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ceo spotlight


Creating a Culture of Measurement


BILL MCDERMOTT


Bill McDermott is CEO of SAP. In this monthly Selling Power magazine column, he shares vital lessons about selling, success, and winning. Each column includes a short video featuring McDermott, so you learn from a role model whose clarity of thought and passion for winning generated extraordinary results. Check out Bill McDermott’s book, Winners Dream: A Journey from Corner Store to Cor- ner Office.


When I first joined SAP in 2002 to lead its North American business unit, the challenge was to revive top-line growth. There were many reasons why U.S. operations were suf- fering, but a lack of accountability and discipline were un- derlying problems. The sales force especially did not have a clear vision of where it was going, how to move forward, or how to assess their progress. Few, if any, measurements were in place to ensure that whatever goals did exist were on track to be met. Transforming the business meant changing the culture,


and, in Winners Dream, I explain in detail how we suc- ceeded at both. Here are some of the highlights. Among my first steps was articulating an ambitious long- term goal for the business – $3 billion in revenue by 2005. It was an audacious increase over past performance, but it was not the most important bullseye. Nor was the revenue number a rep needed to hit at the end of each quarter. The most critical data point we tracked was a rolling mea- surement we called “3X.”


At any given moment, each sales professional had to have


three times his quarterly revenue goal in his sales pipeline. 3X was ambitious, but it provided a cushion that ensured potential deals were waiting in the wings when on-deck deals went awry (because, inevitably, some always do). 3X was a concrete way to control as well as measure progress. But I did not just demand 3X and wish people luck. As


president, it was also my job to design a winning plan so each rep could fill his pipeline to the high bar I’d set. Part of my plan included beefing up field marketing and strengthening partner relationships to deepen the pool of potential new customers.


14 | AUGUST 2015 SELLING POWER © 2015 SELLING POWER. CALL 1-800-752-7355 FOR REPRINT PERMISSION.


Another key part of the plan was retraining sales- people in consultative selling techniques so they could focus on customers’ needs at a higher level than ever before. I knew that the most important numbers for our salespeople to measure were not their own, but whatever numbers mattered to their customers. That meant our people needed to be obsessed with their customers’ business and solving their problems. Only with a customer-centric mindset could we even hope to achieve $3 billion in three years. To help ensure that customer focus, our salespeople needed more efficient sales tools so they could spend less time on internal administration. Amazingly, despite SAP’s own CRM products, back in 2002 many U.S. reps were still tracking their monthly sales on paper! Arming the sales force with the right technology helped them more easily and routinely track their individual progress throughout the quarter – and maintain their 3X status. Because measuring performance must be coupled with


rewarding it, SAP America also instituted a grand celebra- tion for sales professionals whose year-end results mea- sured up. We designed a spectacular experience that not only honored achievers for past work, but inspired them to work hard in the future. Acknowledging incremental “wins” was also key. The


process of winning – one deal and one quarter of growth at a time – bred an unwavering passion to keep on winning. As people’s confidence soared, so did the measurements. In 2005, SAP America delivered about $200 million more than our targeted $3 billion. To this day, I credit the auda- cious goals, the planning, the customer focus, the technol- ogy tools, and the rewards we put in place. All of those ele- ments contribute to creating the culture of measurement. Today, as you consider the culture of your organization, a few takeaways: • Don’t just measure outcomes; measure progress toward the goal. Do you only assess end results, or do you have a system for tracking progress? Do you understand that what gets measured – revenue, profit, year-over-year growth rates, customer satisfaction – is less important than how and when it is measured? In-process measurements allow you to course correct before it is too late.


• Focusing on customers’ numbers is more valuable than focusing on yours. Is everyone on your team more obsessed with measuring customers’ perfor- mance than measuring their own? We all need to have a handle on our own numbers, yes, but the real magic happens when we know what numbers matter to our customers, and to their customers.


• A culture of measurement is ultimately about every- one’s accountability. Does each member on your team know his or her goal? And have you outlined for them


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