Don’t open this article if anyone is looking over your shoulder, because we’re about to give you one of the best-kept secrets to turn around sales — and you can do it on your own. It’s helped countless businesses increase their sales, and it’s free.
It’s called tracking. Everyone should track performance, measure results, manage against objectives, etc. The truth is that most small and mid-size businesses don’t do that — or they don’t do it well.
Tracking is an art and a science … and it’s different for every business.
In “What They Don’t Teach You at Harvard Business School: Notes from a Street Smart Executive,” author Mark McCormack cites a study in which students were asked if they had goals. Ten years later, the examiners followed up to see how the young adults — with and without goals — were performing. At the time of the test, 13 percent had goals, 84 percent had no goals, and 3 percent had written goals.
Here’s what they discovered: A decade later, the 13 percent with goals were doing twice as well as the 84 percent without. The group that documented their goals did 10 times better.
Simply by writing down what they wanted to accomplish, students increased their performance by 10 times compared with those who had no goals at all. They took the time to write down their goals, and as a result they were more committed to them. Most people simply aren’t willing to do that.
The same is true in managing your business. The secret is to develop key performance indicators and then measure your company’s progress against your KPIs. In the past, companies often used a command-and-control approach to manage their businesses. Managers told employees the tasks that needed to be done and controlled their work by measuring their progress to ensure the job got done.
Today, we prefer to use a trust-and-track approach style of management in which managers trust that employees will do the job and then track performance in an effort to help them improve.
Creating KPIs is not easy because you have to put a stake in the ground and say that these are the things we care about most, and we’re going to measure the performance of our employees, our managers and our company based on them.
Former CEO of eBay, Meg Whitman, said, “If it moves, measure it.”
What we’ve found is that you want to concentrate on the three to six KPIs that make the biggest impact on your business.
Here are five questions to help you develop your own KPIs:
1. What is your monthly revenue goal?
2. How many sales are needed each month to reach that goal?
3. Based on your closing rate, how many presentations or proposals do you need to make every month to reach the sales goal?
4. How many qualified contacts do you need to get the desired number of presentations?
5. How many leads do you need to get the desired number of qualified contacts?
Once you determine your objectives you can then track the behavior that will help you reach them. The idea is to work backward starting with the end in mind. Deconstruct your sales process so you can break down the activities that matter most to your business.
Based on the KPIs, you can manage the behavior and activities of your employees. Try developing your own KPIs … then measure each step in the process to identify the strengths and weaknesses.
See related article here.
Jon (Yaakov) Goldman is CEO of Brand Launcher and a JET board member. To contact JET, email firstname.lastname@example.org.