An observation I have made in analyzing companies that fail to achieve their sales objectives is that they fail to put into place an effective process to track progress against achieving sales objectives. A lot of planning and execution effort is put into sales and marketing strategy, but not enough effort is put into validating how effective the sales and marketing strategy is achieving its intended results. Said more clearly …. No Metrics!
Metrics are what you use to measure results versus plan. They can be specific to a particular industry, market segment or product. It is safe to say that whatever the chosen metrics are they must clearly indicate if a company’s sales/marketing strategy is yielding expected results.
So how do you decide what metrics to use for your company’s sales growth efforts? I recommend the
SMART Principle when it comes to choosing metrics:
S stands for Specific. Each metric must be specifically devoted to tracking a key variable related to the objective you wish to accomplish. When you think about your objective, think about what type of metrics can be connected to it to verify its attainment.
M stands for Measurable. There has to be a way to track and measure progress against plan. For example, if your objective is to sell 1 million pounds of a new thermoplastic resin to injection molders over a 12 month period, you can measure number of pounds sold per month. Each metric must have some unit of measurement that can be tracked.
A is for Attainable. This applies more toward your objective and that it should not be “pie in the sky”. Unrealistic objectives are not attainable and metrics used to track such situations are useless. For example, if you are tracking contribution margin and the industry average is 35%, but you want 65%….is this really attainable? If not, you wasting your time.
R is for Realistic. Similar in nature to what I have written above, but if you want to sell 1 million pounds of a new thermoplastic resin to injection molders over a 12 month period, but it takes 24 months to get all the OEM raw material approvals completed, its not realistic. No metric can track an unrealistic objective only add to its fiction!
T is for Time-able. If you have an objective, you had better put a timeframe on it to maximize effort on its achievement. Time is money and money is the life-blood of a business, so one of your metrics ought to be related to the timeframe it takes to achieve whatever it is that you are striving to achieve. For example, sell $3 million in engineering services within the next 45 days.
Once you have established metrics for your objectives record them in writing and review them with your team on a consistent basis. It is critical that your team is aware of progress versus plan, as well as, is on track to achieve the plan. MicroSoft Excel or Word or are excellent tools to capture your metrics and to record updates.
I encourage clients to color code each metric associated with an objective. I use the Red (Issue), Yellow (Potential Issue) and Green (On-Track or Completed) system. This helps each stakeholder working on the objective to understand where it stands versus plan and to prioritize what has to be done to insure successful attainment of the objective.
In closing, put equal effort into picking the metrics used to prove your sales/marketing strategy is working as planned. Metrics drive results and help you be successful!
If your commercial team is struggling to achieve its sales objectives, or if you company is struggling with implementing an effective process to track the effectiveness of your sales and marketing strategy, call me at 248-760-6564 or email me at rich@TrueNorthPMPConsulting.com. I can help you!