Measuring sales performance: Are you measuring results or drivers?

Let me start by asking you a quick question: what is the purpose of measuring sales performance?

Think this through for a moment and jot your answer down before continuing…

I asked this very question in a keynote I was delivering recently to over 1,000 sales leaders. There were 5 answers to choose from.

75% of them answered with “To see how well we are doing”

Now, whilst this is true, in my opinion it’s not THE purpose of measuring sales performance.

For me, the purpose of measuring sales performance is to improve it.

We work with hundreds of different organisations each year. Most of them have CRM dashboards lit up so colourful that they looks like a firework display! Some have enough data and information on them to rival Google.Many organisations use performance management as a way to reward or punish sales people, others use it to impose strict guidelines as to what the sales person should and should not be going. Others use the system as a catalyst for beating their sales teams over the head with a stick for not making quota and others use them for just keeping score.

But data and information is one thing. After all, keeping score is the easy part.

It’s how you use that data to improve your sales team’s performance that should be the real reason of why you are bothering to do all of this in the first place.

Let’s take a quick look at some common performance KPI’s and what they should mean and what they don’t tell you.

Pipeline measurements

“My pipeline is full”

Good for you!

But how effective are you in converting leads to opportunities?

Is your pipeline full of “deadwood”?

How are you qualifying?

Are you qualifying hard enough or are you massaging the figures.  

Do you keep deals in your pipeline for too long?

Meeting measurements

“I’ve been out and about all week with lots of client meetings”

The dashboard shows lots and lots of meetings.

So you’re very busy but were those meetings effective?

Were your meetings at the start of the week better than those at the end?

Did you follow your sales process?

How many qualified buyers did you really meet?

Did you qualify any out?

All of these factors will not show on a report.

Sales velocity

“It takes me 83 days to close a deal”

The time it takes you to close a deal is called your “sales velocity”

But so what, it’s just another number if you don’t put it into context because based on your skills and experience is this in line with what it should be?

Are all of your deals lumped into this metric?

What if you sell a whole range of different products and solutions all with different lag times?

This will distort the figures.

It’s important to measure the velocity of each deal against what the expectation should be against that particular product or service and bearing in mind the experience and skill of the sales person.

Only then will a figure of “83 days” make any sense at all.

Sales target vs actual

“I’ve achieved my target five months straight”

On the face of it everything looks great and it is because this sales person has made their quota 5 months running.

What the figures won’t tell you at this level is that this persons closing ratio is one of the lowest in the company at 21%.

To make quota they have to hustle like crazy to create a pipeline so large that they can sustain a 21% closing average to make their number.

So the questions we have around this are now:

• Is this sales person shooting fish in a barrel and is quickly running through presentations hoping that 21% will stick?
• What are they doing differently in a sales meeting to the sales person with the best closing ratio of 44%?
• Are they creating a lot of meetings with non-qualified buyers and hence their ratio is artificially low?

On the face of it I know many sales leaders who would leave this sales person alone. After all, they are making target right?

If your mindset towards sales measurements is one of keeping score and policing then a lot of money will be left on the table if no action is taken and the figures are not analysed further.

On the other hand if your approach towards sales measurements are all about improving sales then there is a great deal of upside leverage that can be made with the sales person that we have used in this example.

What is your current attitude and philosophy towards measuring performance?

A simple shift in focus from measuring results to driving better results can have massive impacts on the morale, approach and above all else the sales performance of your people.

SOURCE: MYcustomer

Business performance measurement builds a performance culture

As 2014 came to a close, the American Productivity & Quality Center (APQC) conducted a short survey to better understand the pressing priorities and challenges of business excellence practitioners for 2015. We found that process and performance management were the top two areas that business excellence staff planned to focus on in 2015 (see Figure 1).

Although process and performance management are separate focus areas, process management is often a starting point for organizational performance improvements. For an organization to improve its performance, it first must understand how to get work done effectively. This can include using business performance measurement to assess how the organization performs work and identify the performance and value of each process, as well as pinpointing which areas are underperforming, valueless, redundant or inconsistent with definitions and execution. Hence, all these process concerns link back to performance improvement opportunities.

Practitioners are prioritizing a wide array of challenges tied to performance management, from overcoming governance hurdles (e.g., identifying ownership) to including lagging, in-process and leading measures. These challenges have two main concepts in common: engagement and measurement.

