- September 26, 2011
- Posted by: Dave Kurlan
- Category: Understanding the Sales Force
The movie was great – much more drama than the book – but the book contained many more insights about the revolutionary new way to see performance through statistics. More on that in a minute…
Billy Beane, the Oakland Athletics GM who was featured in Moneyball, shook up his team during its 2002 slump by turning off the music (with a baseball bat), putting a stop to the fun, knocking over some tables and saying, “THIS is what losing is supposed to sound like!” Later the same day he traded and released players and put his manager on notice that he must play the team that was assembled for him. That Oakland team then proceeded to set a major league record by winning their next 20 games.
Compare Billy Beane’s managerial style with that of the Boston Red Sox’ GM Theo Epstein, whose team has been mired in a month long slump that caused their 9-game lead shrink to as little as 1/2 a game [Update – the lead was eliminated on 9-27-11 when the Red Sox lost again and Tampa Bay tied them for the playoff spot]. This slump was much worse than the A’s of nine years ago, who weren’t expected to contend. What did Theo do to shake up his team? Nothing. How did the team respond? They continued to lose!
Back to Moneyball.
The basic concept of Moneyball was to find a way to win with undervalued players so that a small market team with a comparatively tiny payroll could compete with the enormous payrolls of the Yankees and Red Sox. They identified how many wins were required to make the playoffs, how many runs they would have to score for the season, and what it really took to score runs. They agreed that On Base Percentage (OBP) would be the primary criteria for the Oakland team and identified players who reached base often but were overlooked and/or underrated by other teams.
If we apply the concept of Moneyball to the Sales Force we must identify what constitutes a sales Win. If your top salesperson sells $1.5 million to the same 8 accounts each year it is important revenue, but is that salesperson really delivering any wins? If another salesperson brings in 8 new accounts worth $750,000, could that possibly constitute 8 wins?
It’s funny – the way those statisticians arrived at the new baseball statistics are similar to the old sales metrics we used where we calculated the number of attempts, conversations, first meetings, presentations, and proposals required to close 1 deal. But those metrics are not enough anymore and attempts and conversations are no longer the default method for how sales opportunities come to be.
What if we included the following new KPI’s as the Sales Force’s version of Moneyball?
NFM – The percentage of first meetings that are new (new customers, new opportunities with existing customers, or a new group or division of an existing customer)
Traction – The percentage of first meetings that progress from Suspect to Prospect
Quality – The percentage of opportunities that progress from Prospect to Qualified
Effectiveness – The percentage of opportunities that progress from Qualified to Closable
Run Efficiency – The percentage of First Meetings (Suspects) that Close
Wins – Closed Deals from New Opportunities
DAIM – Deals Closed at Ideal Margin or Better
It would seem to me that salespeople who deliver more Wins, have a higher NFM, and a better DAIM would be far more valuable to have on your sales force. What do you think?