In today's data-rich era, leaders have many metrics to choose from to compare progress against their strategic initiatives. However, even with all this overly synthetic data, they focus on aggregate data, overlooking the metrics that matter most.
When you synthesize data at a high level, you run the risk of creating metrics that we could call "watermelons«: numbers that are green to the naked eye, but beneath the surface are red. Watermelons hide the underlying execution problems occurring in your sales team, and if left planted too long, they can ruin the business from the inside out.
Leaders who rely on averages and aggregates are doing their business a disservice by not digging deep enough to understand the state of their business goals and areas for improvement.
For example, in a profit presentation, Cloudflare revealed that they had “identified over 100 people on the sales team who consistently fell short of expectations. Simply put, a significant percentage of the sales force has repeatedly underperformed against measurable performance goals and critical KPIs.”
How did 100 people miss the goal for so long? Leaders weren't digging deep enough into the data. It is important to identify the root cause of these sellers' mistakes and fix it from the ground up.
Here's what it means to look for watermelons, how to identify them, and the framework that provides better knowledge and actions to improve their results.
Find the watermelons through human-centered analysis
When looking at important performance metrics, many leaders have too limited a view of their data. Activity and results metrics are often broken down into several dimensions, such as industry, segment, geography, product line, customer group, and buying profile, so leaders can answer questions such as "What is the profit rate for mid-market manufacturing in Europe? This is great, but almost all companies overlook one of the most important dimensions: people.
Not looking at people's metrics obscures inconsistent performance across the team, which kills overall productivity. Let's say your average profit rate is 34%: what may seem like a wonderfully healthy metric could be a complete watermelon. Frankly, for most companies, what's probably happening is that the top-performing quartile's win rate is above the peak, while the majority of the team's win rate is low.
You don't discover this reality unless you look at the person dimension, examining the distribution of each person's performance against the metric. This may look like:
Distribution of the person's performance compared to their average benefits.
Analyzing distributions can be a bit complicated, so here is a way to simplify the analysis. Use the participation rate as an approximation for distribution, for each desired group.
Starting from the example above, you can look at the profit percentage for manufacturing in mid-market Europe and then analyze the performance of your reps on those deals to determine the share rate vs. win rate metric.
The participation rate is simply the number of people who reach a certain threshold. It's not a new concept (leaders commonly use it for their sales quota attainment metric), but it's absolutely new for most leaders to apply it to other key metrics, including:
- Finalized sales ratio
- Generation of sales pipelines
- Pipeline Sales Conversion
- Time until first sale
- The average selling price
- Trading speed
- Volume of potential clients
- Conversion rate
- Booking
When evaluating quota generation compliance, the thresholds are typically 100% and 70%. These thresholds are based on the notion that a well-performing team exhibits a goal-centered “normal distribution.” A cheat code for a normal distribution that leaders commonly use is “50 out of 100 and 70 out of 70,” where 50% of your people hit 100% of the metric and 70% hit 70% of the metric. This same code can be used for your other metrics. A normal distribution for any given metric will look like this:
A normal distribution for any given metric will look like this.
Human-centric distributions will change the way you think about the world. They can reveal problems and opportunities:
- If no one reaches the participation rate, there is likely a serious strategic problem.
- If the participation rate is bimodal, where some people are high performers and some are low performers, then there is a classic enabling problem where there is an opportunity to allow low performers to become high performers.
Determining engagement rate through metrics provides a roadmap of what actions to take to improve people performance, which in turn increases business performance.
Team performance analysis is rep-centric
Measuring sales team performance (as opposed to sales performance itself) can make a big difference for revenue teams. While sales performance metrics can include outcome metrics like lead volume, conversion, bookings, and activity metrics like calls, emails, and accounts touched, sales team performance focuses on those sales funnel metrics. sales in relation to distribution among representatives.
So, while traditional sales team performance analytics focus on the funnel, sales performance analytics focus on reps (rep-centric9). This approach helps better understand the root cause of suboptimal performance.
Understanding this distinction and using it to make long-term team changes helps create an agile and resilient sales team that can carry the company through critical moments and challenges. As the analysts expressed it From McKinsey, while sales is a people business (and always will be), amplifying the power of people with data and analytics is critical to impacting growth.
As a leader, you must help people reach their full potential by investing in them. But to do that, you need to know where to really focus those efforts, and if you're flying blind you're looking at a ton of data about watermelons. As leaders, it is your responsibility to dig deeper into sales metrics and continue the practice as your organization grows and scales. In doing so, they not only meet watermelons existing, but it will also be possible to prevent watermelons future problems become more important problems.
There is no such thing as an “average” sales rep, only individuals with varying levels of performance. And when gaps and highlights are evident, more concerted steps can be taken to set people up for success and improvement.
People are the most important asset, so eliminating metrics is key watermelon and prioritize people-centric data to truly drive healthy growth.