If done correctly, business performance measurement can be the lynchpin of effective engagement. Organizations often will start measurement by assessing the performance and value of its processes, engaging employees in process activities and providing clarity on who does what.

In other words, assessing an organization's current state helps provide a baseline for determining and prioritizing process improvement opportunities, identifying measures for performance management, and engaging employees to think in process terms. An organization can baseline its current state in several ways: benchmarking, surveys, workgroups and value stream assessments. The method applied depends on the amount of performance data available, business process maturity and the amount of employee engagement that is necessary.

Overall, when organizations ignore the effect of change initiatives on people, roadblocks arise and intended results fall short of expectations. Many organizations conduct limited workforce engagement for process and performance management. Limited engagement results in employees who do not understand, care about or even agree with the process. Employee engagement creates buy-in with employees and overcomes organizational resistance. Outlining the value of process management in terms meaningful to leadership results in the sponsorship and resources necessary to make process efforts effective.

The greatest challenge for business process management is making it part of the culture and getting employees passionate about it as well. Many organizations face resistance during process rollouts because they don't involve employees in the process. If organizations involve their employees in the current state assessment, they increase engagement because employees feel a sense of ownership in identifying what the key issues are and what measures matter. Including these measures as the value drivers in process and performance improvement business cases establishes the measurement efforts in terms that leadership can get behind.

For example, Elevations Credit Union established a strategic initiative to improve its organizational performance. Its first objective was to address its ad hoc, patchwork processes. Elevations' approach combined current state assessments, employee workshops, process management and tool training, and mapping contests to engage employees in process management and establish a performance culture.

However, Elevations' real breakthrough with leadership came when it started using a performance dashboard to track and monitor its process performance. As the organization's processes and measures grew in complexity and the leadership's need for data to support its decision making expanded, Elevations implemented an enterprise dashboard system that provided access to the organization's key performance indicators (KPIs -- actual, target and variance). A corresponding "drill down" dashboard for each category of the enterprise process map allows leadership to root cause any variations in performance.

According to Elevations, the ability to get real in-process metrics was a fundamental change in how it operated. From that moment on, Elevations' senior leaders bought in on process management and began managing via enterprise dashboards. All of its metrics link back to processes, so it can now figure out what's broken and why by tracing back to the source of the problem.

Elevations' success using performance dashboards comes as no surprise. When discussing performance measurement, most practitioners refer to the type of measurement that helps companies monitor its current and past states. Thresholds, both low and high, for KPIs are set and managed by exception. When data begins to move outside the threshold limits, the performance measurement system can alert management, who then attempt to diagnose the problem and address its causes. Practitioners refer to this type of measurement as diagnostic control systems. Although this type of measurement provides management with "auto-pilot" capability that can keep the organization on target with its goals, it is frequently insufficient for success.

The performance management challenge -- designing and using process measures in the business -- is one reason this approach is not always successful. Most dashboards look at in-process and lagging indicators while overlooking leading indicators that help organizations proactively react to changes in the business environment.

Figure 1. 2015 business excellence priorities and challenges.

Several methods are available for including leading indicators in an organization's performance management. The most widely known is the balanced score card. Normally (although not required), the balanced scorecard is broken down into four sections called perspectives:

1. Financial -- strategy for growth, profitability and risk (typically the shareholders perspective). The scorecard considers financial measures lagging indicators and includes looking at growth, profitability and shareholder value.
2. Customer -- strategy for creating value and differentiation (customers' perspective). The customer measures are often leading indicators and include customer satisfaction, net promoter score, brand awareness and market share.
3. Internal business (operations) -- is the strategic priorities for business processes. Operations measures are usually in-progress, performance-based measures used to indicate how well the business is running (e.g., cycle time, quality, employee skills and productivity).
4. Learning and growth (people) -- the priorities to create a climate for change, innovation and growth within the organizations. This includes, but is not limited to, employee training, corporate culture, as well as individual and organizational improvement. The measures are typically in-progress or lagging measures that vary but can include employee behaviors and adoption rates.

The important takeaways here are that measurement plays an important part in how organizations can engage employees -- both leadership and frontline -- in process and performance management. By including the right blend of measures an organization can improve its decision making capabilities for improvement opportunities, provide transparency and ultimately establish a performance culture.

