Increasing sales is simple — ask your team to make more sales calls and they’ll come back with more deals, right? Or maybe not. InsightSquared VP Zorian Rotenberg debunks the flawed strategy of focusing solely on quantity, and offers key sales prospecting metrics for determining the true effectiveness of your team.
Many expansion-stage company CEOs and VPs of sales implement outbound lead generation (sales prospecting) teams to help fuel more sales. To increase sales, they typically ask their sales development reps (SDRs) to make more calls or dials daily. But simply making more dials isn’t an effective approach to managing sales prospecting. More dials doesn’t result in proportionally more qualified opportunities or more won deals.
Measuring the Conversion Rate of Dials to Opportunities to Deals
To get more qualified opportunities and more deals, you have to track the effectiveness of each SDR’s dials, i.e., the conversion from dials to opportunities and then to deals. This “dials : opportunities : deals” ratio is a sales activity effectiveness metric that measures how good each individual SDR is at getting deals. CEOs and VPs of Sales should have their sales managers break this metric down into the two key components: a “dials : opportunities” metric and an “opportunities : deals” metric for each of their sales reps so that they can monitor those reps individually for better performance.
In the Figure 1 below, an SDR named Steve Nash has a dials : deal ratio of 3,844 dials for every one deal that results from those efforts. He is one of the newer reps on the team. Meanwhile, Jared Dudley is much more experienced and his dials are much more effective. He only had to make 662 dials for every one deal that his dialing activity produced during the same selling period.
Figure 1: Activity Ratio Per Sales Member
In the book Moneyball, Peter Brand says “People who run ball clubs think in terms of buying players. Your goal shouldn’t be to buy players — your goal should be to buy wins.” Similarly, as a CEO or VP of Sales your goal for your outbound lead generation team is to buy deals, so you must measure each SDR’s dial effectiveness all the way downstream to deals. If you only measure the number of dials or constantly ask for more dials, then your SDRs will simply dial away. But if you also measure their dials : deals ratio, then your SDRs will inevitably ensure that their dials are effective.
Grouping Metrics Correctly and Spotting Trends
When you track these metrics, make sure to group them correctly. Otherwise you may run into a situation where a rep makes 1,000 dials and then goes on vacation for a week. He then comes back at the beginning of the following month, makes 50 dials, and five deals close that month. If you just look at that month, you will see a 10:1 dial : deal ratio but that’s from the 1,000 dials made in the previous month. That’s why you have to group your data correctly based on your sales cycle. Furthermore, this ensures that when your reps change their dialing tactics, you know when to expect the results to show up.
To this point, in Figure 2, you see the dial : deal ratio by month for the entire sales team, allowing you to directionally analyze the trend. In this figure, it is obvious (as shown in Figure 1) that the sales team made many more dials on average in February and March than they did in January to close a deal. This is not a good trend. The VP of Sales should dig in to understand why this has happened and to figure out how to fix it.
Figure 2: Activity Ratios per Sales Team per Month During a Quarter
Measuring the Quality of Sales Activities in Addition to Quantity
Many sales managers think that because SDRs are not responsible for actually closing sales, they should not be measured on conversion to deals. In fact, SDRs should be measured on the quality of their activities. After all, you and your sales team are measured on results, not activities.
While the “dial : deal” ratio may vacillate and a lot can happen between dials and deals, you can still manage this ratio within a consistent and predictable band. Drive your SDRs to perform repeatable and predictable behavior and when they pass opportunities to inside sales reps (ISRs) to close, ensure that your ISRs also behave in a repeatable and predictable manner. The combined efforts and the ratios will be consistent from the SDR to the ISR, from dials all the way downstream to deals.
Successful sales managers look at the downstream conversion of dials : opportunities : deals to understand when to implement effective sales coaching for SDRs (and ISRs) to continually improve the ratio. There are many strategies to do this, including coaching reps on being smarter about who they call or using better tactics on the call.
Utilizing Conversion Ratio Metrics to Improve Your Team’s Performance
In the above example, a good sales manager should know why Shawn Marion has such a good dial : opportunity ratio (Shawn is clearly doing something right here) and she should take initiative to make sure other reps on her team learn from this.
Meanwhile — again, based on the stats above — sales managers may rate Jared Dudley below average if they are only looking at his dials, but in fact he is twice as effective as average on his opportunity : deal ratio. He pushes opportunities through to close 33 percent of the time. He must be qualifying really well and setting these opportunities up effectively for the ISRs to close. That provides another opportunity for the sales manager to determine what is causing one rep to succeed so she can help raise the performance of the rest of her team.
The dial : deal metric is also what best-in-class companies use to measure the effectiveness of their SDRs. If you are only looking for more dials and are not yet using the ratio with your outbound lead generation team, then try it out and see if it helps your SDRs become more effective.