The information age delivers us an unending stream of sales-related metrics. But when it comes to sales performance management, does this torrent of data leave you happily surfing the wave or just struggling to stay afloat?
Time was we just measured revenue … but then the 20th century was a gentler age. Even so, back then some tried to align sales inputs and outcomes as a backwards way to track performance. This resulted in the quantifying of contacts, conversations, scheduled appointments and more. These in turn were compared with proposals and closed deals in a worthy effort to identify and exploit productive sales behavior and profitable relationships.
Now we have smart, multicolored dashboards to tell us what our sales team performance is like under the bonnet. And while not everything which happens prior to the proposal is necessarily of critical significance, there are still many performance metrics which give important insights we cannot afford to ignore.
So just which sales metrics should you be tracking and reporting? And how can you ensure this software-generated data really will help you to improve sales performance? Here are six ways to improve sales performance which really deserve your attention:
1. Opportunity Quality
Old-time sales reps who mentioned any reservations about the quality of leads were sometimes told: ‘Throw enough mud at the wall, and some of it will stick.’ Though it doesn’t take a genius to sense the time-wasting limitations of such a theory, the truth is this approach may not have completely died out.
So are your sale team creating or following leads in which critical qualifying milestones have been skipped? It’s really not enough to simply generate lots of meetings and other sales encounters and then imply that low conversion rates are all down to a poor sales effort. There has to be a meaningful qualifying process to avoid trying to sell people things they don’t want, can’t use and won’t buy. And what is more, taking no account of the unregulated quality of your leads will also skew your performance evaluation all down the line.
Qualifying potential sales leads is essentially about profiling customers, which begins with the development of an Ideal Customer Profile (ICP). Effectively, this is all about recognizing and defining the common attributes shared by the type of customer you seek to attract, and have the resources to handle.
Lincoln Murphy’s seven-point framework will help you identify your ideal customers who possess desirable characteristics which will positively enhance your prospects of making a sale.
They have an urgent problem to be solved, or an opportunity they don’t want to miss. What’s more, they very often know this.
They want to do something about it. They may even be trying out solutions, or some external force may be exerting pressure on them to deliver.
They can afford the solution, have authority to buy, and your sales process matches their usual purchase behavior.
These are your three essential ‘baseline’ ICP features, but these four additional inputs will usually add some measure of extra value:
They are a good fit for your product or service – perhaps for technical, cultural, functional reasons etc.
They represent the kind of customer it’s cost-effective for your business to acquire. Remember ICP is all about ending up with the right customers.
They already offer the potential opportunity for further sales beyond their present need.
They are well placed to influence others and thus to promote further sales opportunities – perhaps because of their connections or dominant position in your sector.
Smart profiling will streamline your selling. With correctly qualified customers your chances of a successful discovery call or meeting are instantly improved.
2. Call Quality
It’s likely you will be tracking, and measuring, the number of discovery calls or demos being created by your sales people. But do you actually monitor the quality of these exchanges? Unless there is some evaluation of the sell-side input, the only measure of call effectiveness will be the success of the encounter. And any outcome-driven assessment represents a missed opportunity to fine-tune this ‘discovery’ stage, which is regularly cited as the most crucial phase of the sales cycle and thus the point where deals are most often won or lost.
A sophisticated call-monitoring system can help to refine sales calling techniques. Essentially, this means defining and sharing examples of quality sales-call interactions with your people. In some instances this may involve playback and/or access to an entire call, but it can also involve samples of ‘champagne moments’ which demonstrate advanced techniques you want your sales force to acquire or develop.
Where the goal is the development of high-quality conversations, call monitoring can increase call effectiveness by promoting behaviors and practices such as:
- encouraging staff to use scripts, or use them more effectively
- developing methods and strategies to reverse customer attrition
- working with new staff to develop customer-friendly perspectives
- modeling sales conversation techniques
- embedding efficient call strategies to maintain performance while simultaneously reducing call-handling time.