SOURCE: TechTarget

Lean and the Corporate Agenda with Guest Jacob Stoller

Business Process Management Key Process Indicators

Business Process Management Key Process Indicators are used to monitor the business performance of an organization.  However, are we selecting, tracking, and making the best decisions relative to organizational KPIs?  I say that often there are problems with the traditional approaches.  Described next are some issues with traditional approaches, along with resolution.   

Business Process Management Key Process Indicators Tracking

 Often business process management key process indicators tracking is accomplished using stoplight scorecards.

 From Table 2.5 from The Integrated Enterprise Excellence: An Enhanced, Unified Approach to Balanced Scorecards, Strategic Planning, and Business Improvement, Copyright 2008

With this red-yellow-green performance tracking approach, a red color indicates that a metric is not meeting its goals, while green provides the statement that everything is operating satisfactory at some point in time.  Process owners who have metrics that are red in color are to be working to bring their scorecard reporting back to green.  When a metric transitions from red to green, organizations may ?bring out the champagne?; however, often this celebration is not warranted and the color can quickly change back to red.

Processes typically have variability, where regular up and down process variation may be large enough to encompass the targeted objectives.  If this were the case, a process could transition from red to green regularly when nothing has changed in the process.  This form of tracking can lead to much non-productive firefighting and/or playing games with the numbers.

Organizations benefit when there are predictive scorecards that get organizations out of the firefighting mode.  This figure below shows how a red-yellow-green scorecard indicated that there were many transitions; however, the alternative 30,000-foot-level reporting format indicates nothing changed over time and that there is about 33% common-cause non-compliance rate.   Whenever we have more common-cause variability that is unacceptable then a change needs to be made to the process.

From Figure 6.2 from The Integrated Enterprise Excellence: An Enhanced, Unified Approach to Balanced Scorecards, Strategic Planning, and Business Improvement, Copyright 2008

Business Process Management Key Process Indicators Metric Determination

The question of whether we are tracking the most important metrics needs to also be addressed when evaluating business process management key process indicators. Often these metrics are not determined as part of an integral evaluation of what is done in the organization and how the functions are to be tracked relative to quality, cost, and time.

An Integrated Enterprise Excellence (IEE) value chain provides guidance for the selection of business process management key process indicators (KPIs).  Where the IEE value chain describes what an organization does and how it measures its performance.

Process Indicators Improvement

Organizations benefit when they use a roadmap for business process management key process indicators improvement.  The IEE roadmap for implementing Business Process Management (BPM) provides this direction.

The analysis steps in both executing BPM and Enterprise Process Management (EPM) in this IEE system can provide valuable guidance for what should be done using data analyses and business knowledge so that business decisions support the enterprise as a whole relative to day-to-day work and whole-system benefits.

Analyses of predictive measure performance hypotheses can give guidance to what could be done to improvement the metrics as part of the IEE roadmap.  The IEE roadmap provides guidance for what might be done to implement improvements that can positively impact business process management key process indicators.

Key Process Indicators Book

A business process management key process indicators book provides the roadmap for the selection, predictive tracking, and improvement so that the enterprise as a whole benefits.

SOURCE: SmarterSolutions

Deliver Business Value With Modern Metrics And Analytics

Modern application delivery leaders realize that their primary goal is to deliver value to the business and its customers faster. Most of the modern successful change frameworks, like Agile (in its various instantiations), Lean, and Lean Startup, which inspire developers and development shops, put metrics and measurement at the center of improvement and feedback loops. The objective of controlling and governing projects to meet vaguely estimated efforts but precisely defined budgets as well as unrealistic deadlines is longer on the agenda of leading BT organizations.

The new objective of BT organizations is to connect more linearly the work that app dev teams do and the results they produce to deliver business outcomes. In this context, application development and delivery (AD&D) leaders need a new set of metrics that help them monitor and improve the value they deliver, based on feedback from business partners and customers.

