Metrics And Measures Really Do Matter
This morning over breakfast I was talking to my family about what happened yesterday while I was out of town at an off site client meeting. My wife was watching our four-year old son Mattox play Wii; in particular a mini golf game. Mattox played one hole over and over and over again — basically driving my wife crazy. When she asked Mattox to play a different game or even a hole — he had an interesting answer for her. It turns out the hole he was playing is the one that creates the most coins that he can use in the treasure chest to customize his player.
To bring this back to sales enablement — one of the key things I focus on is buyer alignment. In our ongoing quest to myth bust conventional wisdom about sales and marketing — we’re taking a “customer-first” view on all of the little details we use in our industry to drive our sales engines. One executive I spoke with told me that one of the things they will look at in a vendor is the compensation plan of the sales organization. His view was that at the end of the day, it doesn’t really matter what the words are used — you get a much better feel for the true behavior of a given company based on their internal metrics.
Mattox is only four years old, but he figured out how to work a game to his benefit to get what he wants — the same is true with the metrics you set for your sales and marketing system. Here are a few common scenarios we see:
- Customer benefit realization pricing models — One company has moved off a price sheet and has developed a detailed questionnaire their sales teams work with prospective customers based on the problem they are looking to address, the current state environment, the desired end state, and a phased approach to benefit realization. This vendor ties its compensation to how they help their customers realize their business objectives. How effective is this approach? One of their projects was losing money so they shared with the customer the problem. Because all of their goals were aligned, the executives quickly showed the vendor what they could do to fix the problem and make more money. Think about that. Normally that relationship is the inverse (vendors margins are too high, buyer focuses procurement resources to reduce the spend).
- Abolition of commission structures — A microchip manufacturer, like a lot of other companies in our industry, has decided that its profitable growth strategy is tied to its ability to be intimate with its customers. They have taken this approach to new levels — abolishing all classical compensation structures; replacing sales incentives with a combination of team goals and customer success metrics. This company now has a 3% attrition rate, but more importantly margins have grown significantly as their customers are willing to pay a premium for the streamlined relationship.
The bottom line here is that the metrics you measure performance against drive the behavior — but this is often outside of the calculus of most sales enablement programs. To truly optimize your sales engine, you need to do some heavy lifting and deeply understand what is the end game. Are your optimizing a bunch of individual people, in disparate roles to generate a variety of deliverables or activities OR are creating a system that manufactures value for customers?
While there are many low-hanging-fruit sales enablement projects to tackle, at the end of the day the returns on investment are ultimately tied to the yield of the system; not by constantly monitoring the individual piece parts. Instead of focusing soley on measuring microscoping projects, deliverables, or activities - sales and marketing executives should agree on the specific measures for success for the whole system. Without that, there is no way to know if the individual goals set for: branding, demand generation, product marketing, sales engineers, sales management, or individual sales people align with each other or not.