IN THIS CHAPTER

Knowing your numbers

Keeping your pipeline filled

Growing more efficient

In any new business sales role, you have a number of measurements, generally handed down by your sales line management. Paramount among these is your revenue target. You may also get targets such as number of new appointments in a week or number of prospecting calls made. These secondary targets are actually worthless in nearly all cases, and although they may satisfy a sales reporting structure, they won’t do anything to assist you in reaching your overall revenue goal.

This chapter explores ten key metrics to help you achieve your revenue goal and shows you how to set, track, and measure them. To succeed in winning new business, you always need to know your numbers. When you understand the ten key metrics, you’ll be in a good position to determine how many suspects and prospects you need to have at each stage of the pipeline to meet your new business revenue target.

Initial Decision Maker Contact (IDMC)

The initial decision maker contact (IDMC) is where a sales cycle really begins; it’s the point where the prospecting of that client turns into real sales activity. Until the IDMC point, all activity on that company is classed as prospecting or research rather than new business sales activity. IDMCs are the lifeblood of new business sales and in turn lead to everything else, and you just can’t skimp on this activity.

Your sales methodology will tell you how many IDMCs you need to make in each sales period. To get your daily target, you simply divide that number by the number of days in the period. Splitting down the number into a daily target achieves three things:

• It gives you a manageable number to hit. Having a big number of new IDMCs to hit can be — in fact, is — a daunting task. Breaking it down into a daily target to run alongside everything else you need to do makes it more manageable.
• It keeps your pipeline topped up. You need to keep the initial stage of your pipeline full so that you always have plenty of potential opportunities to work on and qualify, never having the excuse of “no one to talk to.” Breaking down your IDMC into daily numbers helps you focus on your pipeline by always having a number to achieve.
• It makes it a habit. You need to be in the habit of making daily new contacts at IDMC level and not let this task be daunting or allow it to consume vast chunks of time. Setting aside a specific day each week to work on new IDMCs, for example, isn’t nearly as effective as building it into your daily workflow, because then it becomes a habit.

So how many IDMCs do you need? The absolute answer is unique to your new business sales situation. In my case, I need to hit ten new IDMCs a week, and this is the metric that I watch closely. Ten a week is only two a day, but don’t be fooled into thinking that equates to only two phone calls — it doesn’t.

IDMC is contact with the decision maker — not an answering service, not an assistant, not someone junior as part of door opening, but an actual conversation with the decision maker. You likely won’t achieve this on the first call to a company unless you strike lucky, so this metric needs its own pipeline to hit the daily target of IDMCs. You can’t afford to take your eye off this metric because you need to stack the early stages of the pipeline, and you can’t have a prospect enter the pipeline until you’ve reached IDMC.

Another metric that’s interesting to watch, but not necessarily key, is the ratio of calls made to IDMCs. This tells you how efficient your early prospecting really is. I discuss this metric later in this chapter.

Subsequent Decision Maker Contact (SDMC)

Subsequent decision maker contact (SDMC) is, as the name suggests, each occasion after the initial contact that you interact with the decision maker. This interaction can be from any type of touch point: telephone, face-to-face meeting, or an email from the prospect (note that email only from, and not to, the prospect counts here).

SDMC is a key pipeline management metric and should be one of the first things you look at when reviewing sales activity within a named account. You need to track how many SDMCs you make each week. You should also measure the number of SDMCs you make each week within each target account in your pipeline.

You’ll know from your methodology how many SDMCs you need to hit each time period, and as with IDMCs (see the preceding section), it’s easier to split these numbers into weekly and then daily targets, for the same reasons that I outline earlier.

SDMCs within a named prospect are a good indicator of how well, or otherwise, the relationship is building up. With zero or just a few SDMCs, it’ll be very difficult to accurately forecast anything.

Just as with IDMCs, SDMC targets need to become habits and need application to meet them. If you don’t hit your SMDC targets, you likely aren’t building strong enough relationships with the prospects in your pipeline; without those relationships, you’ll struggle with qualification and therefore revenue targets.

Keeping track of SDMCs gives you and sales line management a good feel, based on real data, of how successful you are in really penetrating and getting to know your prospects. A weak SDMC number is a sign of a floundering new business salesperson, or one who needs support.

Qualification Key Stage Three (a.k.a. MCPQ)

Qualification key stage three is also known as MCPQ within my methodology. The name doesn’t matter all that much; what matters is that it’s a key metric to watch because it shows how your pipeline qualification is going.

The original meaning of MCPQ was meeting, confirmation, proposal, and qualification, and it was a measurement of how and when each of these stages was reached within a sales cycle. Although the acronym has stuck, because “key stage three” sounds like something from high school, the meaning has become much more relevant as years have passed.

MCPQ measures whether a prospect has moved forward during this touch point, in terms of qualification, and documents in exactly what way the forward move happened.

