How do you measure your sales team productivity?
The common measures of sales productivity focus on the end result – the customer order, and of course, the value of the orders. This the most critical measure for every business because it is the driver on which everything else depends, but it does not tell enough of the story to guide management action.
Because it is a result measure, knowing whether sales are likely to achieve budget does not help the sales manager to solve the problem of falling sales, or to understand why sales order trends are rising. Simply knowing the number and value of the orders in the system does nothing to guide sales people or managers to solve a problem or exploit an opportunity.
Even analyzing trends in different product or market segments only identifies the existence of problem or opportunity. It provides little guidance on what to do about it.
When we need to understand why something happened and what we should do about it, we have to examine the process that led up to the end result.
You can always do this case by case but it s not a very efficient way to do it, and it can lead you into a series of post mortem investigation of the reason for lost sales. Too often, the result is a blame and shame process that demoralizes the sales team.
I do not need to remind you that sales teams who are dragging their tails through the mud are heading down the slippery slope to failure. Telling them to make more calls has limited effect when they are worried about sliding commission earnings.
How then can a sales manager lift the team performance?
The answer lies in the effectiveness of the sales process. If you can identify the weak points in the sales process, and show people how to fix them you will be showing real leadership. Your efforts will be seen to be helpful and you will be able to drive a lift in performance.
You will be able to guide their activity planning so that they focus on what they need to do to enjoy consistent success in completing the sale process. If a sales team is focused on the real KPIs for its sales process, wasted effort is minimized, timing of activity improves and productivity rises.
To do this reliably you need numbers, so now I will show you how I set about finding the numbers I need to solve a sales problem.
Discovering process measures.
When I am asked how to increase sales in a business, I start by learning about the sales process. I ask these questions:
• What are your most important market segments? By number of customers? By order value? By profitability?
• How much repeat business do you enjoy?
• What are you selling to them? What do they believe they are buying from you? Is there a difference?
• How do your customers buy from you? How do you sell to them?
• How do you find your prospects?
o When does a suspect turn into a prospect?
o What does it cost to find a suspect?
o What lifts your confidence that you will close the sale.
• How many prospects do you need to find to make a sale?
• How many proposals do you need to submit to make a sale?
• How many sales calls do you have to make to close a sale?
• How long does it take?
• Do referrals and recommendations make a difference?
You could take a few minutes to answer these questions. Your answers will lead you straight to your sales process KPIs.
Now try the next questions.
• Does your system provide the numbers to help you sort out the strong from the weak points in your sales process?
• Do you know your success rates at the critical milestones in your sales process?
• Do your sales reports provide reliable data for your system?
If you are happy with your sales process audit, that is great, and if you have a sales problem it is probably a real drop in demand. You solution lies in finding new market segments or new ways to compete
If you are not happy with your answers, your solution probably lies in adopting a sales activity management system using milestone assessment of status in sales reports. Then you will have reliable numbers to find your strong points and weaknesses.
You can close the loop by adopting the best business improvement strategy ever:
• Do more of the things that work well.
• Do less of the things that are not working.
If you do this you will always make more sales, because your team will be doing the right things at the right time to turn the suspect into a satisfied customer.