Hey, happy Monday.
You have to imagine the work at STRTGY as a laboratory in which we work with precision to help CEOs and managers evolve their strategic work.
We are privileged to be able to apply the certified tools of MAKE PROGRESS with the OKRs in different areas and be able to update them frequently to make them more and more effective.
In today’s note, I want to give you a concrete example of how a sales team can increase its daily performance by 47.89 percent by committing to improving just one metric by 10 percent.
We will continue the conversation in tonight’sSTRTGY Meeting with Mirko Spinelli, Head of SMBs in Italy at Salesforce, will you be there?
I’ll wait for you in the room,
ALWAYS MAKE PROGRESS ⤴
Sales Velocity, the star every sales team should aim for
Why sales teams must have OKRs connected to strategy
OKRs (Objectives and Key Results) for sales teams are not just operational goals, but strategic tools. When they are well defined, they link daily activities to the long-term visions of the company, ensuring that each team member not only knows what he or she is supposed to do, but also why he or she is doing it. This strategic alignment motivates teams and improves overall performance.
Sales, especially today, requires cooperation among different teams. It is not enough to just sell more, it is critical to sell to the right people who are aligned with the product and how the organization operates. Selling only more can cause problems in other areas such as finance due to reduced margins or operations due to customers unprepared to use the product.
Trivial OKRs: a sign of inexperience
Trivial or superficial OKRs often result from inexperience or inadequate guidance from non-certified OKR Coaches.
OKRs lacking specificity lead to ineffective efforts and poor results. In fact, many teams complain about the absence of expected improvements after the introduction of OKRs.
It is common, especially in ongoing implementation program reviews, for sales teams’ OKRs to be limited to a “sell more” type of form. Thus, their goals simply become a transposition of existing long-term control KPIs into OKR form. This approach is comparable to having an OKR to remind us to breathe: trivial and standard, with no real benefit.
Ensuring the Effectiveness of Sales OKRs.
My recommendation is to map strategy before setting goals, distinguishing control metrics from those that are critical to understanding the sales process. Only after calculating trends, that is, the temporal evolution of metrics, can critical points be identified.
This work will distinguish business-as-usual activities from those aimed at solving the problems detected and generating a domino effect on results.
In analyzing various sales processes in different industries, we have noticed that one metric over all captures the key components of the sales journey and helps teams cooperate on process improvement.
I’m talking about Sales Velocity. It is so relevant that we included it by default in the OKR Toolkit.
If you have already downloaded the OKR Toolkit, you will find it in your reserved area in the Learning Center; otherwise, you can purchase the book or theOKR Toolkit Standalone to get started right away.
What is Sales Velocity
Sales Velocity is a measure that indicates how quickly sales opportunities turn into actual revenue. This metric is crucial because it provides immediate insight into the effectiveness of the sales team and the overall health of the sales process. The higher the Sales Velocity, the faster the company generates revenue.
How Sales Velocity is calculated (€/day)
To measure Sales Velocity, four basic factors are considered:
- the number of opportunities
- the average value of the order
- the conversion rate
- The length of the sales cycle.
The Sales Velocity formula is:
Importance of the Four Factors of Sales Velocity
Sales Velocity is measured in Euros or Dollars per time period, and thus allows us to visualize the speed at which opportunities turn into money.
In the screenshot below you can see the example of a company with a sales rate of 3,300 per day.
The four metrics needed to calculate Sales Velocity represent different dimensions of the sales process.
- The number of opportunities indicates the effectiveness of the acquisition team
- average order value shows the market’s ability to recognize value in products
- conversion rate represents both the quality of opportunity acquisition generated by leads and the effectiveness of the buying process.
- the length of the sales cycle highlights the speed with which customers materialize the purchase.
As you can see, selling is a team sport, and with these metrics you can make easily implemented decisions to improve the speed at which the company extracts value from the market.
How to increase sales by 47.89% sustainably with the 10% rule
Teams that neglect this metric risk focusing on short-term tactics, such as boosting budgets on advertising to increase opportunities or raise prices. Or artificially increasing conversion rates by qualifying fewer opportunities or only the safest ones consequently shortening the sales cycle as well.
These unsustainable tactics, once the focus is shifted away from the numbers, could return performance to previous levels.
On the “Examples” sheet of the template that you will find in the Learning Center you will find simulations that for convenience I reproduce here highlighted in pink. These tactics show a 50 percent increase on the Sales Velocity series, but it is the result of one team’s intervention.
At the bottom of the paper, you will find a part highlighted in yellow that shows a simple but powerful rule: the 10% rule.
What would happen if all teams improved only 10% each of these parameters?
As you will notice, these are small but significant improvements that increase daily sales value by 50 percent. It is not a matter of delegating responsibility for sales improvement to a team, but of cooperating to refine the entire process, working cycle by cycle to solve roadblocks in a simple, effective, inexpensive way by defusing, little by little, the work in silos.
3 ways to achieve these results
- Buy Make Progress with OKRs and access the toolkit
- Participate in the The Growth Machine Workshop to identify your own growth mechanics (new dates available)
- Work with STRTGY under the guidance of a certified coach to improve your business metric by metric.
