Too many companies fail at creating a strong, high performance sales force. The most common reason is that the managers work from instinct and results, rather than process and activity. It doesn’t have to be that way. A good activity management program is within the reach of any company, whether you have one salesperson or 1,000 – and it can be your best friend in developing sales results.
Activity Management is the process of quantifying sales inputs (the various types of activity that go into making a sale for your company) and using those numbers to reliably predict outputs (sales results), as well as to better manage your salespeople. Nearly every sale can be broken down into several different activities, with your sales funnel narrowing as the activities are performed. By counting the numbers of the different types of activities performed in a given time period, and then measuring those activities against proven success-generating activity patterns, we can diagnose sales problems and arrest negative work patterns before they become critical. This means that we can alter the performance of our salespeople by working ahead with them, rather than simply commenting and criticizing results.
Of all the skill sets that make up a good sales manager, the most valuable (and most rare) is the skill to alter performance by Troubleshooting and Coaching performance that is substandard. Closely related to this is the skillset of Coaching for improvement in an already strong performing salesperson. Many managers, frustrated with the difficulty of coaching, prefer to simply fire and hire salespeople. Sometimes management-generated turnover is desirable, but often, turnover just leads to more turnover.
In generating sales results, you only have two variables to work with.
Those variables are: Quantity of activity (is the salesperson meeting expectations for calls, presentations, proposals, etc.? If not, why not?); and Quality of activity (is the time spent with customers spent in high-value ways with quality communication?). By understanding those two variables, you take the mystery out of coaching.
We’ll save coaching for quality of activity for a future issue; for now, let’s talk about quantity.
Developing Your Target Numbers
First, it’s essential that you have a good set of numbers to work with. These numbers should be based on real-world sales history with your company, and will provide a roadmap for the salesperson to achieve success.
The basic concept of sales activity management is this: each salesperson has an expected amount of sales he/she needs to generate in a given time period. The average ratio of proposals to sales, from first appointments to proposals, from calls to appointments, etc. dictates the quantities of each activity needed. For instance, if the salesperson closes 50% of his/her proposals and is expected to sell four new customers per month (or close four deals per month), that salesperson will need to have at least eight proposals in the same month.
By understanding your ratios and managing your salespeople’s efforts to them, you can better assure that your goals will be met.
First, let’s understand your key ratios (feel free to fill in below):
Proposals to sales: __________________%
Appointments to proposals: __________________%
Calls to appointments: __________________%
My own preference is to manage activity on a weekly basis, rather than monthly or quarterly. The reason is that the farther you spread out the management schedule, the less urgency there is to fulfill activity quotas; you’ll end up with ‘cramming’ the last week or two of the month. That’s not helpful. Let’s look at a real-life example. Let’s say that the result you want is one new customer per week. Your ratios above might be:
Proposals to sales: 50%
Appointments to proposals: 33%
Calls to appointments: 20%
In this example, to reliably achieve one new customer sale week in and week out, your salespeople would need to have two proposals per week (because only 50% close), six appointments per week (because only one of each three appointments yields a proposal), and 30 calls per week (because one of five calls yields an appointment). With those numbers in place, you have an activity road map. Don’t skip this step! Without some sort of an activity road map using your company’s real life numbers, you will never be able to reap the benefits of activity management.
Once you have your numbers, they should be shared with salespeople at the point of hire (I like to put expectations in the offer letter and have them sign as having received the letter), and reinforced constantly through sales meetings, one-on-one sessions, and evaluations.
Troubleshooting
The first step in troubleshooting sales performance is to look at the Quantity of activity. The reason is simple: If the salesperson just won’t do the work, it doesn’t matter how good the salesperson may or may not be in front of the customer; they’ll never see enough customers to make their goals. You should have a set of sales activity metrics for your salespeople, so begin the troubleshooting process by evaluating the salesperson’s actual activity vs. the expected activity. If the salesperson isn’t meeting activity metrics, it’s time to find out why. The two most common reasons are:
- The salesperson simply isn’t doing the work.
- The approach used by the salesperson isn’t meeting the expected ratios (for instance, the salesperson is making the appropriate number of telephone calls, but is not getting the necessary appointments). In this case, quantity and quality become intermingled.One side issue is the size of the prospects or customers pursued; this method is dependent upon your salespeople pursuing customers of whatever you have deemed the appropriate size. If this is a problem, it’s simple to correct through some list generation and re-targeting.
- If there is a quantitative issue, begin troubleshooting at the highest point in the sales funnel (i.e. calls). Work downward as activity goals are met. If the salesperson is performing enough calls, are they getting enough appointments? If not, that might mean that they are not executing the call well. If they are, move from appointments to proposals, proposals to sales, etc. At some point, you’ll find the problem, and then you have something to work from. Sometimes, the answer is Qualitative Coaching; sometimes, the answer is simply to have your salesperson work above your pattern. I once had a salesperson who simply wasn’t capable of substantially improving his quality of activity, but improved his quantity so much above basic expectations that he still made President’s Club. Once you understand these two variables and how to make them work for you, anything is possible.
Forecasting
You’ll find that sales forecasting – usually a black art – is much more accurate with a good activity management program. If we understand how many activities our reps are doing, and how well they are doing them, and the quantified values of the customers in the proposal phase, predicting new sales achievement becomes a logical conclusion to a process, rather than a hopeful guess performed on a quarterly basis.
Conclusion
If you’re thinking that establishing a program for activity management is going to be a lot of work, you’re right – it is going to be. However, it will pay dividends. As a business owner, the primary thing you want from your sales force is consistent and profitable growth. Establishing a good activity management program will help you know in advance what your results are likely to be in any time period, and to affect those results by coaching and correcting.
