Every day, businesses face the same question: How can we make more money? For businesses that depend on salespeople to generate revenue, the answer tends to boil down to two options:
- Hire more salespeople.
- Get more from the salespeople already there.
Since Option 1 tends to be expensive and time-consuming, most revenue-seeking companies choose Option 2. They resolve to make their existing salesforce more productive.
But how does one measure sales productivity? And which metrics are most meaningful to long-term profitability?
Following are 10 productivity metrics every business that employs salespeople should track:
- New leads/week – Most sales funnels begin with the identification of leads. An outbound salesperson who identifies more leads in a given period of time has more opportunities move the process forward.
- Inbound Response Rate – For companies that have inbound leads, response time can be critical. Salespeople who respond within minutes of an inbound inquiry tend to have significantly more success than those who takes hours – or days — to do so. Tracking response times can help improve this metric and lead to increased conversions.
- Number of Dials/Conversions/Appointments – It’s relatively easy to track the number of calls an outbound salesperson makes, as well as the number of those calls that actually convert into appointments. Salespeople who fall below quotas can be singled out for additional training.
- Contact-to-Conversion Ratio – Another way to measure productivity at this stage of the sales cycle is to determine the percentage of outbound contacts that convert leads into prospects. Although their final tallies may be the same, someone who requires just 10 contacts to close 10 customers is significantly more productive that one who needs 20 calls to hit the same number.
- Opportunity Win Rate – Just as a company needs to track how many leads become prospects, it must track the number of leads who become customers. Sales managers must make sure their salespeople are closing successfully and not wasting valuable sales opportunities.
- Sales Cycle Length – How much time does it take each salesperson to take a lead through the sales cycle? The less time, the higher the productivity.
- Sales Revenue Growth – Ultimately, the point of the sales process is to generate revenue for the company. Tracking total revenues over time is a key way to measure overall salesforce effectiveness.
- Customer Profitability – Of course, in sales, revenue alone doesn’t tell the whole story. How much profit each sale produces is also a key concern. By measuring and tracking customer profitability, a sales force can steer its attention toward those prospects who ae most likely to generate the most revenue at a lowest cost.
- Cost–per-Sale – Another way to look at productivity is by computing the cost-per-sale, both for the individual salesperson and the sales team as a whole. The goal is to lower this figure as much as possible by choosing the most profitable prospects, accelerating the sales process, limiting marketing expenditures, or any combination of these.
- Retention Rates – Perhaps just as important as the number of prospects who become customers is the number of customers who remain Growing a company often requires a sales team to nurture customers, deal with customer issues, and proactively ensure contract renewals. A failure in this area can severely impact overall profitability.
To achieve success, sales-driven companies need to measure performance among a variety of axes. Once these metrics have been established, the company can focus on strengthening its weak spots, providing its salespeople with the additional training, tools and technologies they need to improve their performance in the targeted areas.
Tools & Technology to Improve Sales Productivity
The Peterson Group (TPG) specializes in helping companies of all sizes improve their sales productivity. Our Tools that Sell® and Technologies that Deliver® help companies improve individual sales performance and generate more revenue over time.
For more information, visit www.go4tpg.com or email firstname.lastname@example.org.