Follow these steps for metrics creation to improve your team’s sales performance! Keep reading to find out more.
In this article:
- Sales Performance Management for Effective Teams
- Setting Sales Metrics and Goals
- Rewarding the Right Behaviors
- Setting Regular Performance Reviews
- Sales Assessments vs. Metrics
- Sales Is Not “Only” a Numbers Game
- The Sales Performance Metrics That Matter
- Measuring Sales Activity Metrics
- Measuring Sales Results Metrics
- Why You Need to Measure Sales Activity Metrics
- List of Metrics For Sales Performance Evaluation
- Looking at the Bigger Picture
- The Two Vital Sales Skills
How to Improve Your Sales Performance Evaluation
Sales Performance Management for Effective Teams
Sales is a numbers game, and the numbers never lie. However, numbers are rarely enough to be able to judge the performance of a sales rep.
A sales representative’s performance report may not give you an accurate enough gauge of how effective he or she is in the team. Different organizations also use different methods and metrics to reach their sales goals.
We asked sales managers and leaders what methods and processes they use to evaluate sales performance, and we came away with some useful tips.
Performance reviews need to be fair, they need to be results-oriented and employees should look forward to them, to make sure they are engaged and inspired after this process.
Data shows that when they are fair, performance reviews help employees accept negative outcomes easier.
So before you do your yearly performance review (or are looking to improve for the year to come), here are a few steps to follow:
1. Setting Sales Metrics and Goals
No performance review should start without setting the metrics first – and the most important is revenue.
How much you are selling will always make a difference between success and failure. This number will, of course, be dependent on your industry, the type of product or service you sell, and even time of the year.
However, it will always count towards the bottom line.
Once you’ve set the revenue you want to attain, you can set your sales quota, specific goals, as well as incentive and compensation management. These aspects will make up the sales metrics you need to measure your team’s productivity
“Your number one indicator will always be revenue gained,” shows Matt Leuschner, from Gopher Leads.
2. Rewarding the Right Behaviors
After setting metrics, it’s crucial that you communicate them to reps. Linking sales rep compensation to goals and objectives will ensure that things get done.
Your entire team, from sales managers and sales reps, may know the metrics, but there are still some who can’t or won’t follow them.
Giving an enticing incentive will make sales professionals more excited to close more deals with prospects.
Before that though, make sure everyone is on board with whatever you need to do for revenue generation. Sales metrics will eventually help establish your company’s sales culture.
“In many cases, what you measure will get done – so measure what’s most important to you and what you want your sales reps to accomplish,” said Steven Benson, from BadgerMaps.
3. Setting Regular Performance Reviews
Setting regular performance reviews with sales reps will encourage a culture of accountability. Many sales leaders will conduct monthly, quarterly, or annual reviews – however, weekly reviews are not uncommon.
Whether you choose to make weekly reviews informal or formal is up to you, though monitoring your sales reps’ performance in shorter periods can help you identify problem areas early.
You’ll be able to come up with solutions faster should you encounter problems in your team’s sales strategy.
“I think it is a mistake to only look at things on a quarterly basis. Week-on-week is also a good metric, although there will be a lot of variability,” Steven Benson, CEO of Badger Maps said.
He added, “This is especially true in high sales velocity environments.”
4. Sales Assessments vs. Metrics
Most sales managers will use both sales assessments (reviews) and sales metrics when working with their teams. Using just one type of evaluation is not enough to judge the performance of sales reps.
“We do rely on metrics to drive our discussions, but we also find that there is a ‘soft’ part of the success of our sales team,” said Deborah Sweeney, CEO of MyCorporation.com.
She added, “It is important not that they just hit revenue goals, but also that they have a good attitude, they’re motivational and self-driven, and show leadership skills. Work ethic and drive are critical factors of success.”
A sales rep with excellent quota management may have issues with their attitude and values. These qualities should also be included in the rep’s sales performance management.
By including values in the sales metrics evaluation, potential issues brought on by attitude problems can be prevented.
5. Sales Is Not “Only” a Numbers Game
For some leaders, conducting regular sales assessments are more important than metrics, as they offer a more comprehensive view of the team’s skills.
They look for a combination of quality and quantity when it comes to sales activities.
Monthly and even weekly assessments will help management figure out what causes drops in the numbers. Regular sales evaluations can then make decisions to improve the sales process.
“Sales is more than a job; it’s a career. The industry thrives off of quality human interactions between individuals and their clients to drive deals,” said Jonathan Morgan, Director of Business Development at Solodev.
