The graph paper ultimately stretched from window to window in my bedroom, almost five feet, representing a full six years of weekly revenue results. There wasn’t a lot to report – gross revenues, unit sales, and my commission and tips in dollars and cents – but I dutifully penciled in the double bar graph and extended the line graph overlay every Sunday.
When I got out of bed each morning, I could see the seasonal slopes, up and down, and I could easily determine how I’d done on the comparable date a year – or even two, or three, or four years – previously. I allowed for the summer sales drop-off when my customers went on vacation, and I had a singular year-over-year index for the 20x one-week increase in tips at Christmas.
In the interest of having my own money and achieving a strong sense of financial independence as a teen-ager, there was nothing that motivated me as much as the graph of returns from my morning paper route. In the quiet hours on the streets of Melrose (MA) between 5:30 and 7:00 a.m. my mind calculated the varying demographics among subscribers to the Boston Herald, Globe, Post, and Record, especially as it concerned the collectability of their accounts and their respective level of tips. I knew that getting the paper to 146 Green Street before Mr. Lockhart left for work at 6:30 meant an extra 25 cents a week tip for me. (Daily papers were five cents – it was a different nickel then.) I also knew that the rock-ribbed New England Yankee readers of The Herald were the worst tippers (it was a different Herald then).
To the extent possible in my simple business those years ago, I had a handle on the metrics, even before I knew what metrics were. I even calculated my delivery rate per hour, in sunshine, rain, and snow and determined the relative efficiencies. Yeah, it was a little obsessive, and it led to my nickname of “Facts” in high school, but there wasn’t an awful lot to think about at that hour otherwise.
On the other hand, there is a lot to think about during the limited hours available for management meetings in my client companies, and all too often important metrics from the sales team get passed over in favor of more urgent issues. If I, as a teen-ager, could analyze my newspaper sales six ways to Sunday (Sunday being the most lucrative route), it’s for certain that the managers of most sales teams have unique, insightful, and relevant information to share with the rest of the management group. In many cases, it’s not getting circulated, just because no one is asking for it.
Here’s the sales (not marketing) data that Sales and Accounting collaborate to produce in order to provide the knowledge and understanding that informs the actions of an effective management team:
- Total monthly and year-to-date revenue, fully accrued, reported no later than the 15th of the following month even when WIP adjustments are required. This is compared with the budget and with last year, with variances explained.
- Revenue by product, or product category, monthly and YTD vs. budget and last year.
- Sales booked (as distinct from revenue earned) by sales person or by distribution group vs. goal. The sales manager tracks this weekly and reports to the management team at least monthly, describing variances.
- The closing ratio of leads vs. sales, with important trends noted.
- Changes in the number or quality of leads from various sources.
- Sales by customer year to date and vs. each of last three years, in both dollar terms and as a percentage of overall sales, with variances explained.
- For recurring revenue companies, a periodic list of new customers added, existing customers lost, and changes in sales/service levels for others.
- The Pipeline Report, listing all prospects with total dollar value and percentage probability of closing, assessed by B-A-N-T (prospect has the available Budget, has the Authority to close, has a Need for our product/service, and the appropriate Time is now).
Assimilating and presenting this data doesn’t have to be more complicated than filling in a bar chart on the wall, especially given that most of it exists in even small-company data bases. In most cases, however, if you don’t demand it, you’re not going to get it. Even if you hit the streets at 5:30 a.m. with the latest newspapers, you’ll be forever trying to guess what’s really going on out there.
What’s a newspaper, you ask…???