Measuring Sales Performance
Measuring sales performance has often been left only to measuring the closing rate or ratio as a measure of success.
Salesperson A brings in 100 sales out of 200 leads at $100 each for $10,000 in sales. He has a 50% closing rate, closes one out of two.
Salesperson B brings in 50 sales out of 200 leads at $500 each for $25,000 in sales. He has a 25% closing rate, closes one out of four.
If I look only at the Closing Ratio, Salesperson 1 is better. If I look at revenues generated, Salesperson 2 is better. Just based on this information only and assuming the sales are profitable, as a business owner, would I prefer having Salesperson 1 or Salesperson 2?
Simply looking at Closing Ratios is not a good measure of success. There are other numbers that need to be drawn into the equation.
For the next seven days I’ll give a real brief tidbit on measuring sales performance.
Consider your business. Do you have these numbers?
Tip 1 of 7 – Individual salesperson closing ratio and volume per advertising source.
If you want to focus on sales performance, it is important to know WHO is closing leads and at what RATE from each individual advertising source, whether it is paid or unpaid advertising.
We had input recently from one business who started tracking who was selling each advertising source the best; at what rate and the number of dollars sold. They discovered that the salesperson who actually had the lowest overall acquisition cost had the highest acquisition cost for certain paid advertising. They put out an expectation to their sales team, and said that the acquisition cost for this certain advertising had to be below 10% within a month or so. After that point, anyone who had a higher acquisition cost would no longer get leads from that lead source.
Long story short, after the deadline came, that salesperson did not get leads from that lead source because he was not selling them at an acceptable rate. Before the company would distribute any more to him, he had to go through and rehash some of his old leads from that lead source and bring some to a close, and bring his acquisition cost down.
The net result was that the ones who were good at selling that lead source really increased their close rates and volume because they were getting leads from sources they could close, and the one who was not selling went through his old leads to bring some to a close so he could get those leads back again. By the end of 8 months, they had increased their sales by a little over a million dollars more than the previous time period from that lead source and brought their overall company acquisition cost down well below 10%.
It was a win for everyone; the salespeople, the company and the customer (because they had people who were confident selling to them).
This is a very important part of Measuring Sales Performance.
If you would like to read the specifics on this particular example, CLICK HERE.
How about your business? Do you have a way to see who is selling which advertising sources best? If not, you are more than likely missing out on a lot of revenue.
Are you ready to start measuring sales performance? Call 1-800-972-6952 or CONTACT US HERE.
Measuring Sales Performance Tip 1: Individual Salesperson Closing Ratio and Volume Per Advertising Source
Measuring Sales Performance Tip 2: Closing Ratio Overall in Comparison to Industry Averages, Company Standards, Goals.
Measuring Sales Performance Tip 3: Cost of Leads Sold per Individual Salesperson
Measuring Sales Performance Tip 4: Contract Size in Comparison with Company Averages.
Measuring Sales Performance Tip 5: Gross Profits on Dollars Sold Including the Cost of the Lead.
Measuring Sales Performance Tip 6: Numbers and Volume of Sales for Self-Generated, Previous Customers, or Referral Business (Unpaid Advertising).
Measuring Sales Performance Tip 7: Individual Salesperson Strengths/Weaknesses in Company Product Line