What metrics are sales professionals guided by?

November 10, 2009 8:27 AM

What metrics are sales professionals guided by?

Working with my sales manager to help redefine how inside and outside salespeople should be compensated and reviewed.

Everything from leadership to new accounts to call metrics to closed business... how does your business (or your competitors) judge the success of your sales force?

[Also, if you have any articles of interest or website recommendations, it would be just as valuable.]

posted by anonymous to Work & Money (6 answers total)

For comp purposes, sales revenue performance against target is the gold standard. There are other metrics, like pipeline-to-revenue ratio, days-to-close, but in the end, revenue is what drives the business.
posted by deadmessenger at 9:02 AM on November 10, 2009

I'm an inside sales rep and we're "graded" on the following:
-Sales rate (percentage of leads we actually sell)
-Percentage of sales we get on automatic bill pay (helps customers retention)
-Start rate (I'm at service based company so this determines the quality of the sales, i.e. whether the customer cancels before service starts)

We have group metrics based on these and also have dollar-amount goals we try to make as a group. Each individual makes a flat rate percentage of the dollar amount they bring in. We're also monitored for quality (call center, whoo!) to make sure we're being professional and honest in our sales presentation.

One somewhat innovative technique the management has just implemented (this works much better in theory than in practice, mind you) is to route the calls to the top performers. I'm in inbound sales, so the amount of money I make is related to the number of calls I get. We're given a letter grade (a-d) based on the above metrics, and that determines how the calls are routed. A-reps get the calls first, and the "overflow" trickles down. So the people that are best at what they do are more likely to talk to a potential customer, AND they make more commission.

Hope this is the kind of info you were looking for.
posted by a.steele at 9:29 AM on November 10, 2009

ROI - Return on Investment...
If you put in $100 and get back $150, that's a 50% ROI.

If you open a savings account at 3% it has a 3% annual ROI.

If it costs $50 to generate a lead (through advertising, etc.) and a sale gets you $3,000. You can afford to buy 60 leads before you're at negative ROI. If you can make a sale every 27 leads generated, you're at ~120% ROI. (Which is insanely high.) Anything over a few percent is considered good ROI.

I'm in market research and lead generation for a small agency in Kansas City and everything we do for clients is about ROI.
posted by wmeredith at 9:33 AM on November 10, 2009

I think that it depends largely on the type of business the salesperson is working in. Lots of small clients? A couple of really big ones? Are the sales highly complex or fairly simple?

I'm a sales manager at a Fortune 500 company, and I cover about $15 MM in sales, on deliveries of about 400k-500k units. Our sales program and metrics are almost exclusively based on unit deliveries. Profitability is taken into account at a higher level and is pretty much the domain of the finance guys (I don't have any ability to do price setting at my level). Secondarily, I am judged on actual number of sales calls (like a pharm rep might be), and then other soft metrics like relationships with my largest customers, creative use of trade dollars, etc etc.
posted by suburbanrobot at 10:00 AM on November 10, 2009

External people are frequently Commission based on a sliding scale according to target.
A - B gets X%; B - C gets 2X%; C - D gets 3 X% etc sometimes there is a cap after which the norm becomes X% or 2X%
posted by adamvasco at 10:02 AM on November 10, 2009

You want to consider both revenue and profit margin (or ROI, same basic thing, just a different way of calculating it) -- because a salesman can have stellar revenue but still lose you money.
posted by kindall at 10:32 AM on November 10, 2009