How do you measure your sales team's performance? That's easy. Look at sales.
Revenue is the ultimate sales performance indicator. But what if you don’t hit your revenue target? To improve sales performance, you need to figure out why.
Sales Activities Are the Foundation
To understand why your revenue is below target, it's important to analyze the activities your sales team uses to drive the sales team’s performance.
In Cracking the Sales Management Code, Jason Jordan describes the three components of a sales team's performance: sales results, sales objectives, and sales activities.
Most sales results and sales objectives are based on output—revenue, sales pipeline, deal size, new customers, products/solutions sold, etc. But you can't control the output; that requires your customers' cooperation.
You can control the input—sales activities. If you don’t like your sales results, change the sales activities.
Focus on what your sales reps do and what resources they work with: how many calls they make, what types of prospects they call on, and what sales tools they use. You can do something about these.
This is why sales activities form the foundation of the Sales Performance Pyramid.
Measuring Sales Rep Performance
Both sales reps and sales managers play essential roles in the sales team's performance. Reps do the selling. Managers provide the support that enables reps to sell effectively.
Let's start with sales reps. To achieve their revenue targets, they need activity targets—numerical goals for phone calls, meetings, proposals, etc. Some of these may be weekly goals. Others may be monthly or quarterly.
Having activity goals is not enough. Your reps should also track and record these activities religiously.
At the end of each week a rep - and her manager - should evaluate how many calls she made, how many meetings she had, how many events she attended, and how many proposals she sent out.
Your CRM system may automatically do the tracking for you. Otherwise, it's easy to set up and maintain a spreadsheet to track sales activity.
Activity Metrics for Sales Reps
Here are some of the activities that each sales rep should have goals for and should track systematically.
Activity Metric/Goal Why is this important? Sales Plans
- Completed Sales Plan (at least quarterly)
Every sales rep should have a written plan for attacking her market. It is starts with the type of prospect (size, industry etc.) and the "offering" (product/service, price etc.). It includes a plan for each account or prospect.
- New leads
- Phone dials
- Emails sent
- Prospect conversations
Sales reps who focus on opening new accounts must constantly generate leads and reach out to prospects.
- New prospects
- Follow up meetings
- Account meetings
In most cases, a meeting (or a series of meetings) is an essential step toward generating a sale.
- Proposals submitted
- RFP responses
A proposal is often the final step toward a deal. Your reps should have a monthly proposal goal
- Events attended
- Referrals given
- Referrals received
- New LinkedIn connections
Networking is not selling. But it’s an important part of selling. Sales reps often meet new prospects and generate referrals through networking.
Measuring Sales Manager Performance
To manage sales reps effectively, sales managers need to help them succeed. They must ensure appropriate coverage for the company’s target market. They must also ensure that the sales team has the right tools — sales materials, trade show support, lead generation, and a CRM system.
Activity Metrics for Sales Managers
Sales managers have activity goals, too. Here are some of the activities that each sales manager should track systematically. Activity Metric/Goal Why is this important? Organization Semi-Annually:
- Allocation of reps by territory/account etc.
- Ratio of inside vs. outside sales
- Amount of time reps actually spend selling
- % of performance appraisals completed
Managers are supposed to make sure that the right people are in the right jobs doing the right things.
- Number of training hours per rep
- Type of training per rep: sales skills, product, etc.
Sales reps often need to fine-tune selling skills and get up-to-speed on new products and services. Managers need to ensure reps get the necessary training.
- Number of reps coached
- Number of “ride-along” meetings
Managers need to do more than just tell reps what to do. They should teach reps how to be more effective via regular coaching sessions.
- % of sales reps using tools
- % of reps using CRM
- % of reps using sales process
To be effective, sales reps need to use a variety of tools to find opportunities, provide information to prospects, and track sales activities.
Manage the Sales Team’s Performance by Measuring
Activity targets and activity tracking are powerful management tools to track a sale team’s performance. They will tell you what your sales organization is doing. And they will tell you what you need to change to improve your sales performance.
As the old adage goes “If you don’t measure it, you can’t manage it.”