So what do these new metrics look like and what can you do with them? In the modern application delivery metrics playbook report “Build The Right Things Better And Faster With Modern Application Delivery Metrics,” I describe:

• Preproduction metrics. Leading organizations capture preproduction data on activities and milestones through productivity metrics, but they place a growing emphasis on the predictability of the continuous delivery pipeline, quality, and value.
• Postproduction metrics. High-performing teams track business metrics to understand how the applications they’ve deployed affect business performance. Typical metrics include application health metrics like deployment success rate, performance stability, and ghost users. But AD&D leaders also track customer-experience-related metrics like clicks, usage, happiness, and preferences.
• How metrics are correlated to identify what’s impacting business. AD&D leaders leverage big data and analytics tools that provide reporting, dashboards, and dedicated algorithms to find correlations (and more) in the sea of overwhelming data generated, which neither the business nor developers could otherwise identify or make good business sense out of.

The use of the above metrics with data and predictive analytics and machine learning makes it possible to discover, for example, poor-quality code that’s causing slow performance for users and consequently poor sales or usage of production features, as well as who is developing this poor code — and it then allows you to take corrective action to fix the problem. Likewise, you can also use data to find out where high-performing teams are significantly contributing to business growth.

To find out more details about these new metrics, the products used, and real examples of organizations leveraging them, read the Forrester report“Build The Right Things Better And Faster With Modern Application Delivery Metrics.”

I am looking forward to your ideas, comments, and suggestions on how metrics can make the world of modern application delivery a better one. I will be kicking off a stream of research on how deep machine learning can make this a better world; stay tuned!

SOURCE: Forrester

How to unlock mobile with business process management

Time and again, I’ve seen mobile proofs of concept that are full of “sizzle” to attract and excite business users, but they end up not being delivered due to a lack of back-end capabilities to support them. For example, I’ve seen mobile concepts that deliver in-context information to police officers in operational environments, something that would greatly enhance their ability to apprehend suspicious characters. This idea was sound, but the mobile app never got delivered because the back-end process capability to support it didn’t exist. These situations often leave business users disappointed when they realize their shiny prototype is as hollow as the cereal box robots we built as kids.

Is “fail early, fail often” to blame?

Many developers of mobile applications born on the cloud rightly point to the mantra “fail early, fail often” as the reason for the large number of mobile ideas that never see the light of production. It’s a motto born in the technology hub of Silicon Valley that encourages risk-taking and recognizes the inevitability of some failures along the road to success. But does it also lead IT professionals to dream up too many unconsidered ideas that never come to fruition?

What if we look beyond “fail early, fail often”? What if there is a practical approach that you can follow to increase the odds of getting your ideas to production? Read on.

Business process management can unlock the potential of your mobile applications

Gartner defines BPM as follows:

Business process management (BPM) is the discipline of managing processes (rather than tasks) as the means for improving business performance outcomes and operational agility. Processes span organizational boundaries, linking together people, information flows, systems and other assets to create and deliver value to customers and constituents.

So what does that have to do with the exciting world of mobile? Everything!

The formal definition of BPM is a bit conservative and dull, so allow me to rephrase it. BPM is about disrupting what a user does, breaking down boundaries in an organization and giving you the launching pad to drastically change your business. Now that’s starting to sound more like the promise of mobile.

Philosophically then, business process management and mobile both have the goal of disrupting the way users go about their daily activities. These capabilities both aim to improve the enterprise and therefore complete one another. For example, pushing a mobile notification of a crime in progress to a federal officer in the vicinity illustrates how mobile brings the power of context to BPM and how that could drive decisions and next best actions in unique ways.

Philosophical alignment is good; now let’s get practical

Theory is all well and good, but I did allude to some practical considerations of why you should combine BPM with your mobile applications. I believe these benefits of BPM will increase your success in the world of “fail early, fail often.”

Seven advantages of business process management for mobile

1. BPM can support a true multichannel experience. Mobile is not the only channel, and the ability to move your mobile interactions seamlessly between channels is a major benefit.
2. A good BPM platform will accelerate mobile prototyping with a graphical approach to defining the process, allowing you to focus on the user experience of the front end.
3. Support for playback sessions is built into mature BPM platforms, including rapid UI development. Playback sessions are common practices in the process improvement world and typically help with business buy-in.
4. Good BPM platforms include ready-to-use dashboards that highlight the effectiveness of business transformation that your mobile applications provide. They also provide the business with operational insight.
5. Mobile applications do not live in isolation, and eventually the business will want to see what the back-office capability is to support your mobile application. These processes could be something as simple as applying for a service or more complex case management capabilities.
6. BPM provides an easy hook into analytics that enables the powerful “detect, decide, act” model.
7. Building end-to-end process into the application components is an anti-pattern that will improve your ability to respond to changes.

