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Common Mistakes in Sales Management (Part 8): Applying Macro to Micro

(This post originally appeared on LinkedIn here)

“Everyone is against micro managing but macro managing means you’re working at the big picture but don’t know the details.”

Henry Mintzberg

The higher up in the organization the more aggregated the data managers look at for making decisions. Unfortunately, aggregated data is, well, aggregated, meaning it lacks the detail required to make micro decisions!

One day I was forced to consolidate all CRM records for my customer, a global player with a dozen brands and 1,000+ affiliates, into just one. Why? Because sales management had decided to limit the number of CRM accounts assigned to an Account Manager. Not only did we lose the information by brand and affiliate, we even ran into the situation that participants in our events were titled on their badge with the group rather than the brand name. Given the nature of the relationship of the brands this was not appreciated and participants complained about it with me.

A more common fallout from applying macro decisions to micro level without proper consideration is funnel management. At the top of an organization, at Macro level, thousands of opportunities combined display certain data points, e.g., the average win ratio. Going to Micro what you will find is win ratios varying from 1 in 10 to 1 in 1 (I can already hear you say “1 in 1 is impossible!”, but it is and I will cover this in another post).

What happens next is that sales management establishes a target funnel volume for every quota carrier by applying this average win ratio, let’s say quota times 4 reflecting a 1 in 4 average win ratio. All the account managers running on this or a lower win ratio will have no problems, all others will be confronted with the following situation:

Let’s say an account manager runs a 1 in 2 win ratio. To make a 5M quota they need a 10M funnel. But the target forces them to “find” another 10M (5M x 4). What will happen? Well, of course they will “find” the 10M by adding fake opportunities or inflating existing opportunities in size.

In the first case the target will be met by artificially decreasing the win ratio shown in the system, in the latter it will lead to deal volumes shrinking as the opportunity progresses through the sales stages to adjust them to the real size. In the first case management loses its insight into the real performance of account managers, in the second it negatively impacts forecast accuracy.

What should sales management do instead? Use Macro data on Macro level and Micro data on Micro level which translates into: Below a certain level of aggregation, they must go to the very detail of every deal and develop an understanding of the individual win ratio drivers, e.g., the account manager’s sales skills, the customer’s industry, the individual competitive situation.

Good sales management practices Dive Deep instead of pushing Macro to Micro.

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