Updated: Aug 3
(Apologies to William Shakespeare.)
Beware of too much of the wrong analytics.
Sales operations and sales management go to a lot of trouble to create analytic metrics of company performance. But beware of a large quantity of slick graphics that don’t tell you much. They can mislead and distract you from what really matters.
Ask yourself, do these charts help you sell more? Forecast better? Plan better?
Here’s a great example. A B2B seller who measured their success in new customer acquisitions (“new logos”). Because they had such a long sales cycle, they wanted a signal to tell them if their future sales were looking up. So, they tracked new logo potential by classifying “open opportunities” as one of either active or engaged. Active meant that the prospect was evaluating the company’s solution. Engaged meant that they were considering evaluating their solution.
They had a beautiful report indicating how the number of active and engaged prospects were trending over time. The chart looked something like this.
The engaged and active opportunities are up and to the right, but the actual new logo acquisition is flatlining. At some point, someone decided to add actuals to the chart. And to make this a fair comparison, the actuals on each date show the number of new logos acquired in the subsequent year (about two sales cycles for them—long enough to capture most wins) from the list of active and engaged opportunities on each date.
Were either of these trends a meaningful signal about future actual new logo acquisition? Where is the signal? Did these charts help the company sell more? Forecast better? Plan better? No. They did however take up a lot of time in preparing them and got significant attention in board meetings.
In this case not only was this report a low information-content signal to predict future sales, until someone bothered to add actuals to the chart it was misleading management to believe that things were rosier than they were. The real chart was full of ups and downs (we smoothed them out for this discussion) which made it even harder to determine that the signal was unhelpful.
So, beware of slick graphics of meaningless metrics. The slicker they are and the more you see, the more skeptical you should be. They may not tell you much, they can mislead, and distract you from what really matters.