I urge you to think about what BPM can do for your business when you have your next great mobile idea. Combining the worlds of mobile and BPM can help your mobile application to be more than just a shiny toy.

Please share your thoughts and experiences on why mobile applications do not pass prototyping.

And if you want to keep thinking about the topic, have a look at the blog post “IBM Mobile Smarter Process, the best of both worlds“ and the IBM Redbooks publication on extending IBM Business Process Manager in the mobile enterprise.

SOURCE: asmarterplanet

Business Process Management Key Process Indicators

Business Process Management Key Process Indicators are used to monitor the business performance of an organization.  However, are we selecting, tracking, and making the best decisions relative to organizational KPIs?  I say that often there are problems with the traditional approaches.  Described next are some issues with traditional approaches, along with resolution.   

Business Process Management Key Process Indicators Tracking

 Often business process management key process indicators tracking is accomplished using stoplight scorecards.

 From Table 2.5 from The Integrated Enterprise Excellence: An Enhanced, Unified Approach to Balanced Scorecards, Strategic Planning, and Business Improvement, Copyright 2008

With this red-yellow-green performance tracking approach, a red color indicates that a metric is not meeting its goals, while green provides the statement that everything is operating satisfactory at some point in time.  Process owners who have metrics that are red in color are to be working to bring their scorecard reporting back to green.  When a metric transitions from red to green, organizations may ?bring out the champagne?; however, often this celebration is not warranted and the color can quickly change back to red.

Processes typically have variability, where regular up and down process variation may be large enough to encompass the targeted objectives.  If this were the case, a process could transition from red to green regularly when nothing has changed in the process.  This form of tracking can lead to much non-productive firefighting and/or playing games with the numbers.

Organizations benefit when there are predictive scorecards that get organizations out of the firefighting mode.  This figure below shows how a red-yellow-green scorecard indicated that there were many transitions; however, the alternative 30,000-foot-level reporting format indicates nothing changed over time and that there is about 33% common-cause non-compliance rate.   Whenever we have more common-cause variability that is unacceptable then a change needs to be made to the process.

From Figure 6.2 from The Integrated Enterprise Excellence: An Enhanced, Unified Approach to Balanced Scorecards, Strategic Planning, and Business Improvement, Copyright 2008

Business Process Management Key Process Indicators Metric Determination

The question of whether we are tracking the most important metrics needs to also be addressed when evaluating business process management key process indicators. Often these metrics are not determined as part of an integral evaluation of what is done in the organization and how the functions are to be tracked relative to quality, cost, and time.

An Integrated Enterprise Excellence (IEE) value chain provides guidance for the selection of business process management key process indicators (KPIs).  Where the IEE value chain describes what an organization does and how it measures its performance.

Process Indicators Improvement

Organizations benefit when they use a roadmap for business process management key process indicators improvement.  The IEE roadmap for implementing Business Process Management (BPM) provides this direction.

The analysis steps in both executing BPM and Enterprise Process Management (EPM) in this IEE system can provide valuable guidance for what should be done using data analyses and business knowledge so that business decisions support the enterprise as a whole relative to day-to-day work and whole-system benefits.

Analyses of predictive measure performance hypotheses can give guidance to what could be done to improvement the metrics as part of the IEE roadmap.  The IEE roadmap provides guidance for what might be done to implement improvements that can positively impact business process management key process indicators.

Key Process Indicators Book

A business process management key process indicators book provides the roadmap for the selection, predictive tracking, and improvement so that the enterprise as a whole benefits.

SOURCE: smartersolutions

Analytics: Machines Flourish, People Flounder

The promise of big data is that when advanced analytics are applied to it we can learn new and different things that will allow business to progress. The problem is that many retail organizations are not prepared for this promise.  In fact you can make an argument that for some, more data is clouding issues and fogging decision making but why is this?  As more and better information is made available to the execution elements of a business it may fail to change behaviors.  There are many practical reasons like data quality, availability, and tools, however this is not the real culprit.  What is really at work here is a lack of understanding of the differences between people and machines.

