How To Measure Sales Success
How To Measure Sales Success is the question on most sales managers lips at this moment in time when every sales is vital, alongside measuring those who are delivering in your team.
Companies most likely to thrive are those that scrutinize their strategic sales-management plans, from forecasts to pipelines. They look hard at the cost of sales, percentage of market share, salesperson-effectiveness ratios and customer lifetime value. Conversely, companies that struggle often lack such blueprints.
Effective plans require combining an organization’s goals with the individual salesperson’s business plan with a set of metrics designed to gauge everyone’s progress in meeting those objectives. The fundamental metrics to include in “dashboards” for measuring sales team effectiveness:
Accuracy percentage for monthly forecast, by salesperson
Dollar or pound value of pipeline by stage; number of opportunities by stage
Dollar or pound value of pipeline ratio to future monthly quotas
Actual sales activity compared to a defined set of standards
Average order value
Win/loss percentages by salesperson
Beyond the Basics
As you continue developing your dashboard, consider additional metrics such as:
Value of net new account sales as percentage of total sales for month and year to date
Existing account sales as percentage of total sales, month and year to date
Salesperson profitability to sales volume
Revenue per current customer per year as percentage of total sales
Cost per lead by source
Sales-cycle time from initial contact by salesperson to decision
Number of days with sales outstanding, goal vs. actual
Blended billing consultant rate, goal vs. actual
Realization consultant rate, goal vs. actual
Utilization consultant rate, goal vs. actual
Consultant backlog days, goal vs. actual
Direct sales expense as a percentage of volume, margin and quota
Looking Ahead: Leading Indicators
Leading indicators are activities or ratios that can predict revenues at least 60 days out. While simply looking at future pipeline values can provide a similar forecast, these indicators are also useful. In most cases, certain events early in the sales cycle are most likely to lead to high-percentage sales opportunities. If these begin to fall, future pipelines and revenues will probably do the same. Potential leading indicators include:
New-prospect calls made per week
Face-to-face sales calls made per week
Subject-matter expert or pre-sales tech-support calls made per week
Discovery calls made per month
Demonstrations and executive presentations made per month
Graphs comparing these numbers to dollars booked or margins generated help salespeople see the relationship between indicators and results. Finally, the ultimate goal is improving ratios and results each month and each quarter-not simply tracking them. That’s the real reason for developing a dashboard and the real route to success.
Ken Thoreson, Acumen Management president, is a recognized sales management thought leader with more than 20 years of software/technology experience, including 17 in niche market distribution with emerging and high-growth national companies. The sales management strategist is regarded worldwide as an expert in sales execution, channel management, revenue generation, sales analysis, forecasting, recruitment, and training within the sales function. Prior to founding AMGL, he led development-stage, entrepreneurial, and $250-million national vertical software sales organizations as vice president of sales.
Ken is a frequent speaker and keynote presenter at major industry conferences, including Microsoft Worldwide Partner Conferences, Cisco Systems Worldwide Partner Conference, Sales and Marketing Executives International Conference (SMEI), CA World, TechData/TechSelect Member Conferences, Ingram Micro’s XChange Conferences, SAP Partner Conference, SolidWorks World, Gartner IT Visionshare, CompTIA BreakAway, and NASBA Management Academy. He has authored two books and many articles spanning a variety of sales management topics, which have appeared in Personal Selling Power, VARBusiness, Reseller Management, Business Products Professional and SmartReseller. He is currently a columnist for Redmond Channel Partner Magazine.
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