- No need
- No desire
- No hurry
- No money
- No trust
- Keep using the product or service to experience it as a customer.
- Ensure that you do not annoy your customers.
- Ensure that you do not put in road-blocks for repeat purchase.
One of the key challenges that I have seen in senior leadership is to measure the sales-force effectiveness. This becomes even more important if we are in an environment where revenue growth is difficult to come-by. So how does one measure the effectiveness of their sales-force.
I think there are a few key indicators that show if the sales force is doing a good job or not:
- Revenue growth: The easiest and the most measured variable is the revenue growth. If the revenue is growing month-on-month, quarter-on-quarter, year-on-year, the sales-force is considered to be doing a good job. This shows the ability of the company to close sales. But this alone is not a good indicator of the sales force effectiveness.
- Customer acquisition: This is measured by the total net new customers acquired. Ideally this should be measured and should either show a positive trend or at least stay within a specific range. This shows that the company’s product’s and the sales force is also on the lookout for new customers. This will ensure that the sales growth is not just dependent on a specific set of large customers. This also shows that your sales teams are not just milking existing customers but also are out building more relationships.
- Repeat business (as % of total revenue): This is measured as a percentage of revenue from existing customers as against total revenue. This is very important and a steady trend shows that we are consistently getting new business from existing customers as well as new customers. This in a way shows the strength of the existing customer relationships.
- No. of transactions: This is nothing but the number of transactions completed in a particular time period (usually a calendar month). This is an often ignored variable which can give early indicators to the management so that they can check if there is any cause for concern. This ability of the management to be able to check any issue at an early state can provide the management with enough time to course-correct mid-way. This ability is the difference between good companies and great companies.
All these indicators when viewed together can provide with enough information to the management on the effectiveness of their sales force and can also provide them clear direction for improvement. The compensation plan for the sales force should also have weightages for all of the above (albiet differential percentages depending upon the strategic direction.
I received a comment on my previous blog on sales process that if there is no demand for a product/service, improving the sales process might not have any benefit.
True. But how do you know if the decline in sales is due to lowering demand for your product/service or is it due to some other reason.
My belief is that as long as your product/service is able to solve a key challenge for your customer, the demand for your product/service should not decline. If it still declines, the culprit lies in the process.
A follow-up question is, how, when and how often do we check if our product/service is still relevant for our customers. Do we have a process in place for this ?
Whenever there is a decline in sales, what is our first reaction – we try to figure out what is wrong with the market or the sales team or the product/service being sold. We try to come up with new campaigns, discounts schemes or offers.
The thought that there might be a flaw in the process almost never occurs to us.
And this is exactly what provides us an interesting opportunity to explore. How much improvement in sales can we get by improving the selling process ? Can process efficiency drive sales numbers ?
These are questions that are worth exploring for all of us who manage sales.