"If you don't know your numbers, you don't know your business." — Marcus Lemonis
"It's a numbers game, but I don't know which numbers" — Average Salesperson
Okay — I made-up the last quote, but it's still true. Too many times, I meet with sales managers and salespeople who firmly believe that sales is a "numbers game", but they have no idea what numbers they need to know or even what numbers they should be tracking.
Most sales leaders focus on KPI's (Key Performance Indicators) and while they are important, they do not help produce sales improvements. KPI's are like your scorecard after a round of golf, fun to see how you played, but they can't help you play better for the round you just finished.
Rather than focus on KPIs, it’s time to concentrate on Leading Indicators so that we can effect change during the game that will help you and your team win. Think of leading indicators as data that allows you to make "in-game" adjustments, so that your team can keep scoring.
What Are Leading Indicators in Sales?
Salesforce states that, "a leading indicator describes everything that leads up to making the sale. It’s the top of your sales pipeline and defines how capable you are at opening an opportunity — not closing a sale."
Leading indicators provide insight into likely future outcomes, giving organizations the ability to act accordingly in the present. To improve "in-game" performance, we need to add leading indicators to your sales management toolbox.
Leading indicators help you determine whether you and your salespeople are doing good, bad, or ugly. They help us manage our activity so that we can know how much more we need to do to produce success. If this was a football game, your leading indicators would be:
- The number of offensive plays
- The yards per carry
- Your completion rate
- Your quarterback rating
If you know these numbers, you know if you’re doing the right things, in the right way, to score touchdowns and win the game.
In the world of sales, leading indicators give us real-time data on how sales are going. They tell you if your team has enough activity, the right amount of proposals, and what your closing ratios are.
Leading Indicators Sales Managers Need to Track
How often have you assumed that your sales team was going to hit their goals and then suddenly, all of their pending disappears, and they miss budget? Sadly, it happens too often. Most Account Executives are not good forecasters, which puts sales managers in difficult situations.
So, which Leading Indicators should you track? The answer depends on what is important to your organization and what indicators are predictive of the overall success of your team.
5 examples of Leading Indicators that you can track:
- Number of New Business Appointments
- Number of Needs Analysis Completed
- Number of New Proposals
- Closing Ratio
- Average proposals sold
Tracking leading indicators does three things for you:
- Gives you real-time data for your sales team and salespeople
- Helps you know what they need to be doing to be successful
- Predict the success of your sales team
You'll be able to see in real-time if a rep is making enough new appointments, presentations, and ultimately sales to meet or even exceed their sales budget.