posted by Jaime Davis-Thomas
Analyzing sales performance is a deep retrospective look over certain elements of your sales cycle, from Lead Generation to Account Planning. Looking at the numbers, ratios, and time frames of your sales cycle provides many useful organization-level benefits, including:
- Analysis allows a sales manager to objectively question and adjust the entire sales cycle if necessary.
- Analysis can reveal if sales goals are too high or too low.
- Analysis gives you an accurate picture of your forecast, and help determine whether it should be adjusted.
- Analysis can reveal the cost per sale and which aspects of the sales cycle are most costly and whether adjustments can be made to increase profitability.
But consider the effects of analysis at the individual- or team-level: a thorough analysis gives sales management hard data that can be used to coach and train the salesforce more effectively.
Consider the following, generic sales cycle:
Begin with the end...
Closing Rate: Out of all of the opportunities on the rep's prospect list ("leads") over a particular time period, which ones actually ended up as closed sale? This is the "close rate" or percent closed.
% Close = Total Closed Sales (within time period) x100 All Opportunities (within same period)
Milestone Averages: Once you've taken a good look at the close rate, go further and look at each sale. How much time was spent on each sale from prospect to close? How much time was spent between each point in the cycle? Jot these down and then,
- Calculate the average time spent from milestone to milestone
- Calculate the ratio or percent moved from one milestone to the next
- these calculations can (and should) be done for the entire sales organization, each team of reps, and each individual rep for side-by-side comparisons. The example below could apply to any of these groups.
Analyzing the performance of the sales force may be one of the most important components of sales performance analysis, but it is only a small part of the story. You've already determined the overall averages - next you can examine the productivity of the individual salespeople to determine their contributions to overall productivity as well as compare them to peers.
For example, examine at the close rates per product and break this down by sales person. Do some salespeople have lower close rates than others? Not only can you get a good picture of the sales force, you can also discover who the high performers are. The high performers can help you create best practices to use in coaching and training. Investigate poor performers, as well. You may find they are spending unnecessary time or are struggling on certain points in the cycle. The good thing about analyzing a salesperson's performance is that it can be done regularly, during routine sales meetings, and not all at once.
Analyzing the numbers may take time, but you'll find that the results of sales performance analysis help you to manage and target your entire sales cycle.