Sales Performance Management: Looking Back and Ahead

A ranking by revenue won looks back. Sales performance management also needs the look ahead: what each person's open pipeline can still cover. The two views together form a table with four fields, and each field leads to a different conversation. This whitepaper shows the table. It explains why every rank needs its ranking basis and why a person is a profile, not a number.

A ranking by what was won looks back

At the end of a quarter, many sales meetings have a ranking on the table. At the top is whoever won the most. The ranking answers one question: who has delivered? It does not answer a second one: who can cover the gap that is still open?

Three roles work with this ranking. Sales leadership, running several teams, wants to know how far the teams are apart. The sales manager, who leads sales reps directly, uses it to prepare one-on-ones. Sales operations, which provides the metrics, has to be able to say what a rank rests on.

For the look back, Funnel Economics uses three metrics. The win rate, the share of deals won, is the share of deals won among the deals decided, calculated across all of a sales rep's decided deals. Open deals are not counted.

CIF, the share of the team's result, measures a sales rep's share of the deals won and the revenue won by the team in one period.

PAS as a combined measure multiplies a sales rep's decided-row win rate by their CIF. PAS shows who carries both the close and the contribution.

PAS shows what the win rate alone does not. A person with a high win rate and a low CIF would stand near the top of a ranking by win rate. Funnel Economics calls a high win rate with a low CIF the cherry picker anomaly. It is typical when someone works few deals and wins most of them. PAS prevents that person from landing in the top quarter on the strength of their win rate alone.

All three metrics share one limit. The win rate counts decided deals. CIF is a share of what the team has already won. Each of these metrics is calculated on decided deals. None of them says whether a person can still cover the remaining gap.

That second question is what a quarter-end conversation is about. The look back is necessary for it, but it is not enough.

Looking back and looking ahead belong side by side

The rule of the method is simple: a person's distance to the peer group is never reported without the half that looks ahead. The look ahead stands beside the rank, not in its place.

The look ahead has two building blocks. The first is the risk-adjusted expected value of each person's open pipeline. Funnel Economics calls this figure rEFV, the risk-adjusted revenue expectation. The second building block is the gap that is still open to target.

Together they give the coverage of the gap, and coverage belongs on the table as a pair. Nominal coverage divides the open pipeline by the gap to target. Risk-adjusted coverage puts rEFV in the place of the open pipeline. The finding is the distance between the two values.

One point is specific to the person. Per sales rep, the gap is not a planned quarterly target. It is derived from the annual target. Coverage on a derived gap is a different statement from coverage on a planned quarter. Whoever quotes it says so.

At the level of the organisation and the region, where a planned target is the denominator, the risk-adjusted value is called HACR, the Health-Adjusted Coverage Ratio.

The table with four fields

With the look back and the look ahead side by side, every person sits in one of four fields. The table is the finding.

The four fields come from the Funnel Economics method documentation. Each field leads to different work.

A ranking by what was won shows who has delivered. Who can still cover the gap only shows when you look at the open pipeline.

Four fields lead to four different conversations

No field of the table is a verdict. Each field says which conversation to have.

First field: has delivered and can cover. This person carries the result and keeps carrying it. The work here is to protect, not to coach.

Second field: has delivered and cannot cover. This is the expensive case. The person looks strong on every backward-looking metric, yet the expected value of their open pipeline does not cover the gap to target. The inflow of new deals is not counted in it. A ranking by what was won hides exactly this person.

Third field: has not delivered and can cover. The person has the material and has not won it. This is where coaching starts, because the pipeline is there.

Fourth field: has not delivered and cannot cover. These are two problems, and the order matters. Without pipeline, no coaching helps. Supply comes first, skill second.

Low coverage has two opposite causes

Low risk-adjusted coverage alone does not say what to do. It has two opposite causes, and a single number cannot tell them apart. That is why nominal coverage belongs beside it.

If nominal coverage is high, the pipeline is there but does not carry. The work is then hygiene, evidence at the stage transitions and a decision about old deals.

If nominal coverage is low as well, there is simply not enough pipeline. The measure is then the opposite one. Recommending a clean-up to a person who is short of pipeline makes things worse.

In the run of a week, this question therefore decides everything that follows. First it is settled whether the work is about cleaning up or about building. Only then are tasks assigned.

A gap is not automatically a pipeline gap

The obvious conclusion is: coverage is not enough, so more pipeline is needed. That conclusion is not permitted before it has been checked whether the existing pipeline carries. Asking a pipeline that already fails to carry to be several times bigger multiplies the problem.

The reverse conclusion is just as wrong. Whoever wins from what they have and has too little is short of pipeline. Coaching is then not the lever. Recommending stage discipline spends the one thing this person is not short of.

Both cases can occur side by side in one team. One rule for everyone therefore cannot serve both.

What the table does not say

The table says whom to talk to and about what. The table does not say why a person sits in their field. Whether a conversation or coaching changes anything is not something the calculation shows.

Where a person has no annual target, there is no coverage for them. That is a finding about planning, not about the person. The person is named in the overview and not left out. Otherwise the team looks complete when it is not.

The number of cases also belongs beside every value. A rank that rests on a handful of decided deals is noise.

Why can the same person stand in two places?

A ranking always holds for one ranking basis. Funnel Economics has two. The idea behind this: a ranking should measure more than the single factor of what someone has won.

The two ranking bases do not lead to the same rank. The same person can be in the top quarter by the stage win rate and in the third by PAS. That is not a contradiction. It is the point of having two ranking bases.

One duty follows for every statement about a rank. The ranking basis chosen stands in the answer. A number without its ranking basis cannot be interpreted.

