As many formerly product-focused companies migrate to selling solutions, most overlook one critical component – the way they measure sales performance.
Sales people, using a solution-selling approach, generally nurture larger, more complex and lucrative deals; they are engaging in business-level discussions with key executives in prospect companies and invest heavily in building long-term, trust-based relationships with key decision makers. But in many instances, companies measure their success using the old transaction-based sales metrics.
Making the shift to solution selling is a challenge, and identifying and isolating metrics that can track the productivity of solutions-led customer engagements is particularly difficult, if not wholly problematic.
Sales managers, sit right in the thick of the challenge.
They’re charged with managing and improving sales performance, something they have always been able to do using easy-to-measure numbers, such as the amount of revenue a salesperson brings in each quarter, the number of calls they make, the number of client presentations they give or the length of the sales cycle.
But in selling solutions things get much more complicated. The same salesperson who delivered regular sales volumes may have millions of dollars worth of contracts in a pipeline yet close only one or two deals in a quarter. And because the solution sale is much more complex and usually involves outside partners, the salesperson’s sales cycle might extend beyond a traditional 6-8 weeks to anything up to nine months or more. None of this is bad; it’s just inherently difficult to either monitor or measure when companies continue to define success using the more traditional measures.
How can we measure solutions sales performance?
A systematic process Barrett calls Proximity-Metrics provides an effective measure and addresses the issue.
Proximity-Metrics measures the activity that lies at the heart of the issue of solution selling – i.e. customer intimacy. For example, the amount of face time with the right decision-makers in the prospect organisation is a meaningful proximity-metric because it measures the interaction with key decision-makers, the progress through the sales process in terms of both frequency and duration.
By contrast, traditional sales metrics tallied the number of customer “touches” a salesperson made. If the salesperson left a prospect five voice mails, he/she could record five customer “touches” without ever having talked to that customer. Equally, if a salesperson had interacted with low level decision-makers in the prospect company, this too was measured as successful interaction – even though many of these low-level calls did little to progress the process.
Proximity measurements, on the other hand, count only those instances when a salesperson spends quality time in front of the right contacts in the prospect company. Talking to the receptionist – whilst it may provide information of some value – doesn’t count. Neither do activities such as voice or emails. But an hour-long discussion, with a clearly defined decision maker about critical business that relate to the solutions under review does.
There are other examples. Sales managers have long relied on quarterly revenue numbers to gauge sales progress. But that metric is irrelevant in a solution-selling environment. Managers should instead be looking at the quality of the deals and the depth of penetration of a customer’s business. In other words, not how much business the organisation is getting, but how much of the customer’s spend, in a category, the company is getting.
A complete overhaul of the metrics used in selling may sound like an overwhelming task, but the key to successful measurement of solution selling effectiveness is to use a limited number of metrics that provide a solid picture of what’s going on. Instead of the wide range of metrics usually employed to monitor transactional selling – sometimes as many as 8 or 10 criteria – solutions selling relies on fewer, more effective and focused criteria.
As organisations around the world come to grips with making the transition to solutions selling it is vital that they take time to ensure that the right standards (measures and metrics) are in place to effectively monitor and report on progress. Generally speaking, what gets measured gets done.