An Often Missed Sales KPI That Drives Results

With the wide acceptance of CRM and sales performance reporting, we regularly see sales managers review a variety of performance indicators ranging from what’s in the pipeline to how many deals were won in a specific time frame.

Data readily available from salespeople can be a huge help for not only the sales staff but also the marketing and senior management teams.  For instance, if there are not enough deals in the pipeline, then an early alert is given to all in the organization that corrective actions must be taken or suffer the consequences of a missed sales or profit objective.

Now that the year end is near, it’s is a great time to take stock in the effectiveness of your sales program.

Based on our observations working with a variety of commercial printing companies and equipment manufacturers, there is one indicator that is rarely leveraged. It is deals won divided by proposals generated where customers actually made a decision to act. We use decisions where customers actually acted because we expect great salespeople to qualify opportunities before generating proposals.

The simple formula is:

Deals won/total deals where customers actually made a decision to act = sales effectiveness

5 deals won divided by 25 customer opportunities where the customer actually acted equals 20% effectiveness

We recommend using this KPI to give everyone in the organization a view of what is vital. Detailed analysis of sales effectiveness could lead to adjustments on sales coverage, skills, compensation, marketing and management.

Here are some key questions to ask

·       Of the proposals generated how many were a response to “blind” RFPs – That means situations where salespeople had no significant involvement prior to the RFP being developed?  Are these opportunities worth responding to?

·       How many proposals were enabled from leads generated by the company’s marketing e.g. SEO, social media, trade shows?  How many of those were won? Do we need to do more marketing? What role does the salesperson have in creating and developing leads?

·       How many proposals and wins were generated by salespeople where the lead was mainly enabled, developed and qualified by the hard work and skill of the salesperson? What can be done to create even more opportunities?

·       Are we in enough opportunities that are qualified and the customer is ready to act?

Organizations need to understand where opportunities come from, why some proposals are won and some are lost. Most importantly, how companies and salespeople can add more value to win more deals. The answers to questions can only be developed through using and managing the data that is readily available to marketing and management teams.

Joe Rickard is the President of Intellective Solutions and can be reached at 845 753 6156