“It is impossible to escape the impression that people commonly use false standards of measurement — that they seek power, success and wealth for themselves and admire them in others, and that they underestimate what is of true value in life.” – Sigmund Freud
We love measurement! Not just within sales – but as a species. Ever since we’ve been able – we’ve looked to quantify things. We’ve quickly developed units of weight, length, volume etc . Often this is because we like standardisation for functions like construction and, undeniably, for comparison for functions like barter.
This love of measurement has followed us through civilisation and is now taught early on in the maths syllabus for our children.
To give an example of how unconscious and pervasive this quantification mentality is – tell a child ‘I love you’ and their likely response will be either ‘how much’ or ‘I love you more’. They often innocently look to quantify love. ‘I love you to the moon and back’ and ‘I love you more than all the grains of sand on the beach’. All are phrases synonymous with romance, but also examples of our desires to quantify what’s around us, even our emotions. What the underlying concern here is comparison – do you love me as much as I love you.
The question to possibly ask is whether an emotion like love is digital or analogue? Is it on or off, or are there degrees? So are we and should we be looking to understand the quality of the ‘love’ or the quantity?
This is interesting – because the discussion about love and quantification is long been a focus on business and sales. And here is where we get an immediate issue. Sales is an industry undeniably hot on measurement. Because sales people are often responsible for the revenue and margin in a business – and because this is incredibly important to a businesses survival – these tend to get heavily measured within a sales team. But they often get measured simply on quantity, rather than quality. And, are they about measuring the relationship from the clients perspective or ours? Are we asking ‘how much to you love us’ or ‘how much do we earn off you?’.
And, the next question is what are we measuring? To bring the question of ‘how much do I love you’ back up – how do we measure this? Is it how you make me feel or how many kisses you place on my cheek? Is it how much I miss you when you aren’t around, or is it how many times you say I love you?
In short, do we determine how much someone loves us based on quantity of interactions or quality of the relationship? You can probably guess where this is now going around sales measurement.
If we measure quantity in sales – these become how the sales team focus. If you measure quantity therefore, do you run the risk quality suffers? In sales, quantity measures are often determined as outputs – products sold, revenue driven, margins obtained, cross sale rates etc. So, naturally, these are outcomes of transactions. But are they always outcomes of relationships? Also, these measures are about how much the relationship means to us, but seldom about how much it means to the client. We look to quantity their loyalty in terms of revenue. We look to measure there love of us by way of what margin we can drive from them. This seems at crossed purposes.
These outcome quantity measures are often about the value to the business the sales person works for, not the value of the relationship/transaction to the client. Clients don’t really care about how much revenue you earn of them, what margin you drove, your penetrative sales ratios – they care about what the product/service they engaged you for does to improve their position. But we don’t measure this do we? We look at internal ROI’s – but do we truly understand the difference our sale and relationship makes to the clients business? This is what they are buying after all. This is why they are choosing us?
Now, couple this to the conversation around company values. Most medium to large companies have mission, vision statements and goals which are nearly always client sentiment focus. Statements like ‘Deliver WOW through service’ (Zappos), ‘Inspire moment of optimism and happiness’ (Coca-Cola). But what do they measure are sales team level (not saying the two examples are guilty of this!)?
The questions to consider are:
- Are we measuring in line with our value statement? That is, are we measuring ‘what’s in it for the client’ rather than ‘what’s in it for us’, and
- Are we measuring quality or quantity?
Undeniably, measuring unit sales, revenue, margins and the like are important in business. The need to be measured – but they shouldn’t be the main or only thing you measure. However, the question is whether these measurements are appropriate to motivate your sales team and how they interact with their clients. These types of measurement risk becoming the defacto values for the sales teams. Often companies try to disguise measuring revenue, margin and unit outputs by measuring the activities that drive them. But again, the underlying intent is to drive your sales team toward sales activity which is in the best interests of your business, not your clients. Therefore, you run the risk sales teams don’t focus on the company value of making a difference to the client, but rather on generating maximum value to their employer. It is more often luck that these are aligned.
Why is this a risk and problem in sales?
If you measure revenue, you risk your sales team seeing clients as dollar signs. If you measure margin, you risk clients being seen as percentages. Sales teams value the relationship with the client in line with this thinking. Therefore they do and don’t do things in line with this. If they can’t sell you something today, will they focus on the relationship with you if there is another client who they can sell today? In short, you run the risk of them focusing on transactions over relationships. More importantly, you run the risk that your sales team has myopic conversations with the client solely around what they can sell them, not wider conversations about the business. As a result, they can talk to the wrong people – CFO instead of CEO because they just need a purchasing order, not to understand the company strategy.
What you end up with a symptoms like
- High client churn – clients experience the divergence of the mission and the sales activity
- Service over product complaints – missions set a client expectation, failure to deliver on this because of a focus on sales quantity mismatches expectation with experience
- Transactional relationships with clients – your sales teams only becomes interested when a sale is pending. Leaving you exposed to competitive threat when there isn’t a pending transaction
- Shallow client knowledge – given your sales team focus on what’s in it for them, they don’t take the time to understand their clients entire business – just the bit that matters to the sale
- Lost/uncaptured value – as a result of shallow relationships, there is often uncaptured value in a relationship. The lack of referrals to other departments in your business or external partners are an example.
The problem is measurement. Businesses have to measure something. They always have and probably always will. Quantity, as history has shown us, is easy to measure. Even our quality measures are often quantity measures in disguise. Look at the quality of gold. 24 carat gold is quantity measure (eg lack of impurities) rather than a quality measure. It is difficult to measure client sentiment and ‘the difference’ we’ve made to a client, so we opt to measure quantity – which isn’t a bad thing, but do we measure it with the correct intent?
Sales teams focus on transactions because they are measured in the outcomes of transactions, not in the value of a relationship? This changes why sales people sell. They sell to meet what they are measured on because what they are measured on is often what they are remunerated on and what they are remunerated on is also what they are exited for when they don’t do it. If they aren’t measured on the meaningful difference they make to a client – will they focus on it?
Good sales people are often immune from this as they cast aside their KPI’s knowing that doing the right things for the right reasons will see them achieve sustainably as a result of doing right by their clients. However, for new sales people coming in to a business – they run the risk of quickly seeing their clients in terms of revenue, numbers of units or margins. How many times have you heard a sales people say ‘But they only earn me….’. Would you say this to your client?
As question to sales leaders – would you be happy if your clients saw how you measured your sales team? Would you be happy for them to see you rank your sales team on revenue earned, numbers of products sold? The issue here, as mentioned above, is that these aren’t client forward measurements.
There aren’t any easy answers here and nor is the intention to present any. It is merely to provoke both thought and conversation around the appropriateness of the historical method of measuring sales teams performance and whether it is in line with the vision company’s espouse on their websites and marketing material. If we are going to market to our clients, stakeholders and staff that our vision is to make a meaningful difference to our clients yet continue to measure what’s in it for us – something has to break somewhere doesn’t it? But at who’s expense – most likely both the client and the business.
In short, if we persist in only measuring what we sell and how much it is worth to us rather than why we sell it, we run the risk that what we sell and how much it is worth to us becomes why we sell it. We then lose sight of the client benefit and, ultimately, the client at some point. We need to start measuring why we sell our products and services as this is what the client is buying and why they will keep coming back.