“The world has changed and if salespeople are only focused on what to say and do on a sales call, they are missing the most important measure of sales effectiveness” said Merit Kahn, CEO of SELLect Sales Development and co-host of The Smarter Sales Show podcast on The Sales Experts Channel.
There has never been a better or easier time to manage and train your sales team using sales performance metrics. In fact, some sales managers find themselves overwhelmed by the sheer volume of technology available when it comes to tracking sales metrics and defer their decision altogether.
This is a huge mistake because you cannot manage what you don’t know. You could be leaving money on the table if you’re not measuring your sales effectiveness and monitoring performance. The goal for sales executives and managers is to identify sales metrics that matter the most for growth and efficiency.
“If you track and measure your metrics you’ll know exactly where to make slight edge improvements that will make the biggest difference to your ability to close more qualified deals easier and earlier” said Kahn.
How to Measure Sales Effectiveness
Measuring the most important sales metrics is the starting point for determining your sales effectiveness.
What Is Sales Effectiveness?
Sale effectiveness is your company’s ability to create effective processes and meaningful progress to reach your sales goals. It means finding the right customers for your brand to create the company you want.
Whether you’re an in-house sales manager or you’re becoming a sales consultant, learning which performance indicators to track is square one.
To be effective and reach your goals, you must understand where your company is now and look at your sales effectiveness metrics.
Tune in to The Smarter Sales Show for more tech and technique to sell more and stress less.
7 Sales Metrics to Track
Here are the 7 key sales performance metrics to track to help your company reach your sales goals.
- Sales Growth
- Lead to Opportunity Rate
- Opportunity to Close Rate
- Average Sale Value
- Sales by Region
- Product Performance
- Sales to Date
1. Sales Growth
Sales growth is one of the most important sales performance management metrics for your company. Sales growth measures whether your sales are increasing over time and are directly tied to revenue and profitability. A stagnant business is a dying one; growth is the key to a healthy and profitable company.
Sales growth is an excellent starting point because it can serve as motivation and a rallying factor for your entire team. Salespeople understand the importance of growth and knowing exactly where your company stands gives them either the encouragement to keep going or the fire to bring your numbers up.
However, sales growth metrics on their own are not detailed enough. Sales managers and directors need more of a breakdown in the specific areas of sales and various metrics in order to see exactly where your company is strong and where it needs improvement.
2. Lead to Opportunity Rate
The definition of a lead is where you connect with potential customers and gather contact information. It could be through your website or at a conference where people leave you their email or phone number.
An opportunity is when potential clients show an active interest in your company, such as by stating their interest in an email or call, or by signing up for a demo.
The lead to opportunity metric will tell you if further investigation is required as to how your leads are being handled. If the conversion rate is high, but your salespeople are not meeting their overall sales goals, then you likely need to increase the volume of leads. If the conversion is low, then sales might need better training, or your lead generation process may need to be adjusted.
Another part of this sales effectiveness metric is to see how many leads are actively being contacted by your sales team. If your salespeople call a low number of your leads, then it is time to find out why.
The leads could be a poor fit and marketing might need to find higher quality ones. However, it could also be that your salespeople are being lazy in the leads that they choose to reach out to. Take the time to find out your lead to opportunity metric to help give you an overall sense of how well your marketing and sales are coordinating.
3. Opportunity to Close Rate
Along with the lead to opportunity rate, the opportunity to close rate is the other half of your sale. How many people who expressed interest in your company became paying customers?
This is great if you need to look at how to measure the sales effectiveness of your sales team. The first key step in interpreting your rate is to get a general number from your industry. The conversion rates can range anywhere from 10-30% depending on what field you are in.
This sales effectiveness metric aligns more with the Goldilocks principle. If the numbers are lower than average, then more training may be required. However, higher numbers than your industry average indicate that you are not creating enough opportunities. If your company is not casting its nets wide enough, you are missing out on potential customers and missing out on sales.
A high conversion rate could indicate that your salespeople are being too selective and only reaching out to potential customers that are the “perfect” fit. It could also indicate the need for more salespeople because the demand for your product is so high.
4. Average Purchasing Value
This metric measures the average amount of each purchasing transaction. This is critical to measuring sales effectiveness and monitoring performance if you need to increase your sales growth because the best leads are existing customers.
Increasing the average purchasing value does not require more leads or customers to increase sales. Instead, your business can look into ways to upsell your current customers or sell more expensive goods. You can see if this is possible if you have a metric for how much you make in each average sale.
5. Sales by Region
Measuring how well your sales are closing in each region, whether physical stores or online, is a great way to find your potentially ideal customer and market. You can increase your sales effectiveness and get a sense of whether you may want to tailor your sales strategy and customize your offerings for a specific region.
If you have regions that perform similarly, you have the best opportunity to do A/B testing. You can test specific setups, promotions, etc. for one area and not the other for a set period of time (such as a week) and then compare the sales. This can give you the best sense of what might work for your company without overhauling your sales process in every market.
6. Product Performance
This sales metric lets you know what products and services are doing well in your company. This gives you a chance to tweak, overhaul or get rid of poorly performing products. It also indicates which products you could possibly customize or expand because of how well they perform with your clients.
However, product performance does require a critical understanding of your brand. A high-volume but low-priced item may not bring in as much revenue as your more expensive items, and it could hurt your brand positioning over time. However, it may be essential for your marketing or business model to offer a lower-priced option for your clients.
7. Sales to Date
You can compare these sales activity metrics with previous years to get a sense of the yearly trends in your company. This can be extremely useful for companies that have busy and slow seasons that make monitoring sales growth tricky.
If your sales tend to be slow in the summer but pick up around Christmas, being able to measure sales to date lets you determine if your team has been more effective than prior fiscal years.
Understanding the Sales Metrics that Matter to Your Performance
By leveraging these metrics to track sales performance, you can diagnose pain points and make positive changes to grow your company.
Whether you need advanced online sales training for your staff, or sales process consulting to identify where systemic improvements can be made, SELLect Sales has the experience and tools that you need to create the most effective team. It’s time to start reaching your goals and creating the brand you dream of.
Contact SELLect Sales today to improve your team’s performance!Tags: sales, sales management, sales metrics, sales tips Posted by