Sales is crucial to a company’s revenue, and sales managers should consider better ways to connect their workforce’s performance and the profits they rake in. In aligning their business objectives with their sales and marketing, companies need to determine whether they are measuring the right key performance indicators as well as concentrating on improving their weakest sales activities.
Whether sales managers have the goal to enhance their sales pipeline or increase their company’s market share, firms need to keep in mind the importance of boosting motivation among the sales workforce and offering their employees effective incentives.
Here are five metrics to connect sales performance and revenue:
1. Sales per representative
Sales representatives often thrive on competition and to help drive sales, companies should consider measuring their metrics surrounding sales per representative. In dividing revenue per employee, managers are able to see the contribution each team member makes in growing the company’s profits and determine which ones are most critical to the organization. After measuring sales per representative, managers can reward the top-selling employees to maintain their high productivity levels and increase engagement, which could in turn boost employee retention.
2. Revenue per sale
To grow market share, companies should focus on increasing their revenue per sale. While a large number of small sales are good in increasing revenue for the company, sales representatives who close on a bigger deal are more likely to see a greater payoff and this will be reflected in the revenue per sale. Businesses planning for expansion should measure this metric and ensure their sales strategies are working toward this goal.
3. Sales per product or service
When companies introduce new products or services into the market, they often need to change up their strategy and territory planning. Managers should track metrics measuring sales per product or service to see whether sales representatives are effective in approaching a new target audience or making meaningful conversations with leads. Not only can this metric show the company that their new product lines are successful, it can also help them make the decision to revise their strategy for any items or services that are not seeing as many sales in order to stop wasting resources.
4. New and returning customer sales
As companies aim to increase their sales volume, they often look to emerging markets that could present more opportunities for revenue growth. While companies plan their territories to account for these potential customers, they should also focus on maintaining their customer base in mature markets. To ensure they have the right balance between new and returning customers, managers should measure how well their sales representatives do in selling to these two customer types.
5. Lead-to-customer ratio
When companies structure their sales pipeline around current market conditions, they should also measure metrics related to converting leads to customers. This shows that sales staff are able to connect with leads and get them through to the end of the sales funnel. By looking closely at the weaknesses of the sales pipeline through seeing figures related to lead-to-customer metrics, they can see where they need to improve their approach.
As companies pinpoint what metrics to measure, they can determine whether their existing management resources are pushing their workers toward their performance objectives. Managers should make a greater effort to align the sales and revenue pipelines together and concentrate on helping employees meet their sales targets. Through creating an incentive compensation program that defines sales goals and the processes needed to achieve them, managers are able to better set standards for performance that will eventually lead to greater sales.
