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Sales Managers: What Should You Be Measuring?

Sales Managers: What Should You Be Measuring? Blog Feature

January 16th, 2019 min read

It’s amazing that despite the large number of CRMs available in the market, most sales professionals still aren’t taking full advantage of them.

The promise of a CRM is wonderful.

It's a personal relationship management system for all of your customers -- present, past, and future. Unfortunately, the reality of most CRMs is they aren't designed for the people using them.

CRMs, in general, are designed for management -- for managers like you, who want to know what salespeople are doing, how they're doing it and when.

But before you gain insight into your team’s activities, you must ask yourself:

  • Have I set clear expectations about performance?

  • Does everyone on the team understand their role and responsibilities?

  • Do they know what key performance indicators they are being measured against?

As a sales manager, you know that if you want to see an increase in performance, you have to set expectations. But oftentimes setting expectations isn’t enough. You need to have a system in place where you can measure those expectations.

That’s where your CRM comes into play.

But you don't need a million parameters to measure success; instead, you need fewer, more impactful key performance indicators (KPIs) to follow.

KPIs are signals that indicate your sales team is focused on the things they need to do in order to be successful.

Sales management is all about coaching your team to achieve success. Measuring performance allows you to recognize your people for their good work and provides a clear way to positively reward and reinforce the behavior you expect.

The goals of measurement and reporting are to make course corrections when needed and show the salespeople what exactly is important.

We’ve outlined a few key areas to consider as you identify new or update your old KPIs in order to drive the right sales behaviors and habits, as well as improve the overall performance of your sales organization.

Prospecting

How many calls are your sellers making? How many emails are they sending out? What’s the strategy behind what they’re doing? How many of these initial points of contact turn into actual leads?

Making sure your sellers are keeping track of these numbers and noticing any trends that occur will help them manage their time efficiently.

When you stay on top of what’s going on with your sellers’ prospecting, you’ll be able to better spot warning signs and help guide them before their pipeline goes awry.

First Appointments

How many first appointments do your sellers have each week? How many were generated through the seller’s own prospecting? How many of the leads for first appointments came in through marketing? How many have a follow-up scheduled?

The more quality first appointments your sellers have, the higher their potential for closing actual deals.

More specifically, determining an average number of first appointments a seller should have each week will help establish a range of what they should be striving for, as well as ensuring they’re on track to effectively close as many deals as possible.

Sales Cycle

How is your company’s sales cycle set up? How many opportunities does each seller have in every stage of their pipeline at any given time?

Ensuring each sellers’ pipeline is filled with the right proportion of opportunities in each stage is vital to guaranteeing deals will be closing on a regular basis with no dry spells in between.

Time to Close

What is the time frame for each sale? How many days from a first appointment does an average deal take to close?

If sellers only focus on first appointments, but not on other stages of their pipeline, the time to close can get infinitely drawn-out.

When they learn to stay on top of how long an average deal takes to close and aim to reduce it, they become better equipped to rule out deals that have gone beyond the acceptable date range and are far less likely to close.

Forecasting Accuracy

Being mindful of all of the above measurements will naturally help increase forecasting accuracy.

When your sellers, and you as their manager, are more aware of the numbers behind each opportunity, instead of relying on anecdotes or gut-feelings, forecasting sales will become a bit more intuitive and systematic.

Read up on Four Principles for Great Sales Forecasts and 7 Tips for Improving Your Sales Forecasting.

Ratios

In addition to having solid data on prospecting, first appointments, the overall sales cycle, and time to close - sellers should know their ratios.

For example, what’s the average number of calls or emails it would take to get a first appointment that would then get a next step? What’s the ratio of first appointments to actual deals closed?

Keeping your sellers focused on their numbers will help them improve and allow you to manage them with clearer direction.

Client Retention

Retention and expansion are key to driving sustainable revenue growth.

It’s anywhere from five to 25 times more expensive to acquire a new customer than to retain an existing one. That’s why it’s essential to keep a close eye on churn, contraction, and expansion trends to make sure your team is constantly delivering value to your customers.

For example, if you notice a trend in contraction dollars, which is the loss in revenue from existing customers who have reduced their spend, then perhaps you need to revisit the customer service and/or customer success process your client’s experience.

When you track KPIs that measure your existing business relationships, you’ll better align your service with the goals of your customers, which ultimately helps you improve your client retention and renewal rate.  

What Gets Measured, Gets Managed

Whatever method you’re using to track your sales team’s activities - be it an intricate CRM or a more basic spreadsheet - make sure you’re measuring more than just the bottom line.

Keeping your salespeople accountable for all their numbers will make them more effective, as well as help you guide them more conclusively.

The value of having the right sales KPIs can’t be understated – whether you sell online or offline, SaaS or physical products, B2B or B2C.

For ambitious companies, monitoring the right metrics is the difference between driving scalable growth and seeing your revenue flatline. Put bluntly, if you’re not a data-driven sales leader or sales manager, you’re in trouble.

But KPIs on their own are just numbers on a dashboard.

They only become meaningful when you dig deeper, start looking for underlying trends and themes, and use those insights to take the next step toward faster growth.

Now that you understand the importance of measuring KPIs, how do you determine which ones are the right ones for you and your organization?

The first step is identifying the problem. Get started with our eBook on how to solve five common problems in your sales team.

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