Do you ever get frustrated with your sales team? Do you wonder if they spend their time well? Have you tried a bunch of different compensation plans, and maybe even tried activity measures as part of your commission structure, but were dissatisfied with lack of significantly better results? If so, you are not alone.
The CEO of Safeway, who makes an estimated cool $5 million annually per his Business Week profile, was recently quoted as saying all good management takes is four simple steps:
- Tell them (what’s the measurable you want)
- Show them (what you want them to do)
- Watch them (as they do what you told them to do)
- Coach them (to be better).
It’s a simple formula, but many business owners, when it comes to their sales teams, get stuck on the first step. In sales, what exactly should be measured?
The old-fashioned way to measure a sales person was simply by sales dollars brought in the door. You let them know you expect X dollars in sales or X gross profit per month and that was all you measured. While incoming sales are important, actual sales is a result of two other key components. We call it the Revenue Equation. The first component is Frequency of the right activities and the second component is Competency, being good at critical skills. So the Sales Equation is:
R = F + C (Revenue = Frequency + Competency)
One of the most fruitful 30 minutes you can ever spend to boost sales is to brainstorm five to seven measures for each portion of the Revenue Equation:
Here are some examples to get you thinking:
Revenue. Some good measures are Sales for the Month versus Budget, Sales Year To Date versus Budget, Total Pipeline (estimated dollar value of future sales), Percent of Sales to Brand New Customers. If certain products must be sold more than others to achieve desired revenue growth, then consider setting specific product budgets and measure actual to budget by the most important products. For example, DEF budget to actual. You likely have unique aspects to your business that should have viable measures. These are just a few to stimulate your thinking.
Frequency – These measures should relate to the contacts, actions, and sales maximization activities your team needs to do to be super successful. To help you with this portion of the equation, you might ask yourself “What does my top sales person do differently or how do they spend their day differently than my lowest achievers?” For instance, you could include the Number of Appointments made per week, the number of Solutions Presentations to decision-makers per week, and the Number of Touches with “Top 20” Desired Target Prospects per month.
If you use a CRM to track your sales process, which I highly recommend, a good measure is the number of sales progress Stage Movements per week. Many businesses like the Closing Percentage (sales compared to number of presentations), etc. Let your mind wander to what contacts and activities are the most useful to produce great sales quickly. For instance, you might see that low producers present in front of non-decision makers while high producers get in front of the right people. If so, you would want to measure the percentage of Decision Maker presentations to total presentations. Any differentiator you can measure is fair game.
Competency – These measures should cover critical competencies from as simple as product knowledge to as complex as the ability to accurately complete a Return on Investment worksheet calculation for a complicated sale or Resiliency to Rejections. Good sales people connect emotionally with their prospects showing a total command of product features and benefits plus the more complex skill of helping a prospect emotionally experience the product before purchase. Your measures should capture their level of personal analysis activities to find their own weaknesses and seek and implement continuing education that will drive up needed competencies. Involving your team in setting these measures can provide interesting discussion and insight about specific competencies needed for sales success at your particular company.
As you select your five to seven measures for each of the three elements of the Revenue Equation, make sure each one can be monitored easily and without a lot of administrative costs, ideally fully automated. When finished, you have a 15 to 21 point report card, masterful for revealing to each sales person exactly what they need to do to be successful and how they are doing in each area.
Once the report card is in place, engage your team in self-assessment, comparing their self-assessment to your observations (Remember #3 is Watch Them!). This dialogue allows for continuous improvement from a positive perspective. It also facilitates management and sales staying on the same page.
I wish you super successful selling, big increases in revenues and profits from happy, satisfied customers and sales personnel who know and do exactly what is needed to rocket your company to its next level!
Meridian Associates has been partnering with family-owned businesses for over 30 years to remove barriers, accelerate business growth, build their legacy, and reduce stress levels. With three, high-impact business events each year, The CEO Exchange, Women in Family Business, and The Family Business Intensive, we continually provide best practices & proven strategies that keep multigenerational businesses thriving. Discover how Meridian can help your business thrive through our combination of high impact business coaching, advisory, M&A, and precision company valuations by visiting www.askmeridian.com or calling us at 817-594-0546.