The quarters of a ranking are called quartiles. A quartile is a cut on rank, not a threshold. The people are sorted by the ranking basis, and the top quarter of the row forms the first quartile. Which value a person needs to get there depends on the group.

A comparison in quartiles needs a group that is large enough. If the group is too small, the split would only be a new name for the order. Then no quartile is assigned and the reason is given.

A quartile is also not a label for a person. A quartile holds for one ranking basis, one group and one period. If one of them changes, the rank can change without the person having changed.

Every rank needs its ranking basis. The same person can be ahead by the stage win rate and further back by PAS.

A person is a profile, not a number

The method sets a clear limit on the comparison: a sales rep is never judged on a single rate, such as the decided-row win rate. The diagnosis is the shape of their curve across the stages, compared with the middle of the field.

The decided-row win rate says whether something is stuck. Only the profile says where. Two people with the same decided-row win rate can fail at completely different points. One loses deals early, when establishing the need. The other loses them late, in the negotiation. The two need opposite measures.

A pattern in the profile is a hypothesis with an address, not a verdict. The pattern says whom to talk to and about what. It does not say why.

Three counter-checks come before any conversation:

1. Does the series carry the pattern? A profile over a single period is noise. The statement is the development across several periods.
2. Does the pattern hold at the same composition? Industry, region and deal size produce the same curves as skill does.
3. Is it the person or the stage? Where the same stage collapses for several people, it is the process.

The cause often sits in the incentive, not in the behaviour. Some conspicuous patterns are a rational answer to a compensation or target system. Whoever addresses the behaviour and leaves the system standing gets the same behaviour back in another form.

The trend matters more than the single value

A rank is a standing. Where a person is moving, a standing cannot show. Funnel Economics therefore keeps the trend per person across several periods. The trend shows win rate, CIF, PAS and the stage win rate, measured per period, with the number of cases beside it.

Each figure is calculated in its own period. CIF is a share of the team in one period. The win rate sets what was won against everything decided in the same period. The quartile is a rank within the group of that period.

Three rules apply to reading the trend. Where few cases decide, the single point is noise; what can be read is the direction across several periods. A period without a decision is a statement and is shown, not skipped. And where the time windows overlap, that belongs in the answer, otherwise inertia reads like stability.

An average over the whole time can point in the wrong direction. One person may have left an old average behind long ago. Another may have a brilliant history and several periods without a single decided deal.

Scorecard, ranking table and the view of the second line

Whoever asks about the performance of a person or a team gets the comparison with it, even without asking for it. An absolute value without a peer group says little.

The comparison has two forms. The scorecard is the view of the individual person. It shows their own value, their place in the peer group and the distance to the average of the top quarter. The ranking table is the leadership view. It shows everyone in a team, grouped by quartiles.

This whitepaper shows rankings with numbered people only. What is said above holds for both forms: the rank is never read without the look ahead, and the ranking basis is stated.

First the team, then the person

Where a team stands out in the comparison, the view goes one level down, to the sales reps of that team. The question is then: is the whole team behind, or are a few people pulling the average down? The two answers lead to different measures.

What the second line reads

Whoever leads sales managers asks a different question from a sales manager. A sales manager asks which of their sales reps stand out. The second line asks which of its teams stand out, and whether the distance between the teams is a management issue or a market issue.

At this level, the spread is the finding. A sum across all teams hides exactly the differences that matter. An area at plan that consists of one team far ahead and two teams far behind is not an area at plan.

The table with four fields can also be read by team. For that, the rows of the people are grouped by team, each person exactly once. Such a grouping is a reading, not a measured metric of the team. The method does not form a team total as a figure of its own from it.

If the pipeline carries about equally in all teams, no single team is the constraint. The constraint then lies in the way of working, and a reallocation between teams does not change it.

A person is a profile, not a number. What is read is the direction across several periods, and at the second line the spread between the teams.

Methodology and data basis

This whitepaper describes the figures Funnel Economics uses to form the look back and the look ahead per person: definition, basic formula, interpretation and delimitation. The statements about the method come from the Funnel Economics method documentation. The numbers in the example are invented. This whitepaper contains no measured values of any organisation and no external market figures.

The figures of the method

The definitions and basic formulas come from the Funnel Economics method documentation. bEFV, the structural expected value, multiplies each open opportunity's amount by its stage win rate.

What applies at each level

Per sales rep, coverage exists only as a pair of nominal and risk-adjusted coverage on a derived gap. The gap per person is derived from the annual target. The metric carries the name HACR only for the organisation and the region.

Per team, the method measures neither attainment nor coverage. The method keeps no target of its own for a manager's team. What is said about a team is read from the rows of the people.

Win rate, CIF and quartile hold per period and per group. Over a longer time, the trend is read, not an average.

Delimitation

This whitepaper names no amount of money for a person's distance to the peer group. A different question is what an open pipeline would be worth at the rate of the best group. That is the subject of the article on Internal Benchmark Arbitrage, the gap to your own best group.

This whitepaper makes no promise about the effect of coaching. The table shows where a question should be asked. Whether a measure reduces the distance only shows in the trend of the following periods.

Who calculates

The table, the comparison on two ranking bases and the trend per person, as this whitepaper describes them, are delivered by Funnel Economics Strategist. Funnel Economics Strategist is an optional add-on and not active by default.

Trying Funnel Economics

Discover is meant for trying Funnel Economics before any installation. It is built on a demo org.

What the example shows and what it does not

The example for the table uses invented amounts. The amounts show how what was won, the gap, the open pipeline and rEFV stand side by side per person. No reference value for sufficient coverage can be derived from the example. The method sets no fixed value for it.

Sales performance management needs two views: what a person has delivered and what their open pipeline can still cover. No field of the table is a verdict.