The Math Every Sales Must Do

As a sales rep you need to deliver closed won deals to meet your quota.  As with all journeys to a goal, there is a hard, rough road and a superhighway, fast and smooth as a baby’s butt.  To earn your commission the most efficient way possible, wouldn’t you want to be on the superhighway? Of course!

The Math Every Sales Rep Must Do

Let me show you how to do some math to start you down your sales superhighway.  The key is to leverage data as much as possible along your journey.  To get started, you’ll need a few data points.  If you don’t have historical trends to use, an estimation is fine.  In fact, you might want to do the math a few times using different number so you understand the impact each variable might have.

Here’s what you need to get started:

  • Monthly, Quarterly, and Annual Quota
  • Average Deal Size
  • Sales Cycle
    • Ideally, Lead Create to Opp Close, but Opp Create to Opp Close can work for expansion reps
  • Win Rate / Close Ratio
    • Both Count of Opps and Value of Opps
  • Lead to Opp Conversion Rate

We will use these metrics and KPIs to calculate a few additional data points.  The first is translate our quota numbers to the number of deals we’ll need to close.  The second is to understand what size pipeline we’ll need to target to hit our number.  Finally, we’ll calculate how many quarters we need to project out and how much pipeline we need.

  1. The Deal Count

The first calculation is quite simple and uses quota and average deal size.  Simply divide the quota for the period by the average deal size and it will tell you how many deals you need to hit your number.  As a best practice, add 1 to the number you get:

(Quota for period / Average Deal Size ) + 1 = number of deals you need to hit your quota

Write these numbers down in a book or journal so you can refer back to them.  You may also want to use an Excel spreadsheet and keep track of the number of deals you need and which accounts will give you those deals.

2. What Size Pipeline Do I Need?

Once we know how many deals we need, we also need to know what size pipeline we need to close those deals.  This is where win rate (also known as Close Ratio) comes in.  You should have two win rate numbers, one based on  COUNT of opportunities and another based on DOLLAR VALUE of opportunities.

Depending on which you want to calculate, use the appropriate set for count of deals and quota.  The math is:

Count of Pipeline Size:  number of deals needed to hit quota +1  / win rate of count

Dollar value of pipeline needed:  quota for period +  Avg Deal Size / win rate of dollar value

Again, write these number down.  This is the size of the pipeline you will need to build to make sure you hit the quota number based on your historical win rate.

3. How Far Do You Plan Ahead?

You may be wondering why we haven’t used Sales Cycle yet.  While we aren’t going to use it in a calculation, we will use to see how far ahead we need to be planning. to hit our number.

Sales cycle can be calculated  a number of ways so be careful and understand what the number you have means.  For instance, many clients I have worked with in the past have used a sales cycle which measures Opportunity close age, i.e. Opp Close Date minus Opp Create Date. This is misleading if your business includes prospecting.  A true sales cycle uses either Lead/Contact create date or Account First Activity Date.    Make sure the number you are using a sales cycle which represents the true time frame you need to work your leads/contacts and close your opportunities.

quota period in days / sales cycle in days

If your sales cycle is 45 days, planning one quarter ahead is sufficient.  But if your sales cycle is 105 days, you must plan two quarters ahead.

It’s a Wrap

With these three pieces of math in mind, you are well on your to establishing the foundation for your superhighway to 100%.  Understanding what it takes to hit your quota number, how long and planning far enough ahead is huge and gives you a head start against your peers.  You may be amazed at how many reps don’t DO THE MATH.

 

Welcome 2017! My Three Focus Words

2016 is history.  Not the best year, not the worst year.  It was a year of change, strong opinions and shock.  From mass shootings to celebrity deaths to the election of Trump, it was a year we will all be talking about and trying to understand for decades to come.

It was also the year that I established myself in the Pacific Northwest.  It was the year I became a two car owner, a year in which I established my style and a year in which I learned about myself.  While I do not have a lot to brag about in terms of accomplishments, I can say I rode the tide, survived the year, and learned what is important to me.

As I look back on 2016 and dream about 2017 will bring me, I am filled with a bit of anxiety, hope, and inspiration.  Like a blank page in an artist’s sketchbook, the new year is a blank slate waiting to be filled with memories, transactions, people, ideas, and dreams.  It is more inspiring than anything.

