Blog Sales dashboard: what are the right indicators?

The idea of a sales dashboard is appealing: what business manager would not like to run his company like a well-oiled machine, with the help of a few select indicators? But in practice, it is ironically the choice of these indicators that can stall the installation of the sales dashboard…

The purpose of this article is to facilitate this choice. Every company is certainly different, and it goes without saying that an industrial equipment maker cannot manage its sales process like a travel agency (for example). However, the 5 following tips will be helpful in the majority of cases.

1. Choose indicators that are useful throughout the sales process

As the saying goes, you cannot count your chickens until they hatch. Nevertheless, you want to manage your sales process continuously, not just once a quarter. It is therefore important to avoid indicators that only become meaningful at the end. For example, “Actual/Projected sales” is more useful when compared to its historical average at that stage of the quarter. [...]

A number of recent studies show that companies with modern sales analysis and forecasting processes enjoys faster sales growth than average.

However, most B2B companies cannot use well-established quantitative forecasting methodologies for lack of the large data sets they require.

If your company falls into this category, there are still easy ways to modernize and improve your sales forecasting. We describe 5 of them below.

1. Structure your sales process

Structuring your sales process as a “pipeline”, meaning into recurrent stages (i.e. “Suspects”, “Prospects”, “Needs Analysis”, “Negotiation”), allows you to measure 2 key indicators:

• The average conversion rate of opportunities from one stage to another
• The average lifespan of opportunities within a certain stage

With these indicators, you can estimate for each opportunity entering the pipeline:

• The probability that it will eventually be signed
• The duration of its sales cycle

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Business forecasting is challenging for B2B companies, because B2B unit sales rarely support quantitative forecasting methodologies. Hence the importance, for such companies, of careful sales pipeline management and analysis.

This lack of large data sets doesn’t mean, however, that business forecasting should remain all art, no science. We have much to learn from behavioral economics and decision theory, from the sophisticated “quantitative debiasing of judgmental forecasts” to simpler, but equally efficient tricks.

As an introduction, I wanted to present 5 tricks validated by recent forecasting research and easy to implement in modern CRM software.

1. Explanation

Forecasts supplemented by a one-sentence rationale are more reliable, just because they are less mechanical. You should revise the rationale with each forecast update (ex. “moving the closing date from 31.03 to 15.05 because of recently surfaced compliance issues”). [...]

B2B companies often represent their sales process as a funnel. The sales funnel usually starts with qualified (or “sales ready”) leads and ends with closed-won opportunities. Modern sales methodologies insist on managing this funnel professionally. But how should it be structured in the first place?

Obviously, the answer will vary from company to company, but here are three quick tips to hone your funnel.

 
1. Meaningful transitions I

A good way to choose the right sales funnel stages is to focus on “meaningful transitions”, i.e. borders between stages representing a shift in the sales process.

In this respect, the distinction between “continuations” and “advances” established by SPIN Selling is very useful:

• A continuation is an action that is useful in the context of the sale (e.g. sending the prospect a presentation he requested) but does not “move the sale forward”.
• An advance is an action that moves the sale forward (e.g. answering an RFP formally).

This distinction gives you [...]

B2B sales forecasting is often clumsy for a simple reason: most B2B companies lack the thousands of datapoints required by quantitative forecasting methodologies. Sales forecasting is thus handled in Excel, either directly or following extracts from a CRM system.

Excel is a fantastic tool (you can run a trading floor on Excel), but using Excel for B2B sales forecasting is a bad idea, for 5 main reasons.

 
1. CRM integration

Judgments matter in B2B sales forecasting. It is therefore important to (i) document “stories” (dialogues with prospects), (ii) record numbers (amounts, dates, probabilities), and (iii) perform analyses in a single place.

That is difficult with Excel, since designing a spreadsheet to log prospect conversations usually ruins it for number crunching. Excel-addicted sales managers often juggle with two sets of spreadsheets, for hard and soft data. That is very time consuming…

 
2. The time factor

In the absence of large data sets, B2B companies must rely on pipeline analysis to generate forecasts. That means monitoring not just volumes (e.g. number of opportunities, amount of opportunities) but also flows (e.g. conversion rates, durations). And monitoring flows means (i) recording a complete photograph of the sales pipeline every day, and (ii) running algorithms on these daily photographs. Doing that in Excel requires VBA programming. Good luck… [...]

Here is a great video we have just come across. Always Be Closing!

Thankfully sales methodologies have evolved since then.

Enjoy!