If a touch point doesn’t result in MCPQ, it’s largely a waste of time. The number of touch points and the number of MCPQs within a target prospect will likely be close; if a large discrepancy occurs between those numbers, then something isn’t right in the sales cycle and should set alarm bells ringing. In other words, if you’re not moving a prospect forward during a touch point, then what are you actually achieving?

As your qualification kicks in, some of your prospects will inevitably fail the qualification tests and drop out of the sales cycle. (Flip to Chapter 19 for details on qualification.) Figure 22-1 shows a pipeline with lots of activity at the top to pour in raw unqualified suspects and then a filtering through various stages of qualification with a lot of them dropping out along the way. What you’re left with is highly qualified prospects, which you should be closing the majority of and is certainly where you should invest your time. The further down the pipeline a prospect gets, the higher the level of qualification will have taken place and the closer he’ll be to becoming a new client, which is of course the desired result.

Prospects dropping out of the sales funnel is always going to happen, and depending on the nature of your business and solution, it may well be that the majority drop out. This is natural and nothing to be concerned about. Your qualification criteria are designed to eliminate as many of the prospects that stand no, or very little, chance of becoming a client without you having to spend valuable time and resources on them.

Qualification Key Stage Four (a.k.a. RPBT)

Qualification key stage four is also known as RPBT within my methodology. RPBT originally stood for role, project, budget, and timescale. These remain the fundamental cornerstones upon which all other qualification criteria are built; without them in place, you simply don’t have a qualified prospect. (See Chapter 19 for the full scoop on qualification.)

Note: The vast majority of companies will have industry- or solution-specific qualification criteria of their own to add, and they’re included within the definition and scope of RPBT as far as metrics and tracking are concerned.

Here’s an introduction to RPBT:

• Role: This makes sure that the key person you’re dealing with in your prospect’s organization is in fact the key decision maker or a key member of the decision-making unit. Unless he is, then the role element isn’t qualified, and the sale isn’t currently progressing. Dealing at the correct level of decision maker is vital because otherwise you’re almost certainly wasting your time.

  It doesn’t matter how much a subordinate within your prospect’s organization likes you or your proposed solution. Unless you’re communicating and selling at decision maker level, you’re not dealing with a qualified prospect, and your sale isn’t going to progress.

• Project: This makes sure that you’re dealing with a real need, something that your target prospect’s company actually needs and is a real pain point for it. Is the company actually going to do something about it? Is it in the plan? This part of the qualification is absolutely vital because you need to make sure that you’re dealing with a real, live project, and not somebody’s wish list or a side project that hasn’t been authorized.

  If you don’t properly qualify this element very early in the sales cycle, you risk wasting your valuable time and resources, something you simply can’t afford to allow to happen. Far too much sales time is wasted just because new business salespeople fail to qualify a real need. Obviously, in addition to qualifying that a real project exists, you need to ensure that it falls within the scope of your company’s ability to deliver against those needs.

• Budget: Another vital part of qualifying data is ensuring that the prospect has allocated a budget for the solution and that the scope of the budget falls within a level suitable for your likely solution.

  There’s no point in progressing a sales cycle for a Rolls Royce standard of solution if your prospect sufficiently budgeted for only a Kia standard. A mismatch clearly exists here, and the quicker you find out, the better it will be. There’s nothing wrong with a lower level of budget, unless you’re selling a high-ticket item. This also works in reverse: If the project has a Rolls Royce standard of budget and you’re selling a Kia standard of solution, then you also have a mismatch, and your prospect likely won’t settle for a cheaper solution.

  Here are some things to consider about budget. Does the budget contain any element of elasticity? Does it include ongoing support and maintenance costs, or is it a capital-only budget? Who has the ultimate sign-off? Is this person covered as part of the decision-making unit? Unless you know all these answers and the budget fits your level of solution, then your prospect hasn’t passed the budget qualification.

• Timescale: Understanding your prospect’s idea of time frame is essential. If he’s at the very early stages of his buying cycle and plans for it to take many months to complete, you need to factor this into any forecasting that you do on it, and you need to allocate your time and resources accordingly. Could you allocate some pre-sales support resources to provide your prospect with low-level information gathering if he’s some distance away from getting seriously involved and where your time is required?

  Don’t get too excited and throw everything at a prospect who’s months or more away from a decision point. You need to maintain your primary focus on short-term business wins while driving longer-term sales cycles.

Qualified Pipeline Value

The new business sales role is about securing sales revenue for your business, and you’ll have a sales target to meet, generally agreed at the beginning of the financial year. The figure isn’t always “agreed”; sometimes it’s handed down from sales management as a “will do” figure that you have little or no control over.

Whatever your sales target is and however it’s determined, your job is to at least achieve it and hopefully overachieve. To track progress against budget, you need to keep a close watch on the value of your qualified pipeline. You shouldn’t count anything prior to a successful IDMC (which I discuss earlier in this chapter).

Pipeline value and sales forecasting are different, although closely related in that one feeds into the other, largely based on level of qualification and weighting factors. Check out Chapter 21 for more about forecasting.

