Will You Hit Your 2015 Revenue Target?

Author: 
Ray Smith, CEO, Datahug

The way people are buying has changed selling. Although face-to-face meetings often seal a million-dollar deal, most relationships are built through emails, phone calls and online demos, rather than dinners, conferences and golf games. Businesses are selling globally, which means the deals are being discussed, negotiated and signed digitally. This type of selling is more efficient and more easily measured. When the right data is collected, analyzed and used quickly and at scale across an organization, revenue forecasts can be achieved and surpassed with ease. Most sales organizations are content to examine deals in hindsight to find pitfalls in their sales process. You can use these five metrics to reveal them while the deal is still alive:

Ratio of inbound/outbound communication
It’s well-understood in the industry that the amount of communication taking place between reps and a sales prospect is one of the primary indicators of the strength of a deal. If they’ve had recent contact with a prospect, they’re going to have a better sense of how likely that prospect is going to close. This metric is analyzed in detail by nearly every sales organization. But even more telling than pure communication volume is the ratio of how often your reps have to reach out to get a response from the prospect. If it’s taking them three or four emails to get a response from their prospect, the likelihood that the prospect is highly engaged is quite low. But if the prospect is a true internal champion and working proactively within their company to get a product rolled out, the ratio of communication will be much more even.

Frequency of meetings
Communication provides the baseline measurement of the health of a deal. But meetings are the key to knowing when specific checkpoints in the buyer journey have been reached. The point at which additional individuals at the prospect company get looped into the conversation is usually during a meeting. Demos begin with a meeting. Contract terms are discussed over a meeting. Knowing when the last meeting took place with a prospect, as well as when the next meeting will take place, is essential to calling whether a deal will close or not.

Number of contacts
It’s one of the worst nightmares for a sales manager: being told a deal will close, committing it in the forecast, and then learning that the rep is single-threaded. B2B sales have evolved from the days when a decision could be made through a single buyer. Now almost every purchase has stakeholders within multiple departments, meaning a rep needs to engage far more than one person at a prospect if they have any hope to close the deal. Always examine the number of contacts involved before committing a deal.

Identity of contacts
The number of contacts involved in the conversation at a prospect is almost as important as the identity of those contacts. As any good sales rep knows, getting a deal to close without an engaged decision maker is pretty much impossible. When the product being sold is software, most deals require the involvement of IT in addition to the primary decision maker before a full roll out to the team can take place. When it comes time to sign the contract, many customers bring in a legal representative to review the terms of the deal before the final signature. And even when a primary decision maker, legal and IT all seem to be aligned and ready to sign, a blocker can always arise at the last minute to take a deal off the rails. Even if the CEO likes a product, he has to go through the CFO to get budget for an unbudgeted expense. Identifying the individuals who may stand in the way is just as important as identifying the individuals who will champion your company internally.

Combinations of the above
All of the metrics above are, on their own, valuable indicators of the health of a deal. But the true forecasting magic comes when a sales team figures out how to bring all of these metrics to bear at once. Applying multiple variables is essential when calculating the health of a deal, as neglecting any one of these metrics could leave out datapoint that may be the critical factor in whether a deal closes or gets pushed out. You may have a balanced ratio of inbound and outbound communication with multiple people at a prospect, including the key individuals. But say you forget to check whether there’s actually a meeting on the books before the end of the quarter. You could find yourself committing a deal when the truth is that everyone at the prospect company has their head down trying to meet their own goals for the end of the quarter, with no time to review and sign your contract.

Considering multiple variables at once can also reveal correlations in the data that point to areas where you can make your team more effective. For instance, let’s say you sell a product that helps IT teams distribute internal resources more efficiently. Try comparing your ratio of inbound and outbound emails before and after stakeholders from departments other than IT get involved. You may find that the ratio sways in your favor once you show the marketing department how much more effective they could be with efficient IT resource distribution. This becomes a key checkpoint in your sales cycle, and you can start forecasting deals as far more likely to close once they reach this point.

Most sales organizations already individually consider the first four metrics above for their pipeline deals. But the insight that can help them achieve the ambitious targets set in today’s competitive business world can only be found by looking for the correlations between multiple metrics considered in unison.

Ray Smith is the CEO of Datahug, a leader in predictive sales acceleration solutions.