by GEORGE BRONTÉN for Membrain
In the world of complex sales, people generally take themselves very seriously. Sure, there’s fun and laughter in the workplace, but when it comes down to it, business professionals like to think of themselves as results-driven, real-world achievers.
People certainly don’t like to be accused of “playing” at work, or, worse, “gaming the system.” Yet, according to Pieter Kemps, a venture capitalist at Sequoia Cspital with a focus on SaaS, that’s exactly what starts to happen in companies north of $10M in annual recurring revenue after introducing sales management, KPIs, dashboards, etc.
“Everyone does it. Your reps do it, your sales managers do it, your VP does it. And, yes, founders do it too…”
Kemps goes on to clarify his point: “Your sales team will invariably move from ‘doing Sales’ to ‘playing Sales’: downplaying market opportunity, sandbagging, manipulating data, over-reporting on input metrics, etc.”
When a measure becomes a target, it ceases to be a good measure.
He concludes that because of this, leaders must maintain a focus on the measures that matter; i.e., outputs. When we over-focus on activity levels, opportunities, number of meetings, emails sent, and other such metrics, we open the playing field for sales teams to muck around and create a false picture.
But the outcome number never lies. The results are the results, and you can’t pretend they’re anything other than they are. “Revenue cannot be gamed.”
Is “Playing” the Numbers Always Wrong?
The idea that people are all going to “play” with numbers is interesting, and he’s got a point. Playing is an essential part of human nature. Competitiveness is built in, and salespeople are often among the most competitive. As is the drive of being liked, and the assumption that you will be liked if you show good numbers.
Whatever we measure and compensate people by, that is likely what they will “play” to. That’s the idea behind managing by numbers: that people will want to top the leaderboards, best their colleagues, and win the appreciation of their bosses. If we’re measuring inputs like how many calls they schedule, how many opportunities are in their pipeline, and whether they’re checking all the boxes on what they’re “supposed” to do, then that is what they will focus on. Or is it? If it is, do we need to choose between leading and lagging indicators?
How To Get Results Anyway
So if sales professionals are always going to play the system, as Kemps states, how do we get the outcome we strive for? Kemps suggests the solution is to focus on outputs at least as much as we focus on inputs: He says: “When a clear gap between Sales input metrics and revenue is identified, you know the team is “playing Sales”. Then, focus on the output. Focus on the numbers that can’t lie.”
I agree that measuring your output is critical to ensuring sales results and preventing people from gaming the system. I would add to that, however, that if you go too far in that direction, you will lose sight of HOW you get the outputs you want.
In complex sales, especially, focusing exclusively on “revenue” can lead to massive lags in performance. For instance, if you have a six month sales cycle, by the time you know whether something “works,” you’re already six months behind on adjusting to do better.
You have to be able to:
- Measure sales effectiveness (e.g. win rates, deal sizes, sales cycles)
- Understand what works and not with win/loss analysis
- Adapt your leading indicators according to results
- Understand your people and coach them towards success
- Lather, rinse, repeat
Management by lagging indicators alone won’t allow you to do this.
In Other Words, You Need a Milestone-Based Process
At the risk of beating the same drum I always beat, the solution to me seems obvious: You need a milestone-based sales process, and you need to have it reinforced and measured within the salesperson’s daily workflow.
In other words, you need to develop a sales process that is aligned with your sales strategy, and that walks salespeople through the stages, milestones, steps, and activities necessary to move each opportunity toward a sale.
And you need a way to measure and see what salespeople are doing at each stage, milestone, step, and activity of the process, so you can course correct in real time. Then you need to be able to see how each of these factors impacts the end result, so you can constantly improve the design of your sales process and coach your team to use it.
With all of this in place, then you can afford to let your sales teams play. Because the numbers they’ll be playing with are the ones that actually drive results. For instance, if you know that identifying the needs and desires of all stakeholders is critical for a positive outcome, you can place metrics around it, and reward those metrics.
Now you’ve got salespeople focused on the right things more effectively, rather than salespeople competing just to have the most activities on the board.
So, what do you think? Do your salespeople and managers “play sales” instead of “doing sales” with a relentless focus and minimal BS? What would it look like to align their “play” with the outcomes that your company needs?
