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You’ve established the various stages of your sales process. You know how the typical prospect goes from an email address in your CRM to a paying customer. You’ve trained your salespeople on the key actions required to move prospects from stage to stage.

But how do you know if it’s actually working?

What factors should you be taking into account?

And if it’s not functioning as well as you’d like it to, how can you improve it?

The concept that underlies all those points is known as sales effectiveness. The way that sales effectiveness is measured varies depending on which sales metrics are the most important to the business.

Some other ways to measure sales effectiveness include:

  • Individual target achievement
  • Percent of the sales team achieving target
  • Average annual on-target earnings
  • Sale cycle length
  • Average new deal size

How to Measure Sales Effectiveness

Before diving into conversion rates, we need to understand the process a contact takes to convert. The definition of a “lead” depends on how you acquire customers. If you’re connecting with prospects on LinkedIn and then following up over email, a lead might be any LinkedIn user you’ve identified as a potential good fit. If you’re meeting buyers at trade shows, a lead could be anyone who left their email address at your booth. An “opportunity” is a contact who has confirmed their interest in your product or service. That could mean they’ve confirmed their interest over email, booked a demo, requested to speak with a salesperson, etc.

Lead to Opportunity Conversion Rate

 Which percentage of your leads are turning into opportunities?

This metric tells you several things. Firstly, are your salespeople getting enough leads to hit their goal? Maybe they’re converting a high number of leads into opportunities, but they’re still missing target. That could suggest your marketers need to generate more leads. Second, are your salespeople effectively following up with those leads? If your sales team has the opposite problem — they’re converting a low percentage of leads into opportunities — their follow up could be the problem.

Review their approach. Are they personalising their outreach? Using multiple channels (email, calls, voicemail, social media, etc.)? Are they reaching out enough times before giving up?

Opportunity to Close Rate

How many of your legitimate sales opportunities become paying customers?

If your opportunity to close rate is really high (think 60% or higher), your salespeople are probably being too selective with the accounts they choose to work. They’re cherry-picking the prospects who are determined to buy — or at least, require very little convincing — and the ones who are nearly perfect fits. The problem with this? It’s likely you could be selling far more if your sales team were less discriminating.

If your opportunity to close rate is extremely low, your salespeople might require more training. Try to figure out where prospects are dropping out of your funnel. Do most of them say they’re not interested after the connect call? Train your team to offer immediate value so buyers view them as a resource and see the benefits of continuing the relationship. Measuring your opportunity to close rate over time gives you a good sense of your salespeople’s collective performance. It should either be flat or increasing.

Finally, compare an individual rep’s opportunity to close rate to the team average. If theirs is far lower, they need training or a performance plan (and if you don’t see any improvement, you should part ways).

If theirs is right in line with the average, they’re a solid performer; make sure you’re consistently working with them to help them get better and make sure they don’t leave for greener pastures. If theirs is far higher, use them as a mentor and inspiration for your other salespeople — and don’t forget to keep them happy so your competitor doesn’t poach them.

 How to Improve Sales Effectiveness

Invest in training! Your team’s ability to make the most of their engagements with prospects can only stretch as far as their skills and preparation will take them. So, naturally, it serves you to make sure they’re skilled and well-prepared.

Training is the most fundamental, straightforward base to cover when you’re trying to get there. Make sure your team has a thorough understanding of your sales process, preferred sales methodology, and your product or service. If you feel your training isn’t extensive or rigorous enough, you might want to consider enrolling your team in an externally coordinated sales training programme. In a lot of ways, opportunity management is the practice of gauging sales effectiveness.

Committing energy, scrutiny, and resources towards your opportunity management efforts allows you to better understand your potential customers and prioritise your interactions with them based on their business potential. It also helps you determine the best way to approach them based on the interest they’ve demonstrated and the stage of their relationship with your company. At the same time, it exposes flaws in your sales processes, allowing you to consistently improve how you interact with potential customers.

Salespeople need a framework to operate by. They need some form of guidance and repeatable actions — specific to the product or service they’re selling —if they’re going to be effective. In short, they need a solid sales process to work with. Even your most talented sales people will run into trouble if yours is unsound.

Do you need help reviewing your sales process? Then let’s talk.


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