How do you measure sales? How do you predict and set goals in a way that helps you actually meet them? Bartosz Majewski, our Chief Sales Officer, has shared his experience in measuring sales efficiency during a recent webinar. He dropped so many gems that we’ve decided to write them down, so that they serve as an easily accessible reference for you. Behold the 10 best tips for measuring sales efficiency according to Bartek.
Sales and marketing. Art or science?
Some 10 years ago, the work done at a creative agency was art. People were coming up with slogans, key visuals, etc. All done based on the experience and insights provided by art director, copywriters and other creatives. There was pretty much no metrics, numbers, charts – the only metric was the viewer rating, as per Nielsen’s reports, as well as product sales numbers at the end of the month. Currently, in marketing, you can measure literally anything. You get charts and reports from AdWords, Facebook Ads, etc. Pure mathematics. Salespeople haven’t yet reached this stage, but we’ve already started the shift from art to science. Thanks to technology, sales will become even more quantifiable. Here’s a list of 10 things you should pay attention to when measuring efficiency.
1. Use metrics fairly
What do founders and salespeople have in common? Both are optimists. The former have to believe that the company won’t flop, and the latter, that they’ll be able to sell the product and not get fired in the process. They try to channel their vision on to teams, investors, and partners. In my opinion, this causes them to suffer from the so-called cognitive warping – they’re forced to believe things are better than they actually are. This is exactly the kind of subjective perception of reality you have to avoid.
A sales director has to be ready for what the metrics are saying. This includes showing things aren’t as peachy as previously thought. Since both founders and directors have this cognitive warping, they can’t keep tricking themselves. That being said, remember to use metrics fairly and truly.
2. Get the most out of the data
Ronald H. Coase, a Nobel prize winner, once said:
“If you torture data sufficiently, it will confess to almost anything.”
Your stats should be clear and understandable. No director has time to spend three hours over an Excel sheet to get a single data point out of it. That’s why data has to be easy to access and always carefully analyzed.
3. Pay close attention to the sales funnel
At RightHello, over 56% of leads move on to a phone call with a salesperson. A significant number of them receive contracts up for revision. 98% of customers, who have received contracts from us sign them. This data serves as the funnel’s foundation, because it helps us predict lead behavior in the stages that follow. You have to be aware of the stage you’re losing at and what causes the losses. How many sales opportunities translate into closed deals?
Many of your leads don’t result in sales? Are they leaving for competition, or not making the purchase because of the price? Take a good look at the data. Once you start measuring, it usually appears that when trying to close deals, we’re losing to ourselves, and not the competitors. Insufficient involvement on the salespeople’s end, not enough follow ups, losing touch with the client, the list goes on. Measure and improve the efficiency at the relevant stage of the sales funnel.
4. Learn the average transaction worth and improve your financial liquidity
As a director of sales, you should know what the average transaction worth is at your company and which basket it’s in. For instance, at RightHello over 67% of leads are SMEs, which contribute around 40% of our revenue. 29% of leads are medium and slightly bigger companies that generate around 33% of the revenue. Only 4% of our leads are major businesses, spending big. They contribute 33% of our revenue. This is one of the most important metrics, showing the range of sales at the company and its financial liquidity. And how do you improve it? For one, by convincing customers to pay in advance. If not the entire sum, then at least a significant part of it. Just do the math: 30 customers subscribe to a $200 plan for 12 months and pay half of it in advance. This makes $36,000 come into the company’s bank account. This is a really nice sum that greatly improves liquidity.
5. See how fast you can close deals
Another very important factor is the length of the sales cycle. How long does the process last from the initial contact to signing the contract? There were times at RightHello when some of the salespeople needed nearly a month to do that. At the moment, the average sales cycle length is a dozen or so days.
Obviously, you also have to measure sheer efficiency – how many leads actually become customers? Make sure you take time to think whether the sales process is in need of any improvements. For instance, the contract may be unclear, or contain points that go against customer needs.
You offer a free trial of your product? Shorten its duration time. Instead of providing 30 days of free service, a week may be enough. This is the easiest way to shorten the sales cycle if you’re an SaaS business. That’s of course if your product delivers value fast and is relatively cheap.
6. A great source of leads is crucial for success
Do you know where your leads are coming from? Facebook Ads, AdWords, cold emails? How are they acting? You absolutely have to measure this! When expanding into foreign markets, it’s good to pay attention to the leads’ countries of origin too. There was a month when we had a large number of inquiries coming from India (who woulda thought?). It appeared that these prospects were finding us through Quora.
Similarly, measure engagement (the favorite metrics of all the sales managers, who started in the 20th century). On one hand, see what offers you’re sending to clients, and on the other, how many direct phone convos do you actually hold with them.
7. Remember – it takes money to make money
In most cases, customers are willing to make another purchase with you. This may not hold very true for the automotive industry, or in real estate, since I doubt any of you will buy 12 cars or apartments within a year, but what about other industries? Especially if we’re talking services. You make money, which you can then use to make more money. So a customer bought with you once? He can do it again! Look up the metrics pointing to long-term effectiveness of your sales process – the level of engagement of the existing customers, and how many of them decide to buy again. And again. And again…
8. Product qualified leads… trial performance
If you want to learn the value of your trial, make sure you measure:
- the number of login events to the test version,
- time spent in the app,
- number of actions,
- if the trial user flow is proper,
- does the user reach his “aha” moment?
Large number of logins points to high overall interest, however, short time spent in, as well as a small number of actions may suggest lack of clarity and poor UX. On the other hand, it may be that your app is excellent at providing quality fast and users leave it in no time because they’ve achieved their goal. This is where the quantitative data analysis should be enhanced with some qualitative data, obtained via a telephone call asking for customer feedback. Alternatively, use email.
9. Pay attention to what customers are saying
Just as important as metrics and product quality are the kind of contacts your customers have with your reps. Find out what they’re happy about, and what grinds their gears. If possible, make time to personally answer lead inquiries as well. You can learn plenty about the product and people using it. My experience shows that the one who understands the customer most, wins the game of business.
10. Steadily evaluate your salespeople
Take a close look at the job the best sales rep do. How does the rest stack up against them, and most importantly, how do they meet the quotas? Analyze how much you can squeeze out of a single lead on a month to month basis. Also, check the customer ratings. We’ve recently started using the youcanbook.me app which provides me with feedback regarding how my sales reps are doing on a scale from 1 to 10. I ask them too how busy they get and what’s their level of satisfaction. These metrics help me stay on top of things.
Final word
Fast-paced technological development coupled with unprecedented access to data make measuring performance an absolute necessity these days. This is especially true for sales and marketing. Obviously, mere reporting isn’t enough. If you’re not analyzing and drawing conclusions, you won’t improve your results and will be left behind. You have to be able to analyze data on the go and take action based off of it. That’s what will help you keep boosting your revenue.
