I find it odd that managers and sellers view sales metrics as a negative or a waste of time. I view sales performance statistics positively rather than negatively. Performance is measured by player stats in every professional sports activity. These metrics are used by every player and their coaches to set performance improvement goals. The position of a player on a team determines how stats are recorded. Did you know there are 77 statistics for football in each of the three areas: offense, defense, and special teams. These players’ performance results are directly linked to their salaries. The same should apply to full-time salespeople as well as Doer Sellers or Seller Doers. This article is actually designed to suggest a culture change in the way sellers are coached and how they are paid based on performance statistics.
Let me start by describing the roles of the sales team. Yes, I do suggest that you consider the sales team as a whole.
The full-time salesperson:
They spend 100% of their time selling. Travel time can be a burden, and sellers may have to work 50 hours a week. Full-time salespeople can also be called ‘hunters,’ where they spend all their time prospecting new business accounts. A full-time salesperson could also be a farmer who focuses primarily on increasing revenue in existing customers. This includes new business development in new units and geographic areas within existing accounts. The seller might need to balance their time in developing new business in new accounts and growing revenue in existing accounts depending on how long they have been with the company.
The Seller Doer:
They spend the majority of their time selling. A Seller Doer will spend at least 32 hours per week selling if they work 40 hours per week. The remainder of their time is used to perform secondary tasks. Seller Doers are able to balance their time between managing existing accounts and new business development. Rainmakers are also a term used to describe highly successful Seller Doers. This title is reserved for highly successful Seller Doers only. It is not appropriate for full-time salespeople as selling is the primary function of their job.
The Doer Seller:
They spend most of their time performing their primary job function, with a small amount of time doing sales activities. Doer Sellers are focused on increasing revenue from existing customers. They are often the ones delivering or managing the delivery of the product/service, so they have an advantage in account management over Seller Doers.
It is a good idea to look at your organization and assign roles for the sales team. Let’s now look at the statistics used to measure the performance of the players. These stats are based upon historical performance and may differ depending on the role of the player on the team.
Conversion rate from Meeting to Proposal:
How many meetings must I organize to generate a quote or proposal? I can answer this question by dividing the number (phone or face-to-face) of sales meetings I have held with the number of generated bids or quotes.
Proposal Decision Ratio:
How many proposals do you need to submit in order to sell a product? This metric is also known as the “Closing rate.” The term “Decision Ratio” is better as it reflects the goal of the seller, which is to get as many yes votes as possible. I could get twenty potential clients if I had ten YES and ten no decisions. Divide the total number of YES and NO decisions by the total, and I get a 50% Proposal Decision Ratio. This allows me to answer the question.
Average deal size sold:
How many deals do I need to close in order to reach my annual quota of 50? Divide my average deal size in dollars by my yearly percentage, and I can answer the question. The number of deals I have to close in a year is dependent on how large the average deal size is.
Pipeline Win Rate:
What’s the minimum total dollar value I need to build my pipeline in order to reach my annual quota of $20,000? The Pipeline Win Rate is a measure of a seller’s sales performance and the quality business they are chasing. Forecasting is also possible using Pipeline Win Rates. If I lose a deal, my Pipeline Win Rate does not change. My Win Rate does not decrease if I add dollars to my pipeline. Closing a sale is the only thing that increases my Pipeline Win rate. The Pipeline Win rate starts out very low at the start of the year and slowly increases with minor fluctuations. The answer to the question can be found by adding the total dollars in my pipeline, which is divided into Business Development, Pursuit/Chase, and Proposals. To forecast sales dollars, I multiply my Pipeline Win Rat percent by the total dollars in my pipeline (Business Development and Pursuit/Chase).
It is important to note that none of these metrics can be easily tracked without Customer Relations Management (CRM). These metrics can have a significant impact on the sales commissions and bonus dollars paid to sales staff. A player with a 60% decision rate should receive the same percentage of commission as a player who has a 40% decision rate. Is there a standard for average deal size sold that, once reached, gives bonus dollars at year’s end? Consider financial incentives as motivation to improve performance. Not only is it essential to meet or exceed quota, but so are other sales management goals. The future performance of a seller will be affected by whether they meet or exceed their quota.
Every organization is unique based on its vertical market. There are standards that can be applied to financial service, technology, and professional service companies. The results are what distinguish the top players from the average ones and the underperformers from the stars, much like football. These metrics should be tracked for at least six months. Consider what information you might learn about your team, which could help improve your bottom line. You can project a realistic annual sales figure if you monitor the performance of your team members. Hire more people if that number is not sufficient. It is easy to achieve success. The key to success is finding the right person for the job with the correct performance statistics.