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In the realm of sales, strategies and methodologies play a pivotal role in achieving success. One of the fundamental debates in sales management revolves around the choice between activity-based and outcome-based approaches.

Each method has its merits and drawbacks, but understanding the nuances between them can significantly impact sales performance and overall business outcomes.

Activity-Based Sales Method:

The activity-based sales method emphasizes the importance of specific actions, tasks, and activities performed by sales teams. This approach often involves setting activity-based milestones, such as the

  • number of calls made
  • emails sent
  • meetings scheduled
  • appointment made/held
  • proposals submitted within a given timeframe.

The focus is on driving productivity and ensuring that sales representatives are consistently engaged in sales-related activities.
The idea with Activity based sales model is that Activities lead to outcomes (sales).

Key Points:

  • Activity-based milestones provide measurable metrics for tracking sales team performance and activity levels.
  • This approach encourages a proactive and disciplined work ethic among sales professionals.
  • However, solely focusing on activities without considering outcomes can lead to inefficiencies and wasted efforts if not aligned with strategic goals.

Outcome-Based Sales Method:

In contrast, the outcome-based sales method prioritizes the desired results or outcomes achieved by sales teams. Rather than measuring activities, the focus is on quantifiable outcomes such as closed deals, revenue generated, customer satisfaction levels, and profitability.

This approach emphasizes the quality of results over the quantity of activities.

Key Points:

  • Outcome-based metrics provide a clear indication of sales effectiveness and impact on business objectives.
  • Aligning sales efforts with desired outcomes encourages a results-driven mindset and strategic decision-making.
  • However, overlooking the activities that contribute to these outcomes can lead to a lack of visibility into sales team performance and potential issues in execution.

Finding the Balance: While both activity-based and outcome-based sales methods have their advantages, finding the right balance between the two is crucial for sustainable sales success. Its also important where to deploy these strategies. A junior sales person might benefit from activity based methodology as this helps solidify the sales process as they mature, whereas an experienced sales person would be better suited to the outcome based methodology but with a Freedom Box approach.

The Freedom Box Concept:

The “Freedom Box” concept, offers a strategic framework for managing sales performance within an outcome-based approach. When sales professionals are not producing the desired outcomes, the Freedom Box concept suggests reducing their freedom and autonomy, thereby increasing management oversight and guidance. Imagine a box where a sales person can make their own decisions where this box (eg: decision making) can get smaller and smaller if the outcome is not there, where Freedom in how/when to implement activities gets smaller and smaller.

Key Points of the Freedom Box Concept:

Outcome-Based Focus: The Freedom Box concept aligns with an outcome-based method, emphasizing the importance of measurable results and objectives.

Flexibility and Autonomy: Experienced sales professionals are initially granted greater freedom and autonomy to achieve outcomes independently.

Management Intervention: If desired outcomes are not met, management intervenes by reducing freedom, increasing oversight, and focusing on activity management.

Performance Improvement: The goal of the Freedom Box concept is to drive performance improvement by striking a balance between autonomy and accountability.

Strategic Application of the Freedom Box in Sales: Experienced sales professionals who excel in outcome-based methods can leverage the Freedom Box concept effectively. They start with a high level of freedom and autonomy, demonstrating their ability to achieve outcomes. However, if challenges arise or desired outcomes are not met, management can intervene strategically by implementing the Freedom Box framework.

So who uses what and how?

Leadership vs. Management: The Activity vs. Outcome

At the core of the activity vs. outcome debate lies the distinction between leadership and management.

Leadership(eg CEO) is about outcomes, and uses Outcome based method

Management (eg: Sales manager) is about activities, and uses Activity based method.

Leadership focuses on driving results and outcomes, while management is more concerned with overseeing activities and tasks. Of course when using Outcome based methodology Freedom Box technique should be used.