Sales Metrics

As discussed in the last blog, having accurate information is crucial in growing an emerging business.

In order to emphasize this, let me share an experience.

Jim Arum’s business had been operational for about a year. Although he would like to have been further down the road in building his revenue stream, he felt he was headed in the right direction. Jim worked hard. He got into the office around 7 am and never left before 6 or 7 pm.

He did this for five or six days each week. He also spent numerous Sundays getting caught up before starting again on Monday morning.

Even though he was working hard, he loved what he was doing because all of this hard work was for himself and not a boss who generally did not appreciate his efforts.

One thing Jim was never very good at was accumulating sales data. To make a long story short, entering his second year, Jim did not really have a handle on the cost associated with making sales. He did not accumulate data on how many sales calls it took to get in front of a potential client, how many client presentations it took to make a sale or what type of indirect costs were associated with the sales process.

Jim decided that he needed to add a couple of salesman. However, he had a difficult time recruiting good sales people because he did not have the data to show a good salesman candidate what to expect in building a book of business.

Although he hired several salesman, they soon quit because what they were told about the potential and the ease of adding new business accounts did not jive with reality. Sales metrics would not only have been useful internally. If he had them, he would have been able to demonstrate to the highly qualified sales candidates (which he could not get interested in the job) what the process and potential of the position he was offering had. If he had accurate sales data, he could have managed the sales process better and would have been accumulating new data all the time. This would have undoubtedly made his operation successful and attractive to potential salespeople.

After working with Jim for some time, he finally decided that what I was telling him was worth trying. Over time, he was able to establish a system which enabled him to better manage the sales process. His business growth made a big leap ahead. Eventually, he was able to move the business forward even faster because he was finally able to hire great salespeople.

Information is power. The more of it you have, the better decisions you can make and the better you can manage a business to success.

In my next blog posting, I will discuss financial metrics and their importance.