The Sales Diagnosis problem is common but often overlooked Sales issue. Salespeople (and managers) are often judged only on their sales results, like annual revenue quota or this month’s forecast determine success. Judging sales performance by results can negatively impact the long term growth of a sales team.
Sellers managed by results don’t get feedback that helps them change so they can improve their results and deliver greater value to the team. Reps deliver the same results because they don’t know what to change.
For example, a salesperson we know came up short of making quota last year. This year, our rep started out the year by doing some reasonable prospecting. He had quite a few deals in his pipeline, but nothing was closing. His manager thought his big problem was his poor close rate (result). And that was true. But it turns out that was not the real problem. I’ll share the real problem later. But, but let’s describe what’s going on from a sales diagnosis perspective.
Many sales managers were great sellers. But they have minimal experience coaching team members. This skill gap causes them to focus on obvious problem(s) they can see. Let’s use Close Rate as an example. Close Rate calculates as won deals divided by the total pipeline. It measures won deals as a percent of deals a rep is working. The key issue is it’s a results metric. Many sales performance measures are results. For example, Average Length of Sales Cycle must wait until deals close. YTD revenue is a result of sales for the fiscal year.
Many sales performance measurements are results. In sales operations they’re considered lagging indicators. We can’t know what they are until after they happen. Then it’s too late for these metrics to impact revenue or performance. The results show something happened during the sales process to cause the problem. We have to ask WHY this metric is poor. During the sales process, something failed that kept the rep from closing more deals.
Now let’s go back to our rep example. Looking at the rep’s pipeline, all the rep’s deals sat in the Prospecting or in Qualification stages. Something was going on with those deals stuck in the two earliest stages of the sales cycle. Looking deeper showed that over half of these deals were almost a year old! So, there was absolutely a Close Rate issue. But the real problem was to fix the early stage bottleneck.
It’s a reflex action for Sales managers look at results to determine if reps are performing. We look at the pipeline deals that are closing as our primary measure. But the underlying data better explains why reps do well or not so great. We need to do our own Sales Diagnostic to figure out the root cause. Knowing how much business a rep needs to make their quarter to fix it is too late.
It’s never too late to do Sales Diagnosis. It just takes looking at data other than pipeline results and closing deals. Funnel Metrics’ simple framework helps managers analyze sales data. We provide Salesforce tools to easily determine how reps can improve. In four to six weeks, you can have a process to help every rep grow revenue. Please visit funnelmetrics.com to learn more.