Sales performance measures how well a salesperson is doing on their goals, leads converted and more. It can be defined as the ability to achieve the targets set for a given period, usually monthly or quarterly, in a growing business. Measurement is generally with percentages or ratios and is adjusted based on company wide averages. Most companies use some form of sales performance measurement, whether they track the data or not.
Sales performance is typically used as a form of management evaluation, in conjunction with a grade or rating system that determines how much money an employee will make for the company during the year. It is always on the mind of a sales manager. Unfortunately, only 5% of companies measure their sales performance accurately. Most companies (62%) report that they have no idea what percentage of their products are sold via channel partners. Statistics show that just about 1 in every 3 to 4 sales doesn’t get recorded or measured for accurate performance statistics.
An individual salesperson’s behavior affects the amount of revenue generated. Your Sales Performance score represents how effective you are at each of the four critical activities:
- Product Knowledge
- Presentation Skills.
Need to Measure Sales Performance Precisely and Accurately
For organizations, sales performance is one of the most important factors for success. These organizations constantly need to ensure that they have a thorough understanding of the actual sales potential, the challenges, and the appropriate strategies that they should be employed to improve their sales performance. Often, these efforts are paired with well-defined tactics utilized by management employees or independent 3rd party vendors to determine if these objectives are being met. In other words, we need a proven “system” that will –
- accurately measure the potential of a specific area or region,
- determine where there are unmet needs.
Metrics to track to make sure you measure sales performance accurately
Here are four metrics to track to ensure you measure sales performance accurately.
Sales Productivity is a simple-to-use system designed to provide salespeople with immediate feedback on their performance to improve. It considers the entire sales process, from initial contact to final closing, to making sure that you are using the entire process to your maximum potential. It is based on actual client feedback, so it’s in sync with the way people work. By tracking success in this more comprehensive way, it gives you exact information on how you’re performing and what you can do to improve.
Lead Response Time
Lead Response Time is a great reporting tool to determine the lead qualification process and corporate performance. It provides a quick and easy way to view the number of leads qualified by month, Territory, or Account Manager. The Lead Response Time is an easy way to understand how well your marketing efforts are performing. The Lead Response Time report tracks how long it takes the lead to follow up a task to get done after the salesperson schedules it. This helps you measure sales performance and identify areas of improvement. Lead Response Time measures when a lead is generated by marketing and when it is closed by sales. This allows you to calculate the ratio of bad leads and good leads that are being generated, how fast marketing and sales are closing these leads, and the gap in time from when the lead came into marketing until it was converted into a sale. Lead Response Time will also identify any bad leads that are being generated by marketing.
Opportunity Win Rate
Opportunity Win Rate is a tool that will help you measure how effectively you are converting visits to prospects into full sales. It strategically monitors opportunities with the best chances to convert to sales with the new Opportunity win rate statistic. This standard metric helps you determine which products are converting to sales and learn how to work with your Sales organization more effectively. It helps to analyze and measure opportunities to win customer estimates, wins, revenue and more. Opportunity-to-win rate is a key metric used to measure a salesperson’s performance across opportunity stages from prospecting to closure.
Average Deal Size
Tracking the Average Deal Size (ADS) of each deal is an excellent way to measure how deals are progressing from the time they are set at Deal to The Close Date. The average deal size is the amount of a sale the average customer spends when making a purchase. The deal size is usually expressed in dollars or units and can be calculated using either the individual transaction total for each sale or the cumulative total of all sales. The deal size is essential because it shows how profitable an item you are selling is. Deal size can be calculated by dividing the total revenue generated by a product by its number of units sold. Many merchants rely on gross profit, by product, in the analysis of performance improvement. However, they forget one important point: Average Deal Size. Gross profit by a unit is a performance metric that marketers are familiar with. It measures the effectiveness of selling a particular item and helps to find out whether customers are buying more or less than others.
Measuring Sales Performance Continuously
Wondering why your business goals aren’t being met? The path to success starts with understanding how you’re measuring up, and when you only measure performance a few times a year, that can be tricky. By having a continuous picture of your sales performance, you’ll have real-time data on how you’re doing. With that information, you can make changes throughout the year—not just at the end of it—to ensure you stay on track for its success. Sales performance measurement is one of the most important processes in the exchange of goods and services.
Are you seeking sales consulting services to improve your business?
Building an effective sales strategy that enhances sales performance is critical for the growth of your business. However, as a small business owner or a new player in the market, figuring out everything on your own can be challenging. That’s why working with a mentor to learn which are the most effective strategies to increase your sales can be helpful. This is precisely where Jupiter Business Mentors can make a difference.
The platform connects mentors to the start-up community and small & medium business enterprises so that you can take advice from business growth consultants.
Avail of the special offer – 90 minutes of free sessions with any six mentors on the platform.