Predicting Sales Performance:
What in the world are you measuring?

There is an expression that goes like this “there are three types of people in this world: those who make things happen, those who watch things happen and those who wonder what happened!” That expression has more applicability to the field of sales than any other business function I can think of.

Here is what I mean by that. The number of things a company can measure relevant to sales is nearly endless. Far too many companies measure only one or two things! Usually, those things are last month’s or last quarter’s sales; or they track the number of meetings held with prospects. So what could, or should, they be measuring? Well, the first thing is to include leading indicators and not just lagging indicators into the mix. What’s the difference between the two? Simply answered…lagging indicators don’t indicate anything. They’ve already happened! You cannot do anything to change them. Leading indicators, on the other hand, predict future performance. With lagging indicators, you cannot effect change. Leading indicators allow you to affect every single measurement that you deem worthy.

So what are the possibilities? Check out the comparison of the two types of measurements below:

Lagging Indicators:
Leading Indicators:
Closed Deals from Last Quarter Pipeline to Quota Ratio
Deal Win/Loss Ratio Pipeline Advancement Rate per Phase
Sales Duration per Closed Deal Sales Personnel Competency Benchmarking
Average Deal Size Forecast Criteria Per Deal

So, regardless of what product mix or services offerings that your organization goes to market with do your best to inspect what you expect. But, make sure the inspection measurements analyzed have the right combination of lagging and leading indicators…especially leading!

Comments (2)

Great guidance Joe. Forecasting, especially with project services in the mix can be a real mess. I can see how these pointers would improve accuracy.

What an impact including leading indicators can have on improvement of sales performance. It makes sense to focus on what you can change going forward instead of just looking in the rearview mirror.

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