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Measuring Sales… it’s Not just about Revenue

sales2In my first sales job after college (many, many, many years ago), my first Vice President once said to me, “I don’t care how many sales calls you make… as long as you hit your sales goal.”

And for him – because he was being judged on revenue – that makes perfect sense. But for the day-to-day management of salespeople, that’s a bad way to manage. Let me explain…

While the end goal is, of course, to generate revenue… it’s the steps in the process they get you there. Make no phone calls, send out no emails, deliver no capabilities presentations… and you’ll generate no revenue. So clearly, sales activity is critical to sales success!

That means that one of the first directives of sales management is to help to develop the various sales activities of each of your salespeople. The better they can be at each of the specific tasks, the more successful they will be in the end.

Take a look at the chart below which describes a simple sales process: telephone calls result in being invited in for capabilities presentations… which result in requests for bid… which result in new contracts. I realize that a real sales process is not that simple, but it helps with this explanation…

rep2

All three of the sales reps shown above started with 100 phone calls and ended with 10 new contracts… but they each got there in a slightly different way.

In this example, 50% of sales rep A’s telephone calls resulted in in-person capabilities presentations. Better than either of the other two sales reps.

Sales rep B was clearly the most skilled at delivering capabilities presentation… 63% of his presentations resulted in a bid request.

And sales rep C’s strong suit was obviously in putting together bid packages… with 50% of his packages resulting in wins!

Now, as the sales manager, imagine what would happen if you could get the top level of productivity from all of your sales reps with each of the different sales activities? That would mean, in this case, that 50% of all calls would result in capabilities presentations… 63% of all capabilities presentations would result in bids… and 50% of all bids would result in wins!

If, in fact, that happened… in this scenario, you would not end up with 10 new contracts… but, instead, would end up with 16 new contracts! A 60% increase in new business!

So, how do you make that happen? The key is that, from day one, you are tracking ‘sales activity.’ You must be measuring all of the specific steps in the sales process. So, in the example above, the sales manager is tracking phone calls, number of capabilities presentations, number of bids requested and the number of wins. Depending on your business, that list can certainly be different… it may include things like software presentations, networking leads, emails sent, etc.

Once you begin to collect this data over time, then you can begin to see who the best sales reps are at each of the various sales activities. From that point on, it’s easy to get the sales reps teaching and training each other.

But what if you only have one sales rep? Clearly, a more difficult challenge, because there are no other reps available for comparison and cross-training. For the singular sales rep, it is still critical to keep an eye on the various sales activities and work to improve the skills of that sales rep in each of those categories.

For example, if 20% of the solo sales rep’s phone calls result in capabilities presentations… what can you do to get that to 25% or more? And while you may have no ‘best case’ examples to learn from other reps, there is still the opportunity to train and practice and rehearse so that the sales rep becomes as good as he or she can be.

More than any other position in a company, salespeople hate to be micromanaged… and so, the whole concept of having all of their various sales activities measured will not go over well with them. But, if they understand the big picture… that this measurement is a way for you, as the sales manager, to improve their skill set… in the end, their outcomes – and their paycheck – will be enhanced.

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