Wouldn’t it be great if every sales manager had a crystal ball that accurately predicted sales growth? Well, put on your swami hats and take a peek into a forecasting future that’s already here.
While the traditional sales metric (past revenue compared to forecast) has always been measured, today’s Sales 2.0 tools allow companies to examine performance at all stages of the sales cycle and take action as necessary to ensure that companies achieve their goals. Many companies use this new technology to foster a culture of measurement that enables consistently better sales-management decisions, and the results can be truly spectacular.
Massachusetts-based software vendor HubSpot is something of a role model for this new culture of measurement. To understand exactly what HubSpot is doing in this area, Selling Power spoke with Mark Roberge, HubSpot’s vice president of sales. Here’s what he had to say about predicting sales with this powerful new tool.
Selling Power (SP): Can you explain the genesis of your culture of measurement?
Mark Roberge (MR): About two years ago, by following the patterns of about a dozen sales reps, we were able to construct patterns of what was working and what wasn’t. We formalized into a sales process the parts that were working and hired a local systems-integration firm to customize Salesforce to match our process.
SP: What about customizations?
MR: In the out-of-the-box version of Salesforce, it took a sales rep literally 12 clicks to update the database with a new lead, send an email to that lead, add a note indicating that the rep left the prospect a voicemail, and schedule a task to recontact that lead. Because that activity was common and repetitive in our sales process, we were able to reduce it to only three clicks while at the same time capture data that was more granular, resulting in better metrics.
SP: What sort of metrics do you gather?
MR: We track the entire sales process, from the first time leads touch our Website or become involved in one of our lead-generation activities. We know how many times they’ve contacted us, how they contacted us, what we did about it, how they responded, and so forth. We continue to track the relationships through the closing stages and, because our business model is based on subscriptions, continue to monitor the relationships closely as long as they continue.
SP: How do you use those metrics?
MR: When a sales rep receives a new lead, the system automatically suggests the type of email that should be sent to the prospect based upon a variety of criteria, such as how the prospect found us – Webinar, a white paper request, etc. – and the number of times that lead touched our Website. Because we have historical data on what worked in the past with customers who have a similar profile, the system is now optimized to tell the sales rep what to send, what to say, what to put on the subject line, and so forth. Because the system automates that busywork, the sales rep can focus more on preparing for the actual sales call.
SP: Is that process “cast in concrete”?
MR: Not at all. Salesforce.com gives you the ability to experiment and then tune your process based upon the results. For example, suppose we want to discover the optimum number of times to contact a lead and how frequently that contact should be initiated. We can have one set of reps call a set of leads every five days, and another set of reps call a set of similar leads every 10 days. Because we have the infrastructure in place to track what happens to those leads, we can triangulate on the process that will generate the most conversions.
SP: What are some of the other ways you use metrics to tune your process?
MR: One of our custom applications allows us to create a mini funnel for each of our lead-generation channels. For example, last month we received 18,000 inbound leads. I can find out how many people found us through organic searches, our blogs, or other social media; how many ended up on our Website; etc. I can track the performance of these different mini funnels to find those that are performing well and then decide whether it makes sense to scale up that lead-generation method in order to increase the number of leads from that channel. I can also identify mini funnels where we aren’t doing so well and either figure out how to make them perform better or simply decide that the particular lead-generation channel isn’t working for us and shut it down.
SP: How do you use metrics to coach reps?
MR: The key is to be able to look at the various stages where a sales rep’s behavior and activities influence the buying process. For example, if a certain rep isn’t performing as well as his or her peers, often the assumption is the rep isn’t working hard enough. Because we have real metrics, however, we may discover that the activity level is fine but that, for some reason, this rep isn’t landing as many demonstrations after the initial contact. From experience, we know that this problem usually results from awkwardness in the first 10 to 20 seconds of the first conversation. We can then individually coach that rep on that specific issue.
SP: Do the reps mind having sales management look over their shoulders?
MR: That’s the beauty of having a culture of measurement: Everybody understands these metrics and how the organization is tracking them. Reps know that if they’re having a problem, they’ll get additional help rather than be criticized for not performing well. Rather than see measurement as a burden, our reps often request more measurement so that they have the metrics to hone their performance even further.
SP: Does the culture of measurement change the way the company is managed overall?
MR: We’re constantly using metrics to calculate how quickly we can grow and to find our growth bottlenecks. For example, we’re currently hiring about five new reps a month. With our system, we can test to see if we could grow faster if we increased that rate to eight reps a month. Similarly, because we have deep visibility into the sales cycle, we generally know weeks in advance if our sales will weaken, allowing us to take action today to ensure that we achieve our future growth target.
SP: Would you recommend a culture of measurement to other companies?
MR: Absolutely. At HubSpot, we often quote a maxim that our management team picked up while at MIT: “In God we trust; in all else, bring data.”
For more insight on leveraging opportunities in today’s sales environment, visit sellingpower.com/content/video/?mid=576 to see Roberge in conversation with Selling Power founder and publisher Gerhard Gschwandtner at HubSpot TV.
Location: Cambridge, MA
Year founded: 2006
Number of customers: 2,500
Number of sales professionals
Product: Inbound-marketing software to help small to medium-size businesses optimize their Web content to capture more Internet traffic and convert contacts into leads and customers