, and so on.

Unlike P.T. Barnum, I am constantly amazed at the ability of business in the past few decades to subordinate the most advanced, human, even spiritual concepts, to a “greater good”—the enhanced economic value of a non-human entity called a corporation.

I first heard it when someone said, “Trusted advisor—that sounds like a good idea; anything that’ll increase share of wallet, I’m all for it.”

I heard it when I saw "loyalty" debased as simply repeated, and harnessed to price-driven frequent-buyer programs.

I hear it again in the oxymoron "human capital."

I see it in lenders and borrowers alike walking away from loans because “it no longer adds up.”

Trust happens to be a fabulous economic strategy—the strategy for our times— don’t get me wrong. But if your only reason for being trusted is to make money, then nobody’s going to trust you. It’s that paradox thing.

"Love! Cool!

Well, sounds good, but—you know—how you gonna measure it?

Come back to me when you can make that love thing work on the Street, in a business process, or in a marketing campaign. Show me the love levers, the love success factors (LSFs). 

Have you got some love diagnostics so we can do a love gap analysis and a love needs assessment?  You need to break it down with some behavioral metrics; what are best practices love behaviors?  

Have you got something that really makes the business case for love?  Who out there is a success story, really doing the love thing and making a ton of money at it?  How can we be sure love isn’t just another fad? 

How fast can you roll out the love campaign? 

What’s the payback?"

I saw a new book out the other day called "Spiritual Capitalism." I haven’t yet read a word of it; I’m a little afraid to do so. I can conceive of how it might be a good book, but I’m suspicious it’s going to justify spirituality on the grounds that it makes money. Which spirituality does, but if making money becomes the end, then you end up not just spiritually bankrupt but not so good in your checking account either.

There’s nothing wrong with measurement per se. In the long run, measures work and are meaningful. A great idea will measurably win out in the long run. But what results from repetitive microscopic measurement tends to be just the belief that people exist for the company—not the other way ‘round.