Engaging prospects in five-star conversations, driven by effective questioning and an ability to build an urgency to buy, is the pinnacle of sales performance. And reviewing live examples of calls on a one-to-one basis is a proven means of honing these high-yield skills. This can be particularly successful with both high and low performers: Your ‘stars’ will relish the novel opportunity to review their performance from a non-participant perspective and glean new insights from the experience. Likewise, your less confident performers will be able to appreciate and internalize the cause-and-effect implications of sub-standard exchanges much more easily when they hear the conversation as a passive listener.
3. Pipeline Velocity
Conceptualized as a flow through your sales funnel, a sales pipeline can look deceptively healthy unless it becomes really obvious that it has slowed to a crawl. But, as Andrew Tate notes, measuring pipeline velocity – defined as ‘moving plenty of high-value opportunities successfully through the pipeline’ – is a critical element of performance evaluation:
‘Within sales, that speed is … a way for you to see exactly how you are succeeding in getting your prospects from one end of the funnel to the other. … By measuring this, not only will you be able to benchmark and track how well you’re doing, you’ll be able to guide changes to your sales process and coach to build a better, quicker-moving team.’
In terms of sales metrics, pipeline velocity is a composite of a sales team’s qualified opportunities, overall win rate and average deal size. Thus any change in these components will be automatically produce a corresponding change in pipeline velocity. At an internal level, any drop in this metric may indicate an individual is struggling to fill the funnel. Perhaps this may signal someone resting on their laurels, or a rep whose figures tick over when there are is a ready supply of sales opportunities, but who may lack motivation when it comes to doing some prospecting during downtime.
4. Demo:Deal Ratio
Using demo/deal conversions as an indicator when tracking sales-team performance takes you into the realms of ROI. One factor guaranteed to drive down the demo:deal ratio is schooling individuals to become more effective at closing. Adam Heitzman recommends the following six strategies as a productive means to shorten the sales cycle by closing more deals, and closing them faster:
Identify the decision maker: Getting to the person with purchasing authority is not always easy, but it’s got to be a primary goal of any deal-closing strategy.
Be real: While it’s important to be efficient and well-prepared, in order to close you must also be genuinely committed to adding value for the customer.
Create a sense of urgency: Building the dynamics of your exchange, maybe by adding extras, a discount or a time-limited offer, gives your customer more reasons to commit.
Overcome objections: Structuring your demo to overcome potential sale barriers can speed the progress of any deal. Getting the whole team to review a sales pitch for possible snags (and, of course, their practical solutions) is a further confidence-building strategy.
Know your rivals: Be sure each member of the team understands the competitive landscape. Knowing where you can outdo your rivals also gives you your strongest selling points.
Watch what you say: Professional sales people stay in control, even if the best may sometimes appear to walk the line. So by all means be yourself, but stay within your commercial focus so the conversation doesn’t drift into uncharted areas.
To properly gauge the effectiveness of your team, performance metrics must also track the customer acquisition costs (CAC). Like all other sales activities, CACs have the potential to increase efficiency, and therefore profitability. So monitoring, and improving, this metric will both indicate team progress and make a further contribution to your ROI.
5. Average Deal Size
When creating an action plan to improve sales performance, too many companies simply track the number of deals. While this can be interesting, it’s not the most important metric. Your average deal size is a good indicator of whether business is growing, reducing, or just standing still. In addition, your average deal size is very likely to impact heavily on CAC.
In terms of rep behaviors, conversations which focus on value rather than just transactional issues are known to boost the average deal size. And for individuals, those who consistently score below the average deal size for the team are likely to be sales people who discount aggressively in order to close the deal quickly. Alternatively, it may indicate a rep who just targets low-hanging fruit and is more reluctant to go after a more substantial prize.
Sales performance management opens the door to discussions about learning and improvement. In fact, using an evidence-rich software environment for tracking performance enables sales leaders to do far more than reward the good and ease out those who don’t perform.
Companies are finding the tools they use for sales performance evaluation can also be employed to promote high-quality coaching opportunities. Hiring staff is expensive and time-consuming, so helping reps to quickly learn from their mistakes is always a cost-effective exercise.
And in terms of developing a learning culture which values and promotes continuous improvement, creating an environment in which people are open to receiving coaching and feedback in order to move the needle has got to be the way to go. Furthermore, reps who are more coachable and willing to learn have a greater chance of achieving and/or exceeding their quota – which is surely the ultimate win-win strategy.