There you are great salesperson, hanging out with your sales buddies at the end of the month. Everyone has a good sales story to tell about how they landed the big one. But how many of you actually track your Key Sales Performance Indicators? Those are the metrics which tell you how good you are as a salesperson. Let’s look at the most important ones.
Of course this is the most important sales performance indicator. After all the dollars created from your sales help fund all the functions of the business. If you aren’t producing sales revenue it’s hard for the business to continue to operate. Or as my salesman father always said: “Nothing happens until someone sells something.” Do you set reasonable sales revenue goals for yourself? Do you check how you are performing against those goals?
Sometimes called “win rate” is the measure of your selling productivity. You can look at the closing ratio of the number of proposals made compared to the ones you closed. For example if over the quarter you presented 30 proposals and closed 15 of them your closing ratio is 50%. That means you only won half of the business you went after. Closing ratio can be based on sales revenue. If those 30 proposals were worth $15 million and the 15 deals you closed produced $5 million in revenue, then the revenue closing ratio would be 33%. Are you measuring your closing ratio? Do you follow up to see why you lost a sale? Then seek to improve your selling skills based on the feedback?
Lifetime Customer Value
Some sales are “one-and-done” sales. That is your product or service is only sold once to a customer. Other sales set the customer up to be a mutually beneficial long-term relationship. Based on the historic pattern of purchases, great salespeople learn which types of business are most valuable to them over time. The hunter sales team goes out to win their business. After the customer relationship is established the gatherer team continues the business relationship. In the example above the 33% closing ratio bringing in $5 million of revenue may be customers with high lifetime value. Great salespeople assess the potential lifetime value of prospects they pursue. And they follow the customer’s revenue and profitability over the long term. As customer performance changes, great salespeople adjust the lifetime value key sales performance indicator standard.
Sales revenue is great! But if the salesperson has to negotiate away profit to win then that sale is not as valuable as one at full margin. Great salespeople close deals based on the value of the product or service to the customer. They are skilled at demonstrating the benefit outweighs the price. Profit margin is a key sales performance indicator of the skill level of the salesperson.
How fast does a salesperson move a lead to a sale? In those one-call-close businesses this is not a significant concern. But if there are long sales cycles then measuring the sales velocity is critical. Keeping the prospect moving through the sales funnel is important. The longer a prospect takes to make the buy decision the more opportunity for a competitor to step in. Great salespeople are sensitive to the buying process. And they keep the prospect moving. Set a nominal time to close for each class of customer. Then compare your progress to the standard.
How To Use The Key Sales Performance Indicators
Remember: “measure what your treasure”? If you are not measuring your performance you don’t know how well you are doing. Most of the time your boss will set the standard. And you can use that to measure your performance. Or you can set your own standard. Either way measure your performance. When you don’t meet the desired level of the key sales performance indicator determine why. And when you find you are consistently above the standard, set a new one.
What You Can Do Right Now With Key Sales Performance Indicators
- Be sure you are measuring your performance
- Check your performance against the goal
- Determine why you don’t meet a goal
- Challenge yourself to reach for greater goals
To learn more sales secrets see Chapter Eighteen, Setting Your Goals, in Secrets of the Softer Side of Selling. For even more sales encouragement, join our FREE Sales Club! “See” you next week.