Back in 2006, Chris Brogan began publishing 3 words to represent and guide him throughout the year.  This tradition is ten years old in 2016.  The idea, as described by Mr. Brogan:

Pick any three words that will guide you in the choices you intend to make for 2016. They should be words that let you challenge yourself as to motives and decisions. They should be words that help you guide your actions.-Chris Brogan

So, without further ado, here are my three words:  Connect, Learn, Build

Connect – connect is about connecting with the community around me, the poeple, rhe places, the events, and the technology.  Throughout 2017, I will be looking for opportunities to connect with everything around me.

Learn – While we are required to spend roughly 18 years in school before we are ready to participate in the world, the truth is life is one big school and you should never stop learning.  I am eleven years into a career in Analytics and I realize how fast technology changes.  I need to stay current on the tools.  I also want to set the foundation for grad school, so I have some studying to do for the GRE.

Build – This word has a few meanings to me.  First, I want to spend more time doing things with my hands, away from computer and not reliant upon technology.  From a hydroponics system to arts and crafts, I want to build. Second, build represents establishing a foundation for the latter half of my life.  I see myself undergoing a lot of personal change and 2017 is the year the foundation is built for that change.

What are you three words?  What’s your focus on 2017?

My Views on the 2016 Presidential Election

My disclaimer:  I am not normally vocal about my political views.  Politics are best left for the debate table and not for work or other sensitive environments.  But, my feelings and observations regarding the 2016 Presidential election are so strong, this blog post is a fair expression and my right of Freedom of Speech.

The results of the 2016 Presidential election were none other than shocking.  For so long, the media hyped Trump as unfit for the office of President and fed us poll after poll of Hilary Rodham Clinton’s (HRC) lead.  In the late hours of November 8th, it was clear that Donald Trump was to be our 45th President.  As floored, shocked, saddened, and scared as my reaction was, reviewing the results over the past few days have begun to change my opinion.

What worries me most about the events of the last few days is how disrespectful people have been.   I received a number of harsh responses to my tweets on Twitter regarding my shock and disdain for the “The Don.”  These people were quick to judge me as a wrong for my point of view in a very disrespectful manner.  While I knew the conversation wasn’t going to civil, nor productive, I simply asked them to respectfully disagree and show some respect for a fellow human and American.  Once we lose our respect for each other, we lose America. Politicians may have lost respect for each other, but citizens are better than them and we can lead be example.  Always be respectful.

Here are some points to consider:

  • Was the media biased against Trump and trying to sway the public toward HRC?
  • America didn’t vote for Trump as much as we rejected HRC
  • Those who did vote for Trump, did so with a short-sighted view of the world
  • Voter turnout was at an all time low
  • The DNC was oblivious to the changed voter sentiment and still stood by HRC as their candidate, offending the ever important Sanders voters (myself included)
  • Clinton was so arrogant about her quest to be POTUS, she lost site of reality
  • Bernie Sanders would have been a better candidate, but was forced out by Clinton
  • The political establishment needs a shakeup, Trump might actually be good for this country
  • Clinton received the majority vote of the population, but the electoral college went to Trump; let’s rethink “democracy” in America
  • America is bitter and divided, but we must find a way to respect each other.
  • Protests and riots did follow the election of Obama eight years ago, calling out protests against Trump as unfair is unfair in itself.
  • On Dec 19th, the Electoral College could still sway to Clinton

While I will never go out of my way to support Donald Trump, I do respect the Office of the President of the United States (POTUS).   I think we do owe him a chance to lead this country and begin a process of unification.  I am scared to death of what could happen if Trump is really tied to Putin’s Russia.  On the other hand, Trumps presence as POTUS could be the shake up this country needs to rebuild its middle class and set America back on a course of innovation, prosperity, and best practice.

If he does not lead with compassion for all Americans, continues to berate fellow citizens and world leaders, and shows disrespect to the office of POTUS, I will be one of the first to sign a petition to start impeachment proceedings.   Let keep an open mind in the interim.

Understanding Our Past: Support LIDAR Mapping at El Pilar

In the late 1990’s and early 2000’s, while I was attending University of California, Santa Barbara, I had the honor of working with Dr. Anabel Ford and her resilient crew on various projects surrounding the Maya site of El Pilar.   From archaeological excavation to mapping, to cutting trails, analyzing artifacts, and building predictive models, the time I spent on this project was phenomenal.

Recently posted on my Facebook page was a notification the Dr. Ford is undertaking a new project, mapping El Pilar with LIDAR to better understand Maya settlements beneath the thick rain forest canopy.  Please follow this link for more details.

