How to Measure Sales Success

How to Measure Sales Success

Companies that carefully review their sales-management plans from forecasts to pipelines are more likely to succeed. They look hard at the cost of sales, percentage of market share, salesperson-effectiveness ratios, and customer lifetime value. Companies that are struggling often lack these blueprints. To create effective plans, you need to combine the goals of an organization with each salesperson’s individual business plan. Then, add a set of metrics that will measure everyone’s progress towards achieving those objectives. These are the fundamental metrics that should be included in “dashboards” to measure sales team effectiveness.

Salesperson: Accuracy percentage of the monthly forecast
Pipeline value by stage; number and dollar amount of opportunities per stage
Future monthly quotas to be determined by the dollar value of the pipeline ratio
Actual sales activity compared with a set of standards
Average order value
Salespersons can win/lose percentages

Beyond the Basics

As you continue developing your dashboard, consider additional metrics such as:
Net new account sales are expressed as a percentage of total sales in the month and year.
Sales of existing accounts as a percentage of total sales, month to date, and year-to-date
Profitability of salespeople compared to sales volume
As a percentage of total sales, revenue per customer for the year
Cost per lead based on source
From the initial contact with a salesperson to the final decision
Sales outstanding days, goal vs. actual
Rate of a blended billing consultant, goal vs. current
Rate of Realization Consultant, Goal vs. Actual
Utilization consultant rate, goal vs. actual
Backlog days for consultants, goal vs. current
Direct sales expenses as a percentage volume, margin, and quota

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Looking Ahead: Leading Indicators

These are activities or ratios which can accurately predict future revenues for at least 60 days. These indicators can be used to provide similar forecasts, even if you only look at the future pipeline value. Most likely, high-percentage sales opportunities will be created by certain events that occur early in the sales cycle. These events will likely cause future revenues and pipelines to drop if they do. These are potential indicators:

New-prospect calls are made per week.
Face-to-face sales call made per week.
Each week, pre-sales or subject-matter support calls
Discovery calls per month
Monthly demonstrations and executive presentations
Salespeople can see the relationship between indicators, results, and dollars booked by comparing graphs. The ultimate goal of improving ratios and results every month and a quarter is not just tracking them. This is the true purpose of creating a dashboard. It’s also the route to success.

Acumen Management president Ken Thoreson is an internationally recognized thought leader in sales management. He has more than 20 years of experience in software/technology distribution, 17 of which were with high-growth, emerging companies. This sales strategist is known worldwide for his expertise in channel management, sales analysis, and forecasting, as well as sales execution. He also has training in the sales function. Before founding AMGL, he was vice president of sales for national, vertical, development-stage, entrepreneurial software sales companies worth $250 million.

Ken is a regular speaker and keynote presenter at major industry conferences such as Microsoft Worldwide Partner Conferences and Cisco Systems Worldwide Partner Conferences. Two books and numerous articles covering a range of sales management topics have been written by Ken. They appeared in Personal Selling Power and VARBusiness, Reseller Management and Business Products Professional, as well as SmartReseller. Redmond Channel Partner Magazine currently has him as a columnist.

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