In your business, how are your sales reps spending their time? Do you know the activities that fill their daily schedule? Do you know your team’s weaknesses and strengths? Not having the right metrics to monitor these things can cost you money. Can you tell if changes in your sales process make a difference in the bottom line? Since it is difficult to measure something if you cannot track it, how would you track it? The answer is metrics. A manager cannot judge a team’s performance or incrementally improve an ROI (Return on Investment) without them. The following are metrics you can use for your sales team. Since each sales team is different, the specific metrics to use for your situation can be different.
The first metric to track is time spent selling. Within the sales process, you need to determine the biggest time drains. For example, a sales representative may spend a lot of time generating new leads. They may spend too many hours trying to locate prospects that are sales ready and not prospects who are not ready to buy. This kind of time-suck can cause bottlenecks in the sales process that may slow your whole company. There is software available that can help you monitor time spent at each stage of the sales process.
A second metric to track is lead response time. The more time taken responding to interested leads means these opportunities are slipping away. Reality If you take a day to contact a lead, the lead may tire of waiting and contact one of your competitors. In addition, they may have purchased from somewhere else, lost interest, or change their mind about the purchase altogether. Remember, those companies who respond quickly are more likely to make a sale. Research shows that if you contact a lead quickly (within one hour), you are seven times more likely to qualify that lead. However, if you wait 24 hours, you are 60 times less likely to qualify the lead.
A third metric available is the sales cost ratio. This ratio reveals whether the revenue earned outweighs the commission, salary, and travel expenses needed to make the sale. On a broader scale, the sales cost ratio can help spot financial trouble early in the sales period prior to serious damage. Is it more expensive to run your sales department than what your sales department is bringing in? If so, a change or changes need to happen ASAP. These changes could include reducing costs, targeting different customers, and shortening your company’s sales cycle.
A fourth metric is to track new monthly sales leads. Different businesses and industries can differ in how they define a lead. For example, some companies define a lead who downloads something whereas other companies define a lead differently. If a company will compare their number of leads versus their new customers, they will have a monthly average conversion rate. This is important to tell what percentage of new leads buy your product.
Sales managers typically focus on sales quotas as a measure of sales team success. However, the metrics listed above can help identify problems and opportunities sooner than looking whether you met sales quotas.
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