Effective Sales Capacity – The only Sales Management tool you’ll ever need

SalesCapacityIf you can get the collective brain of your sales team wrapped around the concept of Effective Sales Capacity, you’ll have taken a massive step toward effectively measuring and continuously improving sales performance. In fact, if you don’t get the collective brain of your sales team wrapped around the concept of Effective Sales Capacity, you’re opting for dumb luck as your continuous improvement strategy.

And, frankly, it shouldn’t be hard to do so.

The logic is straightforward. Sales closed is a function of four factors:

  1. The Number of opportunities being worked at each stage of the funnel
  2. The $ Value of those opportunities
  3. The % Advanced to the next stage of the sales process
  4. The Cycle Time for each stage of the sales process

Right now this instant, your sales team has A opportunities in the funnel, potentially worth $B in sales, since C% of those deals will close in D days. With a decent CRM (that’s being effectively used!) it’s a simple matter to calculate your current sales capacity.

It’s even easier to figure out with this Effective Sales Capacity Calculator.

Plug your own numbers into the tool, then begin to ask the obvious questions:

  • Should we be working more opportunities? (Or will that cause us to get bogged down trying to juggle too many deals?)
  • Should we be focused on increasing the size of the opportunities we’re working? (If so, how? Will bigger deals take longer to close? Or should we focus on winning smaller deals really quickly?)
  • Should we be focused on advancing more deals to the next stage of our sales process? (Or should we concentrate on qualifying opportunities and getting more dead weight out of the funnel sooner?)
  • How can we do everything faster? (Why does it take so long to get an opportunity through Stage X of the funnel?)

And so on…

The discussions (and thinking!) prompted by these sorts of questions and the many others like them, is an exceedingly great way to identify the genuine “Sales Best Practices.”

Or you could rely on dumb luck.


Help ‘em make better decisions

Virtually everything I read about how to differentiate products and services from the competition uses the phrase “differentiate your products and services.” And of course that makes sense. It bugs me though, because it frames the question much too narrowly.

Differentiating your organizational knowledge – not just your products and services – is what really matters.

trainingHard to do! But ya’ gotta’ start somewhere. Becoming great at decision-making – and more importantly helping your customers become great at decision-making – is one way to begin.

Think of all the times you’ve had a sales rep tell you that the customer is just making a bad decision; not considering everything and therefore a sale is lost. Think of all the times in your own career when you’re dead certain the customer decision team is making a bad decision for their organization; not considering everything and therefore a sale is lost.

Fact is, most managers in most organizations have gotten about as much training as you got to be a sales manager. Zero! Zilch! Nada!

Here’s some material that equips you to conduct  an education session/discussion at your next sales meeting. Study this article from McKinsey & Company. Use this PowerPoint. Teach your team. Give them the Decision-Making Checklist. Expect them to use the knowledge.

Differentiate your organizational knowledge!

A different spin on time management

Time management has been on my mind lately. Came across the following article in my routine reading. Good stuff.

How Is Your Time Being Spent?

“Time available for selling” is plummeting.  Several years ago, we assessed how sales people for a very large client were spending their time.  Both they and we were shocked with the results, less than 20% of their time was being spent directly on customer related activities. Let me sharpen that definition a little, primarily so you […]Related Posts:Lean Sales And Marketing — Time Available For SellingGetting Things Done Through Our PeopleTime Available For Selling, Again……Lean Sales And Marketing — Standard Work354 Sales Conversations In Just A Week! No related posts.

Managing somebody else’s time

Good time management is one of those fundamentally, indispensable business skills. It’s rightfully part of every basic sales training course. As a sales leader, your time management aptitude is even more critical. You also need to be sure that everyone on your team manages time well.

But trying to manage your sales pros’ time for them is doomed to failure.

timemgmtThey’ll revolt. They’ll push back against the (perceived) micro-management even when it’s for their own good.

So now what?

The answer is, change the question. Nobody can lead or manage a sales team by dictating what needs to be done when. The only answer is based on identification, tracking, reporting and discussion of a handful of core metrics. And the only way to identify the core metrics is to first clearly define the sales process that’s being measured.

For starters, answer the following:

  • What are the stages of your organization’s sales funnel?
  • What are the crystal clear completion criteria for each of those stages?

With those answers in place and a half-way decent CRM system, four critical metrics emerge:

  • Number of opportunities at each sales funnel stage
  • $ Value of opportunities at each sales funnel stage
  • % Opportunities Advanced from each stage
  • Cycle Time for each stage

Those metrics in turn can serve as the basis for really, really useful conversations. (Ummmm, maybe those conversations could be called coaching???) Picture yourself sitting down with each of your reps kicking around the following talking points:

  • Your “Metric X” is 27% lower/higher than the team average
    • Why is that?
    • If it were higher/lower, what impact would that have on your sales?
    • Should it be higher/lower given your territory?
    • What can you and/or I do to drive it higher/lower?
  • Your “Metric Y” is 19% lower/higher this month than it has been over the last year
    • Why is that?
    • Is that good or bad in terms of closing deals?
    • What can you and/or I do to drive it higher/lower?

No dictating in that sort of discussion. And no directing of where to invest time. Just agreement on what metrics deserve focus and mutual thinking about what to do next and how to do it.

So it’s not managing somebody else’s time. It is, however, causing time to get invested where it’s most needed. It’s coaching and it’s leadership.

“New School” Version of an “Old School” Tactic

oldschoolYet again, Isaac Newton’s “If I have seen further it is by standing on the shoulders of giants” came to mind as read Matt Heinz’ post about business cards. (See link below.) This time the lesson reinforced for me is that many – if not most – business practices never really become obsolete. Sure they need to be updated, adapted and tuned to take advantage of new technologies, but the fundamentals remain in place.

Methodical, relentless, continuous improvement of everything we chose to do is not optional.

Exchanging business cards is for sure an old school practice, but with a few tweaks, becomes decidedly new. Read the original post, then come back for a quick summary

How to convert business cards into an active network & pipeline

Next time you swap business cards:

  • Ask for permission to add a subscription to your blog (or your company’s blog) for the new contact
  • Send a LinkedIn connection invitation within 48 hours
  • E-mail the new contact with a link to or attachment of “someting I thought you find interesting”
  • Add the new contact to your CRM (via a smartphone-based card scanner)
  • Add the new contact to the appropriate “Contract Nurturing Track” (…you do have several “Contract Nurturing Tracks” tracks defined and automated, right? At least a “touch” every week/month/quarter/year, right?)

Update all your old school practices! (…or dump them!)