Weighting of pipeline value is done according to both explicit and implicit criteria by my methodology. Explicit criteria are

• Role
• Budget
• Timescale
• Project
• Demographics

So they’re the same as key stage four qualification (see the preceding section) with the addition of demographics. The more of these criteria that have been qualified, the higher the level of explicit qualification weighting is applied to the pipeline value.

Implicit criteria are

• No interest
• More info wanted
• Follow-up agreed
• Very interested

These are fairly self-explanatory criteria and are taken alongside the explicit criteria to form a weighting that you apply to the known project budget, giving a potential value to each entry in the pipeline. Clearly the weighting for no interest is much lower than for very interested; weighting increases as you go down this list. A word of warning here, though: Implicit criteria by their very nature are prone to rapid change, so make sure that you revisit them after each touch point.

You need to keep a close watch in the weighted value of your pipeline to ensure that it’s in line with your sales target. Any shortfall here is a clear sign that you need to do additional prospecting in order to fill up the early stages of your pipeline. Also keep in mind that you’re not going to win everything in your pipeline, through natural wastage and competitive activity, so make sure that the value of your pipeline reflects this and is significantly higher than your sales target.

Conversion Ratio of Suspects to Qualified Prospects

The conversion ratio from suspects to qualified prospects — those who make it into the pipeline to begin with — tells you a lot about the success of your prospecting efforts and the quality of your raw data. Watch your conversion ratio carefully because it guides you in the right direction and is a key metric.

Too low a ratio suggests that you’re doing something wrong with your approach to prospecting or that your data sources aren’t good enough. You need to address either of these cases because although prospecting is an extremely important activity, it needs to be time and resource effective and able to generate sufficient quantity and quality of leads that make it into your sales pipeline.

In Chapters 9 and 23, I discuss prospecting in detail. Take on board these thoughts; apply them to your prospecting efforts and try to be targeted in where you commit your time and resources.

Personally, I’m disappointed if any suspect I identify fails to make it into the pipeline as a qualified prospect, because I firmly believe in going for quality over quantity every time. Make this your goal, too. Spend less time on suspects by focusing on some key attributes that you identify, and prequalify out anyone who doesn’t meet your criteria, leaving you free to invest your time on a higher level of suspect.

Touch Points

Touch points with your prospect are vital. These are your primary opportunities to both qualify your prospect and to build your relationship. As your sales cycle progresses, the number of touch points will increase. So if you discover a highly qualified prospect in the sales forecast with a low number of touch points, then I’d be suspicious of the accuracy of the qualification and forecast.

The volume of touch points should be an accurate indication of where you are in a sales cycle. This metric also shows you whether you’re spending too much time on a prospect who isn’t progressing through the sales cycle sufficiently.

Keep a close watch on your touch point numbers and make sure that you’re using your time to maximum advantage.

New Prospect Identification

You need to keep your pipeline filled at the early stages because some of these new prospects will become your qualified prospects and new clients as time progresses. The last thing you want is to be floundering for prospects to sell to.

Having a regular flow of new prospects, emerging from your suspect pool (which also needs to be constantly topped up), is vital to your prospecting and sales efforts. See Chapters 9 and 23 for details on prospecting.

Have daily and weekly targets for the number of new prospects that you feed into your sales cycle, and don’t let this figure slip because it will have a negative impact further down the line. The absolute numbers that you need vary depending on your sector and solution and the length of your typical sales cycle, but work out the figures that you need to achieve, and then don’t let anything get in the way of achieving them.

Ratio of IDMC to SDMC

If you’re achieving a reasonable number of IDMCs but not securing many SMDCs (both of which I cover earlier in this chapter), then something is going seriously wrong, perhaps with the way you’re positioning yourself or with your prospect targeting. The ratio of IDMC to SDMC is a key metric to track.

You should always achieve a multiple of SDMCs for every IDMC. Within a target prospect, the ratio is a significant figure to watch and ensures that you’re covering the basis of the decision-making unit. Too few SDMCs will make any sales forecast or qualification a bit suspect.

If your ratio of IDMC to SDMC is too low, say, less than 1:2, you need to spend some time considering what the problem is and how to address it as a matter of some urgency. This low ratio implies that you’re not getting second touch point opportunities. A ratio of 1:3 in the early stages of a sales cycle is about average, and 1:4 is good to achieve. The relative importance of the ratio numbers is a moving target and shifts as the sales cycle progresses, but it’s a metric that you need to watch.

Close Ratio

Clearly, the number of sales that you close is of vital importance. To become more efficient as a new business salesperson, you need to pay attention to the ratio of IDMCs to close. This metric shows how efficient your sales activity and sales processes are.

When you have a good grasp of this number, you can work backward and determine with a fair degree of certainty how many prospects you need to have at each stage of the pipeline to deliver your target revenue figure.

Closing new business is the pinnacle of your new business salesperson’s role, but as you see from the ten key metrics in this chapter, the role can be made easier with a more scientific approach than just chasing everything that moves. Take the time to understand these metrics and how knowing your numbers can help you deliver more predictable new business success.