Support the El Pilar LIDAR Mapping Project

They are currently seeking $2,700 in funding via Experiment.com, a crowdfunding platform for scientific research.  $2,700 is a bargain for the wealth of data and insight this team of researchers will acquire.  At 30% funded with 22 days left, let’s push it to 100% and beyond!

Cheers!

Top 5 Best Practices for Rolling Out Sales Rep Scorecards

Sales rep scorecards are that golden unicorn of any sales organization.  The scorecard is a compilation of Key Performance Indicators (KPIs) which are measured against thresholds.  In a rep scorecard, we see a visual interpretation of how a rep is doing for each of the KPIs. An example of which is below:

A Simple Sales Rep Scorecard with three KPIs

Sample Sales Rep Scorecard

Before I dive into best practices, a word on why not a lot of sales organizations have scorecards.  The primary reason is due to organizations struggling with data which best represents the business which makes it difficult for them to setup a KPI, let alone establish effective targets.   An understanding of the analytics continuum is also helpful for understanding the evolution of data practices which need to met prior to rolling out KPIs and Scorecards:

The Analytics Continuum: a blueprint for adoption

Top 5 Best Practices for Sales Rep Scorecards

  • Sales reps, Mangers, VPs, and CROs must all have agreement on the KPI definition, targets, and thresholds.  If one level of the KPI hierarchy is not on the same page as the others, there is very value in using the Scorecard to represent an ideal.
  • Targets and thresholds must be reasonable.  When rolling out KPIs, we often realize that actual performance is far from the corporate ideal. For instance, a Sales Cycle of 45 days is thought to be ideal, but the rep actual is north of 60 days.  Don’t hold this against them, consider rolling out a target of 55 and stepping the target down to 45 days within three quarters of launch.  Be kind to the reps and allow them to catch up.
  • Scorecards must be part of a larger sales communication strategy.  Rolling out a scorecard alone will have an impact on the organization, but the most impressive will happen if scorecards are a part of the larger communication strategy.  For instance, a weekly email can call out wins by reps, it should call out performance, and it needs to call out what needs to be done to hit the goal.  Scorecards are just one piece of the story in sales.
  • Scorecards need to be updated as the business evolves.  Scorecards can never be truly static, recurring reports.  Part of the role of your analytical team is maintain reports as the business changes and evolves.  Scorecards are no different.  From a subtle change of keeping thresholds and targets up to date, to swapping out KPIs for new ones, scorecards are a living animal and requires food to stay alive.
  •  Scorecards are a coaching opportunity, not a punishment tool.  While HR and managers will look at a scorecard and see a rep with all red for their KPIs, this doesn’t mean the rep needs to immediately be put on a performance improvement plan or, worse yet, fired.  Scorecards are coaching tool and enable the manager to work with the sales rep and ask questions like “why do you think your sales cycle is double the average?”  Work with the rep, train the rep, and allow the rep the chance to go for green.

As your team rolls out scorecards across the sales organization, keep these best practices in mind.  Be kind to your reps, get agreement on definition, use scorecards as part of a larger strategy, keep them updated, and use them as a coaching tool.

How a To Do List Alone Is Not Productive

Stress is at its highest when one is unprepared.  Managing tasks, putting out fires, and meeting deadlines is difficult without a proper task management solution.

Whether you use the latest smartphone app or just pen and paper, you probably have some form of reigning in all those tasks, big and small, you must get done. Each of these tasks is multi-dimensional in that each has a priority, an effort level, deadline, and could even be related to another task or appointment.   Managing these dimensions is the key to being proactive and productive.

The problem with the to do list, is just that, it is strictly a list.   Making a list of your to do items is critical, but it does not give you the ability to set priorities in a complete manner.  In fact, the longer the to do list, the more overwhelming and difficult to mange it will be.

The solution is pretty simple.  Of course you need a list of task items, but you need integrate both the priority and scheduling.  The easiest was to do this is to schedule them on your calendar just like you would schedule a meeting or doctor’s appointment.

Scheduling your tasks takes care of a few things in one shot:

  1. It automatically sets the priority relative to not only other tasks, but your appointments.
  2. It gives you a clear start time and end time to tackle the task.
  3. It allows you focus on the immediate tasks for the day without getting overwhelmed by seeing tasks for a week or month.
  4. It sets the amount of time you need and have available to complete the task.

Using your calendar, be it a Daily Planner or Outlook, to manage your tasks is a very efficient way to be productive.  By managing a list of tasks and taking the extra step of putting them on your calendar means you are serious about being proactive and productive.  Try it today!