The Problem with Vanity Metrics in Sales

“I closed 18 deals this quarter!”

“My closing percentage is at 20%!”

“I did over $100,000 in sales this month!”

All seem like really great stats, right?

Most sales leaders would love those types of results from their team (of course, depending on what is being sold and the ticket price).

The problem is that those three statements aren’t related; they are three different examples of what a salesperson would tell someone – like their manager – to highlight why they are ‘winning’.

Understanding Vanity Metrics

Might sound extreme, but I have seen that sentiment to be accurate countless times.

I refer to those statements – those metrics – as Vanity Metrics. On the surface, they seem great. But by themselves, without any context or other metrics to go with it, they are vain. They are intended to make the person delivering them (salespeople to their manager, managers to their leadership, leadership to the owner/board) look good.

Let’s break down what I would need to know to make these stats actually something to celebrate.

“I closed 18 deals this quarter!”

Here are my questions:

• How many conversations did it take to close those? (3? 28?)
• What was your average time to close those deals? (1 week? 2 years?)
• What was the average sales price? (Was the sales price high? Or did you give money away to get deals closed?)
• How many leads did it take to close it? (Good closing percentage? Or did you cherry-pick the easy deals?)
• Did you close these on your own, or did your manager have to step in a lot as a “second voice” to help you out?

“My closing percentage is at 20%!”

Here are my questions:

• How many sales does that equal? (Did you hit your quota?)
• Is that based on all leads you received? (Or based on a ‘qualified’ lead status?)
• Did you take all the leads you could have? (Or did you avoid taking more leads so your percentage would stay high? Did you cherry-pick leads?)
• What was your average sales price? (Did you give away money to close deals so you could hit that percentage?)
• Based on what timeline – from lead to close? (Lifetime stat? Just the leads you took this month, compared to all the deals you were previously working on that happened to close this month?)

“I did over $100,000 in sales this month!”

Here are my questions (You will notice a trend by now):

• What was your average sales price? (Did you give away money to close deals so you could hit that percentage?)
• What was your closing percentage? (What does the company need for a profitable Cost Per Acquisition?)
• How many leads did it take to close it? (Good closing percentage or did you cherry-pick the easy deals?)
• What was your average time to close those deals? (1 week? 2 years?)
• How does that compare to your quota/target? (Were you supposed to sell $200k?)

As you can see, the Vanity Metric is just that – surfacy and lacking context to show that it is worth celebrating.

Sports Analogy

Like in basketball, someone could say, “I made 60 3-pointers this season.” But how many shots did you take to get that done? If the shooting percentage is low, then you are just throwing stuff up there trying to make points, and I promise your team is suffering. How many games did your team win? If you did well and the team lost most of their games – then something isn’t working. What was the percentage of assists, to you and from you? And so on. In a vacuum, that 3-pointer stat is a Vanity Metric.

Identifying Important Metrics

I was recently asked by a leader at a company what metrics I think are the most important to track. The answer is every stat.

Okay, that’s overkill and has diminishing returns at some point with too many data points.

But here are the ones that matter:

• Number of sales (of course!)
• Closing percentage or Closing Effectiveness Score (A formula I created to determine Cost Per Acquisition across multiple lead sources with varying costs.)
• CPA (Cost Per Acquisition)
• Average Time To Close
• Average Ticket Price (Revenue per sale)
• Cancel percentage (within a certain time frame after close)
• If you are selling something with an ‘onboarding’ – then I would track onboarding percentage
• And the big bucket of metrics…everything that you can track along the milestones of both your sales process and the conversation milestones (Not just lead to qualified lead to discovery, etc. - but also within the conversations – if you are tracking it in the CRM. For example, if it’s a Discovery/Demo/Pricing call, did each of those stages occur?)

Conclusion

The key to successful sales operational leadership is the metrics. As they say, what isn’t measured isn’t managed.

If you only measure…or listen to…the Vanity Metrics you will try to manage to just that, and you will not succeed as a company. The salesperson might win on their end with that stat, but you will lose as a company.