The Cold Call is Dead
“Why aren’t you calling more?!”
A shout heard in sales rooms up and down the land. Why aren’t you calling more people? Why aren’t you emailing more people? Why aren’t you setting up more meetings?
For some sales leaders, the answer to every sales problem is “more.” For some sales leaders, that’s the answer when things are going right as well. “We could 2X our revenue if you just 2X the amount of people you were cold calling.”
But more does not equal better. More activity for no more revenue is the opposite of what you need in your sales team. It is the closing that matters, not hitting activity quotas. There is no Cadillac Eldorado or set of steak knives for the rep that called the most people.
The goal is more revenue. That outcome is more important than the activity that got you there. Yet almost every sales analytics platform makes you think otherwise.
Tracking Call Volume Is a Weak Metric
You have two salespeople. Rep A calls 20 people per day. Rep B calls 50 people per day. Which is the better salesperson?
You can’t possibly answer that question. You don’t have the right data. In particular, you are missing:
- Context — Is Rep A new? How much time are they spending on these calls? Are they reaching people on these calls? What is the quality of the people they are reaching?
- Outcome — Are these calls leading to meetings? Are these calls leading to deals? What is the output of each rep for the month so far?
Metrics on their own are meaningless. Activity metrics on their own are dangerous for two reasons. Firstly, what gets measured gets managed.
In Electrical Units of Measurement, Volume 1, the physicist and engineer William Thompson, better known as Lord Kelvin, wrote:
“When you can measure what you are speaking about, and express it in numbers, you know something about it”
He meant this as a good thing. When you measure something you get to understand it, and through that understanding you can start to affect it.
Over the years, this has been twisted into the pithier what gets measured gets managed. If you measure activity, that is what will be managed. If you track call volume, this is what will start to matter to your reps. This leads to the second problem: activity metrics are easy to game. To hit a dial quota, I could call unqualified leads (we’re picking on cold calling, but this is the same for any activity metric). I could call back prospects that have already told me they aren’t ready. I could even call the same person over and over or random numbers depending on how well the sales organisation was managed.
If a rep is being measured on their activity, activity is what will matter to them. They want to do well, and you are telling them that picking up the phone and calling people is “doing well.” But more activity isn’t what you want from your team.
Activityless Analytics
Sales activity metrics are akin to engineering teams tracking lines of code developers have written and then using that as an effective measure of output. No one cares if a developer writes 2,000 lines each day and any engineering lead counting lines of code would quickly have a mutiny on their hands.
Instead, developer teams measure their output in terms of final goals. The big goal might be to ship a new feature. The smaller achievements within that goal would be completing the components that make that feature — the UX framework, the API, the design assets.
The same should be true of sales teams. Each sales team has a final goal: hitting the end-of-month target. That final output is the sum of all the smaller achievements — each team member closing deals throughout the month.
If you measure output, that is what will be managed. This is the Heresy dashboard that each rep gets:
This is the Heresy analytics that every manager gets:
One thing missing from both? Activity. We aren’t tracking calls made, emails sent, or meetings set up. Tracking what people are doing is not going to help you know how people are doing. We are tracking the outcome of that activity: revenue.
This is what matters most for both salespeople and sales managers. Adding activity metrics to their dashboards just clutters their view and increases their sales cognitive load.
There are other metrics on the dashboards, but not activity metrics. They all are outcomes of activity:
- Deal size — are reps chasing large enough prospects to hit their targets?
- Win/Loss ratio — are the reps winning enough of their deals?
- Average time to close — are the reps moving deals through their pipeline fast enough?
- Contributing deals — which deals are the reps currently working on?
- Sales velocity — is the overall speed of closing deals enough to hit the end-of-month target?
Any rep (or manager) looking at this dashboard knows two things:
- Their state of play. They know where they are in the month, whether they are closing large enough deals or need to move a little faster to hit their targets.
- What matters. They know that they have been given a task and that task is to get that burndown chart to zero by the end of the month. Revenue matters, not how many calls they have made.
How they get there is what comes next.
Getting that burndown chart to zero by the end of the month requires a lot of activity. A rep has to send emails, has to set up demos, and yes, might have to call a couple of people. If they are missing their quota, how do they improve without focusing on activity?
They do focus on activity, just not in the context of metrics. Every week during their sales standup, or every day in the natural course of their work, they talk to their other reps, leaders, and managers about how they could do better. If they are having trouble getting demos set, they talk to their manager about explaining the value proposition better. If they are having trouble with people not answering the phone, they talk with their peers about how to qualify leads better.
In almost all cases, the problem with activity isn’t quantity, it is quality. In most cases, small numbers are better. A developer writing five lines of code to do what another developer takes 100 lines for is doing a better job. They are more efficient and produce higher quality code. Because of that, they can get more goals completed.
In his SaaSFest 2017 talk, Steli Efti, CEO and co-founder of Close.io, set out his AQC framework: Activity, Quality, Conversion. We would switch that around and go Conversion → Quality → Activity:
- How many deals are you closing?
- If too few, what is the quality of the work you are doing?
- If high, then that is the time to increase the amount of activity.
This is best described by a simple sales funnel. Let’s say a rep is closing 5 deals for every 100 calls: 100 calls → 20 conversations → 10 demos → 5 deals.
What do they need to do to double that close rate? In theory, they could 2X the number of calls they are making. This is what an activity-metric based system would push you towards. But this is just hiding the problem. To hit ten deals, you would have to make 200 calls, and still have a close rate of 5%.
The better answer is to work up the funnel:
- How can they get more of the demos to close? They could improve their demo technique and refine their answers to objections.
- How can they get more conversations to demos? They could improve their initial sales technique and pitch.
- How can they get more calls to conversations? They could improve their qualification process.
Each of these is about doing better work rather than more work. As an added bonus, along the way they are becoming a better salesperson so each of these becomes easier and less time consuming in the future. If they can 2X each of these steps they wouldn’t just double the close rate, they would 4X it.
By seeing the world in terms of outcomes rather than activity, it allows you to see those activities as just a means to an end.
What Gets Measured Gets Managed
It is good to be data-driven. But when the data becomes the focus, it has driven you too far. This is what has happened to activity metrics in sales. They have become what sales teams are striving towards. More calls, more emails, and more meetings.
But this is a waste of your money and their time. By focusing on the outcomes in your analytics first, you can show that revenue matters. Closing matters. This can allow your sales teams to deep dive into how to get there. This allows sales teams to take control of their own destiny, while still giving them insight into the numbers that matter.
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To help your sales team take back control, head over to heresy.io and signup for your (free) account.
Originally published at blog.heresy.io on April 10, 2018.
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