Posted by Mansfield Sales Partners on Sat, Jun 26, 2010
As product and service differentiation becomes more difficult to achieve and competition intensifies, effective sales channels are vital to growing and defending your market share. Many companies face growing pressure to reduce field sales investments and to produce more with less. With ever increasing resource constraints, sales leaders have used external cross-industry efficiency benchmarks to fully assess the performance of their field sales staff, to validate their resource allocations and to determine if strategic outsourcing of some sales functions is warranted.
Three factors play a critical role in sales force performance:
- Sales team size
- Resource allocation to target markets
- Sales team productivity
In order to optimize sales team size, validate resource allocation, and evaluate overall sales team and individual sales rep productivity, it is essential to establish valid benchmarks. Most companies measure the success of their sales force based on sales results – revenue growth, actual sales vs. plan, average order, order frequency, close rates and so on. And this makes sense, until you really examine it.
If the benchmark for a sales team’s success is beating last year’s performance, how do you know if that is the right goal?
What if your sales team was inefficient last year? Wouldn’t a sales goal of a modest increase over last year just be asking your sales team to be a little less unproductive? On the other hand, if you have the most productive sales team in the industry, do you need to put programs in place to make sure that your competitors don’t steal your star performers? And are there functions that can be more cost-effectively achieved by external partners? Should you consider outsourcing some sales functions?
Establishing effective sales performance benchmarks
For a truly informative benchmark, compare your team to leading competitors across your industry. In addition, benchmark internal productivity measures [cost per qualified lead, cost per sale, revenue per sale, and so on] to outsourced supplier results. Benchmarks can help you and your sales management team identify gaps and determine where to focus efforts to improve sales productivity and accelerate sales growth.
The most common sales productivity gaps
- High cost per lead OR low cost per lead with a low close rate: This usually indicates a gap in your company’s lead generation process. A review of your marketing strategy and lead process is in order.
- Low close rate: Investigate carefully to identify the root causes. Are the leads really qualified prospects? Are there gaps in the sales process? Is your company at a competitive disadvantage in service delivery, pricing or other significant factors? Is your sales team properly trained and managed? Is there a gap between your marketing message and the sales presentation?
- Sales growth from existing accounts lags the industry: Determine if your sales and service teams are doing what it takes to maximize the profitability of existing accounts. This gap usually indicates that your clients’ needs and expectations are not being fully met. The root cause could be a real product/service gap or it could be a poorly constructed sales presentation that overpromises what your company can deliver.
- High customer attrition rate: High rates of customer loss are the most troubling problem. Quickly identifying the cause and increasing customer retention rates is the single fastest way to increase sale revenue.
How do you address misaligned strategy and/or poor productivity in your sales team? These are some of the questions we address directly when we join forces with you as a sales partner. Contact us for more information about sales outsourcing.
Photo Credit: CPX Interactive