The dust has settled on 2011’s first quarter and it’s time for sales leaders to assess their year-to-date performance against their quarterly and annual goals. When we walk through this process with our clients we find most of them fall into one of the following four situations.
Sales, Where Do You Stand After the First Quarter?
- Ahead of plan on year-to-date closed business and a full, healthy pipeline to make the full year goal.
- Made plan in Q1, but pipeline not quite as strong for the rest of the year.
- Missed Q1 plan, but the pipeline appears reasonable if deals close when forecast.
- REALLY missed Q1 plan, a weak pipeline for the rest of the year and no light at the end of the tunnel.
Based on where you stand you need a management strategy for the remainder of the year. Focusing on the following areas will get you started and help prioritize these important mid-year corrections.
First, be honest with yourself about the factors that have contributed to the current situation. If you are achieving your sales plan, is the success from quarter one repeatable and sustainable for the remainder of the year? If you are behind on your goals, what did you do – or not do – as the sales leader that prevented your team from reaching the targets? Consider all aspects of what contributed to the results.
– How strong was the qualified pipeline entering the quarter?
– Are the results balanced across many members of the sales team or concentrated on just a few?
– Is the Lead Management process creating enough sales ready leads to continue refilling the pipeline?
– Do you foresee any internal or external forces that could change close rates or decision timeframes over the remainder of the year?
Second, perform a very objective, thorough review of your full pipeline. Start this process by running an opportunity aging report to highlight deals that are much older than your average sales cycles. Those perpetually pushed out deals are often dead or lost opportunities in disguise. Purging them from the pipeline will give you a truer picture of your real situation.
With that step done you can move on to an evaluation of your real pipeline. We always suggest looking at many components besides total pipeline value, here are important metrics to consider.
- Total values by each probability / sales stage (is the curve healthy?)
- Velocity of opportunities through the sales cycle – compare total length of time for wins vs. losses. Rule of thumb: Losses take twice as long to reach decision stage as wins.
- Benchmark current closing rates to previous periods and expected averages. (Even slight changes from targeted win rates can significantly impact the year)
- Calculate average deal values for both annual billable revenue and total contract value. (Are you tracking to the goal for average deal size?)
- Measure the percentage of pipeline from existing vs. target accounts. (How successful are sales efforts on new logos?)
- Subtotal pipeline values by region, division, service / product line, team leader and account executive. (Helps isolate the strong vs. weak performers)
- Graph pipeline values based on projected close dates. (Are your wins projected to occur evenly throughout the year or are you hoping for that famous ‘hockey stick fourth quarter?)
Third, never forget sales is a performance-based profession. The two most important measurements for sales rep and managers are:
1. Past results (quota attainment)
2. Future opportunities (pipeline values)
Those sales execs that consistently rank in the bottom tier rarely catch fire and become top performers. Unfortunately, it’s those bottom performers where too many sales managers spend most of their time. Regularly evaluating all sales personnel on these two criteria (attainment and pipeline) and eliminating the “bottom ten percent” is a proven sales leadership best practice.
Start Now. It’s already the middle of April and pulling the data to do this review will take time. Once completed, update the actions and goals for the upcoming quarter, and present your analysis and recommendations to both the executive leadership and the sales team. This provides everyone with insight into how the sales organization is managed and demonstrates a focus on the details that determine success.