Four Sales Performance Metrics that Matter
Sales managers are responsible for managing, coaching, motivating, and measuring the performance of their teams. Unfortunately, many managers are promoted from sales positions without the skills to effectively take on these new responsibilities.
As a rep, one’s focus was on their individual performance with success most directly attributable to their personal motivation and selling skills. As a manager, however, it's important to change their performance mindset from one of “personal success” to “success through and with others.”
This change in perspective can be enhanced and accelerated through the development of sales management skills, including:
- Managing sales performance
- Sales coaching
- Pipeline management
- and Sales leadership skills
These skills directly align with the following four sales performance metrics.
Metric #1: Team Performance
This sales metric matters because it captures overall quota attainment relative to goal over a finite period (typically quarterly).
As an example, a sales team that produced $5 million in quarterly sales versus a goal of $4 million achieved a 125% of quota. Keep in mind that quota attainment is backward-looking and that it's important for managers to focus on leading indicators of sales performance such as sales activity levels and pipeline coverage.
By focusing on what activities matter most and monitoring these activities, managers can assess how the team is doing from the beginning of the quarter and proactively address any performance gaps.
Metric #2: Percent of Reps Achieving Quota
Many sales teams rely heavily on sales stars to achieve their team goal.
In some cases, over half the team can miss their individual sales goals. In addition to creating significant performance risk if one of the top reps has a bad quarter or leaves the company, it also has a negative impact on morale. Personalized sales coaching allows managers to collaborate with each rep on specific selling skills that will improve sales performance.
As an example, a manager may focus on prospecting skills with a newer sales rep to help them develop more sales opportunities, and on negotiation skills with a more experienced rep to help improve margins.
Metric #3: Forecast Accuracy
Managers are typically asked to prepare and update sales forecasts throughout the quarter.
These forecasts are calculated based on an assessment of the sales opportunities in the sales pipeline. Without careful scrutiny of those sales opportunities, however, the manager is likely to provide an inflated sales forecast. The basis for this problem is that reps are motivated to add opportunities to the pipeline but hesitant to remove them when they're stalled.
To address this challenge, sales managers need to conduct periodic pipeline reviews with each member of the sales team to evaluate the health of the pipeline. This includes asking questions, offering advice on how to advance opportunities, and determining which opportunities are truly active and likely to close within the quarter.
Metric #4: Employee Retention
This sales metric is important, as it has become an increasingly significant problem since qualified sales professionals are actively recruited for other sales positions.
This is where sales leadership skills are essential since sales reps are more likely to stay with their current company when they feel respected, challenged, and motivated by their manager. This manifests itself in the way sales managers:
- Communicate with their teams
- Address performance challenges
- and Celebrate success
Ultimately, to improve sales team performance it's important to focus on the sales metrics that matter to your organization. You should develop your frontline sales managers so that they can effectively manage, coach, and lead their teams. This, in turn, will promote a culture of success where managers are proactive in the development and motivation of their sales reps.
About Norman Behar
Norman Behar is a Managing Director at the Sales Readiness Group, A Part of SBI. He has over 25 years of senior sales management experience and is recognized as a thought leader in the sales training industry. His blog posts and whitepapers are frequently featured in leading sales enablement publications, including ATD, TrainingIndustry.com, and Selling Power.