How to measure Sales Performance Productivity

How will you measure your Sales Person’s productivity ? Be a startup or an MNC, it becomes imperative that you not only get the best person to take your business ahead, but you need to make sure that they are being productive. So how do you do it ?

Selling is the most difficult job in the world. Period!!!

In a world opened up by the internet & bombarded by marketing promotions of multiple me-toos for any product/services category anytime anywhere, the job of selling is increasingly becoming more & more difficult.

So, CEOs need to take care of their Sales engine. They must ensure that the Sales Force is properly enabled, engaged & measured to be able to deliver the revenue outcomes for the company.

Wow, that’s so easily said & really means nothing in the day-in day-out realities of the workplace. How exactly are enablement, engagement & measurement supposed to happen?

Okay, let’s cut the high-level talk & get to the basics. Let’s focus on how to set the right goals & define open and fair methods to measure these.

Typically, the key factors to measure that are agnostic to any industry or market are Sales Cost, Profitability & Customer Service.

Sales Cost is the cost to convert a contact to a customer.

This can be measured in a number of different ways but the key is to be able to do that as early in the lifecycle as possible. After all, if things are not working right, there should be triggers set for early warnings to allow time for course corrections.

Thus, companies should set measures from the very initial stage of prospecting & at each subsequent crucial step of the pipeline journey. Given that almost every Sales activity can be measured & costed, companies may consider setting targets on Dials (number of calls being made in a day), Appointments (number of conversions from calls to appointment for a subsequent sales activity) & so on.

This will thus help to measure the success ratios & the associated sales costs at each stage of the pipeline — quite crucial to monitor performance & set targets/budgets for the future.

Profitability is the value earned after deducting the cost to serve the customer from the revenue.

It is quite critical that companies set processes to be able to track costs down to each customer & link these to the department/individual bearing that cost.

This is controversial as at times Sales reps feel that they should be measured on revenue as they have little responsibility/control on the cost to serve the customer. However this is definitely not true.

Firstly, the profitability equation has equal significance to Revenue & costs. Sales reps have an overwhelming control on the revenue side & should close deals that are profitable to the company.

More importantly, there are many Account administration costs that get hidden under company overheads that are directly attributable to Sales & Marketing activities. These include customer meetings, travel, gifting & sponsorships etc.

So, CEOs should set processes to be able to attribute all direct & indirect costs to a customer account & be able to measure lifetime value earned on a continuous basis.

Customer Service is what keeps a customer loyal to its vendor.
Again, this can be measured in various methods — common tools like Customer Satisfaction scores are typically used to measure effectiveness of this.
However, meticulous CEOs should be able to define all key aspects & activities that contribute to outstanding customer service, set targets against these & measure them on a continuous basis.

For example, there are some companies that even measure the number of Thank You notes that Account Managers write to their clients in a given time frame!!!

A final word of caution — As with everything in life, it’s important to not overdo & be balanced in how we set & measure performance. It’s never the best approach to measure everything that can be measured as there is a cost of time to supply that data & analyze it. Nobody would want their Sales reps spending more time filling up data that would help analyze performance than spend time with potential customers.

Originally published at grosum.com.

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