Talk to me in numbers – applying metrics to business success

If you have ever found peformance issues and the reasons being given seemingly incredibly complicated, then perhaps distilling the essence back to the number only may be the answer you are looking for.

For example, let’s say sales performance is down. A person can provide any number of reasons, incredibly well argued, as to why their sales performance is off. Or why they missed their last deal. And if they are any sort of sales person, they should be able to be pretty persuasive in their argument as they probably have been constructing in their minds for some time!

So how do you reshape the nexus of this? Well, get back to the numbers and the causal factors of success.

Step 1: Fishbone the profit and loss statement to look at where the revenue comes from

Step 2: Drill into the customers spend to determine which customers, what product lines, and which sales when.

Step 3: Determine the causal steps ie activity, necessary to get the success you need. For example, to sell $10 million of a service, you may need to have generated a sales pipeline of $30 million if you close 1 in 3.

Step 4: Determine the metrics that make sense around the steps to get to the target. For example, to get to $30million pipeline, you may need to have qualified $60 million of opportunities. If each deal is $10 million, it is 6 deals. You then track activity to create deals – number of presentations, meetings, sales calls, product demonstrations, roadshows and events.

Step 5: Turn the above into simple numbers next to boxes and track that against performance. This will in turn drive activity that leads to success and also may provide some focus to improve success rates on each successive step.

Used correctly, the above approach can move to an empirical analysis of activity that reinforces the right behaviours, and also how you can help along the way, and quickly ends long and unfruitful discussions.

If you have had a good experience – or a not so good experience – in applying metrics to your business, please leave a comment, I’d appreciate your feedback.

3 thoughts on “Talk to me in numbers – applying metrics to business success

  1. Strongly agree on the need for data-driven management.

    As you say “A person can provide any number of reasons, incredibly well argued, as to why their sales performance is off.” People are rationalizing creatures. It is important to have mechanisms that guide us away from self-delusion.

    Two other recent posts make complementary points.

    First a great post on the “10 best ways to lie with metrics”:
    http://scottmaxwell.wordpress.com/2007/02/23/10-best-ways-to-lie-with-metrics/

    Second a post on how to rationalize your answer based on selectively picking your market (as opposed to selectively picking your metric):
    http://simplematterofsoftware.typepad.com/weblog/2007/02/fractal_geometr.html

  2. Hi Kerry and thanks for the post. Both of the posts you have highlighted are excellent. Having spent over a decade in marketing, I also have seen the essence of the challenge in market definition – first mover advantage vs the market isn’t defined etc.

    Thanks again
    Justin

  3. Thanks for a good read. I agree that it can take a while before your investment in solar panels returns. But on the other hand, it is a very positive thing for our environment and it really helps!

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