Right Sales Metrics Aid Brands
DeMo and GST apart, general dullness in the market is making it hard for sales, and brands are investing heavily into driving business development and sales. As with any major business initiative, an investment in sales enablers will need a business case. Unlike other processes, sales and marketing processes are pretty matured and there are good performance metrics available to evaluate the investment effectiveness. It will be interesting to look at some of these metrics and how one can effectively drive proper measurements for sales. We should begin this process by outlining the impact on the execution of sales. All organisations have hundreds of sales factors that can be measured.
However, the critical metrics for the success of any execution will not be more than 5. The following five metrics most directly impact revenue attainment: Number of opportunities in the pipeline, average deal size, Success rate, length of the sales cycle and total number of “active” sales persons.
You will find that there is a mathematical relationship between these performance metrics in terms of their impact on revenue. Due to this relationship, significant improvements in sales performance can be obtained with relatively minor improvements in each metric. For example, it is found that a 5 per cent improvement in each area yields a 26% increase in revenue. How significant is a 5 per cent improvement?
l If the average number of opportunities pursued by a salesperson annually is 100, they are now able to pursue 105.
l If the average deal size is Rs 100,000, it’s now Rs 105,000.
l If the current success rate is 50 per cent, it’s now 53 per cent.
l If the length of the sales cycle is currently 26 weeks (6 months), it’s now 22 weeks.
l If the current number of “fully-ramped” salespeople is 50, the new total for “active” headcount is 53. So how does the sales process directly impact each of these performance metrics?
Increase Opportunities: The most important benefit is on the time required to create customer-facing sales materials. By using automation tools, organizations can create the best content for a given selling situation, and make it much easier to personalise those assets for the customer. This will save their time to drive more important higher vale sales activities. By pursuing such processes, one of our clients actually saves over 50000 hours for their sales team in a year. If you enable the salesperson to deliver a customer-centric message to a prospect, you can dramatically improve the conversion rates of leads to qualified opportunities.

Increase Average Deal Size: These days most companies are selling solutions rather than products, which they assume, will differentiate them from the rest. Solutions selling strategy essentially covers a macro revenue generating capability and can be sold within the single sales cycle. However it is not enough to tell your sales team of selling solutions but you need to give them proper training to do so. One of our clients has struggled for a couple of years to make this transformation. You also need to enable the sales team with the right tools for them to assess the situation at the client’s end and suggest possible solutions. For instance one of our clients who is in industrial chemicals of a wide range, the problems of one furnace user could be very different from another. Technology can indeed be of help here and that can actually institutionalise up-selling and cross-selling.
Increase Success Rate: Supporting a salesperson to deliver a more targeted value proposition to a customer will clearly impact his success rate. Our clients equip the sales force with the latest industry data, discovery guides, competitive intelligence and objection handling guidance and so on. With this and a hand held device they can actually save time and prepare well for a sales pitch better than before. By being able to answer all the questions of the customer, and also by providing proactively industry data and ratios of productivity, etc, the salesperson can indeed get the respect of the customer and therefore the better success with sales.
Decrease Sales Cycle: These days sales cycles across all industries have been steadily increasing. Economic conditions, lack of will and policy improvements, and increasing complexity of customer needs – all have had an impact on both the duration of the sales cycle as well as the number of decision makers and influencers now involved in the buying process.
Increase “Active” Sales Headcount: Attrition in sales is pretty high though it varies from industry to industry. It is about 10% in chemicals to 40% in retail.
Recruiting and bringing up a new sales person to speed takes time. So active sales force may be less than optimum at most times. By helping and supporting the sales force actively and in real time on the above four areas will actually help in retaining more talent and increase the active sales headcount. If you can compress that ramp up time, you will increase your “active” sales headcount, and as a result, can increase revenue.

The writer is CEO & MD, CustomerLab Solutions
Columnist: 
M Muneer