He added, “Some people think that sales is a numbers game plain and simple. While the number of calls matter, knowing the difference between quality and quantity is also important.”
He further stated, “Quality involves doing a little research.”
6. The Sales Performance Metrics That Matter
Standards for measuring sales performance need to be specific, measurable, attainable, realistic, and time specific. This is the only way that they can accurately reflect the salesperson’s drive and accomplishments.
Your metrics should also reflect what your company needs to increase revenue. Specific performance criteria also help you with sales coaching.
“It’s important to measure the activities of the sales team that you really want them to take action on. In many cases, what you measure will get done so measure what’s most important to you and what you want your sales reps to accomplish,” said Seven Benson, CEO of BadgerMaps.
7. Measuring Sales Activity Metrics
Activity metrics are much harder to pick than sales results metrics. Of course, metrics will be different for every company and sales strategy.
Include activities relevant to your company’s sales goals. Don’t just copy the activity metrics from other companies as your team may have a different process than theirs.
“To pick what makes the most sense for your company, look at what activities are most highly correlated with success on the sales team,” added Benson.
8. Measuring Sales Results Metrics
You might think that sales is all about the revenue number, however, that’s not always the case.
The Sales organization structure now contains roles not always involved in closing a deal. Thus, they will have limited influence on this goal.
Field sales and sales development roles are some of these roles.
“For an inside sales team, number of calls or amount of time spent on calls are good metrics. For a field sales team, it might be the number of in-person meetings they do,” added Benson.
Measuring sales performance changes depending on the sales reps’ specific function and role in the team.
9. Why You Need to Measure Sales Activity Metrics
Measuring sales activity metrics matters for accuracy of performance reviews. When someone has a lot of activity without a lot of success, managers can spot a problem.
Either there is a skill gap, or the territories are not well balanced.
“Measuring activity metrics also motivates the sales reps to optimize their schedules and increase productivity so they can accomplish more, which ultimately leads to higher sales,” added Steven.
10. List of Metrics For Sales Performance Evaluation
While revenue numbers show overall team performance, there are other key performance indicators (KPI) that give the value of each individual sales rep. These KPIs determine whether your sales reps are doing a good job or not.
What are the key performance indicators or KPIs? This is a series of quantifiable measures to determine if an individual or team can attain the business or organization’s goals.
Leaders watch for sales KPI’s like meaningful conversations, persistence, speed of response, and the percentage of leads that get a response.
Ken Krogue, president and co-founder of InsideSales.com, lists 12 main metrics for sales rep evaluation in high-velocity sales.
The top three are about immediacy in lead response, which is an important driver of success:
- Immediacy – How fast does your team respond to leads
- Persistence – How persistent are your team in responding to leads
- How soon does your team book appointments?
11. Looking at the Bigger Picture
Measuring both results and activity will allow you to have a panoramic view of how well a sales rep is doing.
“Everyone loves a deal, but when evaluating sales performance, we look at the whole picture. We look at the amount of activities, call time, the type of sales activities, and then ultimately the amount of deals they make,” said Matt Gardiner, Sales Manager at Frank Recruitment Group.
“It’s important that each aspect is as strong as the next. One missing link makes the process fall down,” he added.
12. The Two Vital Sales Skills
Sales leaders – Chief Revenue Officers or Sales Vice Presidents – are always looking for ways to reach quota, and this really translates into two simple concepts, said Ron Hollis, Enterprise Director at InsideSales.com.
These are pipeline generation and closing skills.
“Sales reps need to build more and better pipeline, and they need to close deals. These are the two metrics that truly matter,” said Ron Hollis, on the Playmakers Podcast.
A Sales Effectiveness Assessment will work on these two skills and create a quadrant of sales composed of:
- Top Performers – Sales professionals with lead generating skills as well as closing skills.
- Deal Makers – Sales professionals who excel at closing deals, but are lacking in lead generation abilities.
- Pipeline Builders – Sales reps who specialize in pipeline generation, however, they lack the ability to close.
- Underperformers – Sales reps who are lacking skills in both pipeline generation and closing sales deals.
Coming up with the right metrics can help sales leaders determine who their top performers are and how to motivate underperformers. By figuring out who are your top performers and transferring the methods and processes they’re using to win, you can move all sales reps up through the ranks to improve performance.
What sales performance KPIs do you use to assess your sales reps? Share your insights in the comments section below!
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Editor’s Note: This post was originally published on December 27, 2017, and has been updated for quality and relevancy.