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. 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’s a few steps to follow:
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.
“Your number one indicator will always be revenue gained,” shows Matt Leuschner, from Gopher Leads.
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.
“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.
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.
“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. This is especially true in high sales velocity environments” — Steven Benson, CEO of Badger Maps.
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. 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,” said Deborah Sweeney, CEO of MyCorporation.com.
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.
“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. 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. Quality involves doing a little research,” said Jonathan Morgan, Director of Business Development at Solodev.
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.
“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.
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.
“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.
Measuring Sales Results Metrics
You might think that sales are all about the revenue number – however, that’s not always the case. Sales organization structure now contains roles who are 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.
Why You Need to Measure Sales Activity Metrics
Measuring sales activities 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.
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. 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?
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. It’s important that each aspect is as strong as the next. One missing link makes the process fall down,” said Matt Gardiner, Sales Manager at Frank Recruitment Group.
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 lack the ability to close
- Underperformers – sales reps who are lacking skills in both pipeline generation and closing sales deals.
By figuring out who are your top performers and transferring the methods and processes they are using to win, you can move all sales reps up through the ranks to improve performance.