For a smart machine, the more data the better the conclusion.  Machines can ingest tremendous amounts of data, sort them for relevance, find patterns and predict outcomes. With each iteration the process is further refined by the incorporation of new data and measuring performance of previous predictive activity. Machines have no bias toward a particular outcome.  If a machine makes a bad prediction it is not emotionally attached to it.  Instead it learns from it and goes on to modify its algorithms.

People do many things quite well and given the appropriate information at the right time will make good decisions.  However confronted with a wide array of perhaps seemingly conflicting information the human response is to either become paralyzed, unable to make a decision, or to resort to past behavior. Sometimes the information will point to a conclusion that renders their past behavior as obsolete.  This is particularly difficult for a human to absorb and act on because they may be emotionally tied to the past behavior or action.  Statements like “I built this business from the ground up by doing ….” or “I always run a back to school bogo promotion the second week in August” are just examples of the types of feedback that may result from analysis that says to take a new direction.

In many conversations with retailers that have implemented advanced technologies such as price optimization we find that the optimized prices are never really executed.  Many retailers are struggling to implement more advanced planning applications.  Just the act of implementing more advanced dashboarding capabilities has at times made it harder to make decisions.  Its very important for retail business and technology leaders to understand this fundamental difference.  The organization must be prepared for the blended human and machine workplace of the future.  The best hope to map a successful future is to understand how to ensure the right information is delivered to the right person at the time of execution of any activity.  People must be guided toward the acceptance of smart machines, gently at first but firmly and steadfastly mandated later on in the timeline.

SOURCE: GARTNER

Increase Productivity and Employee Satisfaction Using Six Sigma

Six Sigma principles and strategies have been used for years, but some business owners are just beginning to see the benefits of using these tools. One of the biggest benefits of Six Sigma is increased productivity. Increasing productivity is one of the best things you can do to strengthen your company, as it leads to lower production costs and higher profits.

Planning

One of the most important things you can do to improve your company is have a comprehensive plan. As part of your comprehensive plan, you can use Six Sigma to design layout plans. This will help you determine whether a process layout (with like machines grouped together) or a product layout (where machines and workers are placed according to the order of the manufacturing process) is the most efficient way for your manufacturing area to be set up. Additionally, Six Sigma can be used to streamline operations, increase yields and improve the internal processes of your company.

Image source: CBIS

Managing Time

Helping employees manage the time they spend at work effectively is one of the ways Six Sigma can improve the overall productivity of your business. Employees who use the Six Sigma system are asked to write a list of goals that they hope to achieve. Six Sigma data principles are then applied to those goals, using the areas of performance, fulfillment and learning as a guide. Participants may be asked questions about distractions during working time and whether these distractions are important enough to take time away from what they are working on. Employees may also be asked what they are doing to work toward their professional goals. The employees can then create a plan of action, which helps them become more efficient workers as well as happier employees.

Staffing

One of the goals of every human resources department is to have the most qualified and efficient employees in the places they need to be in the company at any given time. Six Sigma can help your hr department reach this goal by assessing performance and finding ways to reduce waste. Creating a business scorecard will help you to tie organizational goals to human resources processes so that your performance status in continually tracked and problems can be discovered and remedied quickly.

Streamlining the process of adding and maintaining employees in your company is another great project for Six Sigma. Value stream maps can be used by companies such as call centers. They identify the most common call types and find ways to reduce the time spent on these calls. Six Sigma can also be used to design templates for recruiters that are posting jobs, increase the hit rate of your job postings, and decrease the time it takes for your company to respond to potential new employees. All of these things make your company more productive, as well as more desirable to both current and prospective employees.

Increasing Employees Motivation

Motivated employees will naturally be more productive than those who are unmotivated. There are techniques and tools from Six Sigma that are specifically designed to promote employee engagement and create systems of motivation that will work for the employees of your specific company. It’s important to remember that all companies are different and the employee reward systems that work for some companies may not be motivating for the employees of other companies. Six Sigma will individualize a system for your employees. Some companies have increased productivity by as much as 50 percent just by engaging their employees fully.

Implementing new technology such as Six Sigma into your company can be daunting at first, but the benefits it can bring to your company far outweigh the initial learning curve. Using Six Sigma is an excellent way to improve the overall productivity of your company, as well as attract and keep valuable and productive employees.

SOURCE: bpmleader