The Problem with Linearity in Enterprise Sales Opportunities
Many senior sales leaders are enamored with “linearity”- the concept that the sales process can be broken into monthly, weekly, and even daily activities.
The idea is that you can then manage and forecast sales results by focusing on these activities. It’s safe to say that every sales manager at a minimum tracks certain basic activity metrics such as the number of calls made, number of appointments booked, the total amount of proposals submitted, and so forth. After all, how many times have you asked one of your reps, “How many calls did you make today?”
Sales dashboards let you track key metrics in almost real-time. For SMB sales teams, who typically have short sales cycles and large prospect lists, there is something to the old adage that “quantity has a quality all of its own.” Here, linearity makes sense: if your team consistently meets its daily and monthly activity goals, the sales results will follow. Linearity gives a sales manager a sense of control and predictability.
Predicting Enterprise Accounts
However, the calculus changes dramatically when selling to enterprise accounts. Much to the frustration of sales managers, linearity doesn’t work. Aggregating and tracking a large amount of disparate data is only effective when there are a large number of opportunities in the pipeline. In the world of Enterprise, Account Executives manage a limited number of large sales opportunities. The smaller the sample set, the larger the degree of randomness, and this randomness renders linearity useless for managing large sales opportunities. How does your Enterprise Account Executive make 50 calls a day when they may only have 10-20 accounts? Moreover, what are meaningful daily or even monthly sales metrics when your sales cycle is 12-18 months or longer?
To successfully manage enterprise reps, you need to manage both quantify and quality. Since tracking daily activity levels isn’t productive, here are a few key metrics that can be predictive.
- Sales pipeline of 2x-3x quota: Knowing that an enterprise sale can take a long time, a key question is whether your enterprise reps have enough pipeline, so that deals can be closed within the quarter.
- The number of new opportunities: That pipeline is dependent on adding two to three more qualified opportunities for every deal that is closed. If this metric is lagging, you may need to dig deeper into more traditional metrics around activity levels.
- The number of high-level meetings within the account: In the land of the blind, the one-eyed Jack is King. High-level meetings can be a fuzzy metric, but it’s possible to track the titles of the people AE’s are meeting with, and if they are getting multiple meetings. The stronger the relationship with the high-level person who makes or influences buying decisions, the better the odds of a deal getting done.
- Velocity or stagnation of the pipeline: Even for large opportunities, there must be some consideration as to how quickly opportunities are moving through the pipeline. If an AE is not getting follow-up meetings, the opportunity may no longer be active.
In part two of this blog, we will discuss ways to manage the qualitative aspects of an Enterprise sale that will help you better predict if deals will close.
About David Jacoby
As a Managing Director at Sales Readiness Group, A Part of SBI, David helps large B2B sales organizations improve sales performance. Previously, David was a Principal at Linear Partners, a sales consulting firm providing sales strategy, sales operations, talent management, and interim management services to emerging growth companies. In the past, David has served as Vice President of Business Affairs of Xylo, Inc., where he was responsible for the Company's business development, sales operations, legal affairs, and financing activities.