Revenue Isn’t the Goal: Manage What You Can Control
Too often, B2B sales leaders focus on revenue goals when they should target sales tactics instead. So say Jason Jordan and Michelle Vazzana, the authors of the book “Cracking the Sales Management Code.”
Jordan and Vazzana make a compelling argument for sales leaders to concentrate on what is within their control rather than just aiming for a number.
Measurements of Sales Success Vary Widely
Jordan and Vazzana base their argument on solid research.
The authors surveyed B2B sales leaders on the metrics they use to measure success. Answers ranged from business objectives such as revenue and gross profit to sales objectives like the number of new customers acquired and the overall percentage of customer wallet. Others measured sales activities such as calls made, accounts assigned per rep, etc.
Overall, the authors uncovered 306 unique metrics that B2B sales leaders were using to measure success.
B2B Sales Leaders Can’t Manage Outcomes
Vazzana and Jordan found that many B2B sales leaders were targeting revenue and sales objectives like the percentage of customer wallet.
Importantly, these metrics were based on a business outcome, not a set of sales team activities.
As a result, this data led the authors to a crucial insight for B2B sales leaders:
“Activities can be managed, outcomes can’t.”
In other words, they realized that many B2B sales leaders were focusing on things they couldn’t directly control.
Picking a Revenue Target Shouldn’t Be the Goal
At that point, they had me hooked. The authors gave voice to something I’ve known intuitively for years but didn’t have the 306 numbers to back it up.
For B2B sales leaders, picking a revenue target isn’t the right first step. It may not even be a wise second or third step. Choosing a set of sales activities you want your team to focus on is a B2B sales leaders’ best initial step.
|Unrealistic Sales Goals||Controllable Sales Outcomes|
|“We are shooting for $200 million from the Northwest Region this year.”||“How many client conversations are we going to have in the Northwest Region this year?”|
|“The company needs to grow to $300 million in revenue next year.”||“How many proposals do we need to send out each week to meet a $300 million revenue goal?”|
|“Our leadership team expects us to double the revenue from existing customers this year.”||“When talking to existing customers, what type of approach/messaging should we use?”|
|“We need to double the revenue we get out of the UK next year.”||“How do we help the sales reps move from a proposal sent to a signed contract in the UK?”|
|“I expect you to hit your goals next month”||“Here are the calls/emails/meetings you need to have to reach your goal.”|
Managing Our Sales Activities Led to More Revenue
At a personal level, this book resonated. To get to why that is, I need to share a bit of history.
My first attempt at big-time sales was in late 2002. My first company, 3 Leaf Solutions, was facing a challenge. We wanted to grow our two primary accounts at the time, Microsoft and Intel, but our attempts to hire an outside seller had flamed out.
Whoever we hired couldn’t cost us that much salary-wise since we were a small company. Furthermore, our seller had to have very deep technical knowledge of the latest software and hardware. Our seller would also have to understand Microsoft and Intel culturally and organizationally. Finally, they had to have the soft-skills and tenacity to close large projects.
Needless to say, it was very hard to find an outside candidate who checked all of these boxes. I volunteered. Whether that was smart, only time would tell, but given the skills the three co-founders had, I was the best fit for the job.
Initially, I did so in a part-time capacity, given I was a co-owner/co-founder and I wore a lot of hats, just like the other two owners.
I immediately had to contend with the notion that I could hit a specific number of sales. From the beginning, I would say things like:
- “It’s more about the number of opportunities we have in the pipe vs. hitting a specific revenue target.”
- “This is more about the number of trips we take to Microsoft and Intel and the number of people we meet on those trips than a revenue target.”
- “It’s more about the number of meetings (phone, virtual, & in-person) I can have in a week vs. hitting a specific dollar amount each month.”
It’s important to note that I wasn’t treating this like a numbers game. I was not telling myself that “every ‘no’ was just one more step on the road to ‘yes’” or similar things salespeople have been telling themselves since the 1950s.
Conversely, what I was telling myself was this: it’s the activities I do that matter. I could manage my activities. That was something I could control.
Some Things Are Just Out of Your Hands
On the other hand, there was a lot that I couldn’t control. Just a few examples:
- A VP changing jobs in the middle of a contract approval process and an entire project being delayed for a month as a result.
- A scenario where budget was re-allocated four levels above where our stakeholder sat, thereby freezing all his/her projects for lack of funding.
- A reorganization that took a well-functioning product team and turned them into a pretzel.
From experience, I was reminded over and over again that there is a lot you don’t control in life, including meteor strikes, VP firings, and reorgs.
But I could control my activities, and that approach led to a lot of revenue growth for us over the years.
This Is an Unorthodox Approach to B2B Sales
Shooting for revenue goals and other uncontrollable outcomes is the norm for the B2B tech sector.
Focusing on sales activities is a lot harder for our clients, who are typically enterprise or mid-market software and hardware companies. Our primary stakeholders in these companies are small groups or even just an individual. They don’t own the company. They can’t say to their co-owners, “I know what I’m doing, be patient. And no, I’m not giving you a revenue number. But we will grow in a way you can see and rely upon.”
That’s a tough message to sell in a large company as a B2B sales leader–even though it’s the truth.
Furthermore, our stakeholders also operate at a very different scale than we do as a small company. Our clients have sales teams that have tens, hundreds, or even thousands of sellers.
This is why the analysis the authors went through is so critical. As a B2B sales leader, it gives you a framework and data to make your argument. I wish I had had this data back in 2002. Back then, all I had was intuition, solid sales skills, and a willingness to argue with my co-founders.
You Aren’t In Control
In sum, B2B sales leaders shouldn’t target revenue goals because they have no direct control over revenue growth.What B2B sales leaders do have direct control over are the actions their team takes each day.
A strong B2B sales leader can prioritize their team’s activities, whether these actions fall under call management, opportunity management, sales force enablement, territory management, or account management. (In the book, the authors go in-depth in each of these areas.).
Advocate for the B2B Sales Metrics That Matter
Focusing less on revenue is liberating, but it is also challenging.
Consequently, effectively delivering this message to company leadership will require a strong B2B sales leader who can say things like:
- “Don’t talk to me about hitting a number. Tell me what the sales team should do differently this afternoon.”
- “Don’t tell me we’ve got $1 million in the pipeline. Tell me how the reps are going to close on each deal in that pipeline.”
- “Don’t tell me everyone is happy with us. Tell me how customer satisfaction affects individual deals in the pipeline.”
As a B2B sales leader reading this post, you might be thinking, that’s not us. We’re smarter than that.
To you, I’d like to point out that of the 306 metrics, the authors identified, only 17 percent of them were focused on controllable sales activities.
That means that 83 percent of the metrics weren’t directly manageable. That is, B2B sales leaders in the vast majority of those companies were telling their peers they could hit a number they had no direct control over.
This sounds like an excellent way to find yourself brushing up your LinkedIn profile on a Monday morning. Don’t be that B2B sales leader.
When you need to understand exactly what activities your sales team needs to take on, that’s the time to do win-loss analysis, competitive landscape research, or fine-tune your funnel. To learn more about how we can help, drop us a note at firstname.lastname@example.org.
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