In an increasingly competitive economic environment, sales performance is a key factor in guaranteeing the development and long-term future of companies. But how is sales performance measured? And above all, how can it be improved? This is based on a clear understanding of key performance indicators (KPIs), appropriate management tools and strategies for optimising sales teams and processes.
What is sales performance?
Sales performance is the ability of a company or organisation to achieve its sales objectives, whether in terms of sales, market share or customer satisfaction. It is a measure of the effectiveness of the company's commercial actions, but also of the relevance of its strategy and offering. Good sales performance means that the company's resources - human, financial and technical - are optimised to generate maximum value for both the company and its customers.
Managing sales performance using KPIs
Key Performance Indicators (KPIs) are essential tools for assessing and managing sales performance. These indicators, both quantitative and qualitative, make it possible to measure results, monitor changes and identify areas for improvement. Essential to all informed decision-making, here are the 9 KPIs to consider when managing your sales performance:
1. Sales figures
Turnover is one of the indicators most often associated with sales performance. However, if it is to be meaningful, it needs to be put into perspective with other indicators that will enable us to assess its real quality.
Revenue is the most recognized measure of sales performance. However, to be meaningful, it must be analyzed alongside other indicators such as profit margins.
For example, sales growth accompanied by a significant drop in margin may be indicative of a poor sales strategy. Similarly, a more detailed analysis of sales by market segment or product type will help to identify the most promising activities for the company's future.
2. Margin
Profit margin, whether gross or net, is a crucial metric for assessing the real profitability of sales. High revenue does not necessarily indicate high performance - if margins are declining, the business model may need to be re-evaluated. Monitoring profit margins ensures that sales efforts contribute positively to the bottom line.
Whether gross or net, the margin is a crucial indicator for measuring the real profitability of sales. For example, high sales cannot be considered a commercial performance if the margin is low, or even falling.
3. Acquisition levers
Acquisition levers refer to all the actions implemented to attract new customers: communication campaigns, SEO strategy, digital marketing, commercial partnerships, etc. Their effectiveness is assessed using a range of metrics, such as :
- Customer acquisition cost (CAC): This is the average amount paid to acquire a new customer. A CAC that is too high may indicate a poorly targeted or insufficiently effective campaign.
- Return on investment (ROI): This indicator assesses the profitability of the expenditure incurred in acquiring new customers.
4. Conversion rate
The conversion rate refers to the proportion of leads (or visitors to an e-commerce site) that are converted into customers. It is a key indicator for assessing the relevance and effectiveness of the sales and marketing initiatives you have put in place. For example, you can track the conversion rate of leads generated by a specific campaign, or the conversion recorded at a specific point of contact (website, telephone reminders, etc.).
5. The sales cycle
A sales cycle refers to all the steps taken by sales staff to convert a prospect into a customer. The average length of a sales cycle varies greatly from one business sector to another. Nevertheless, an abnormally long sales cycle may be indicative of ‘bottlenecks’ in a sales process, a lack of efficiency in approaching prospects or difficulties in meeting their needs.
6. The average basket
The average basket is the average budget spent by each customer on a purchase. An effective sales policy, such as targeted promotions or the promotion of complementary products, is often rewarded by an increase in the average basket.
7. The loyalty rate
Building customer loyalty is essential to improving sales performance. A high loyalty rate is a sign that the company has implemented a relevant sales policy to build a long-term relationship with its customers. A high customer retention rate is all the more essential as it helps to reduce acquisition costs.
How do you calculate your customer retention rate?
Retention rate = (Number of customers present at the end of the period / Number of customers present at the beginning of the period) × 100
8. Attrition rate
The attrition rate is the proportion of customers a company has lost over a given period. This is a strategic KPI, particularly for companies whose business model is based on subscriptions, and more generally in sectors where retention is crucial.
9. New customers versus old customers
A good balance between new and existing customers is a major objective for many companies. It is the result of a well-balanced commercial effort between acquisition and retention. When a company is over-dependent on new customers, it needs to look at the reasons for its retention problems. Conversely, a company that is struggling to recruit new customers needs to question the dynamics of its sales policy.
What tools are needed to measure sales performance?
There are a number of digital tools designed to help you monitor sales performance effectively. Here are just a few of them:
- Sales dashboards
The sales dashboard enables you to centralise all your KPIs on a single platform and access them in real time. Tools such as Salesforce, HubSpot, or Business Intelligence solutions such as Power BI or Tableau Software, are extremely useful for monitoring a company's sales performance.
A sales dashboard consolidates all KPIs in a centralized platform, providing real-time access to performance metrics. Tools like Salesforce, HubSpot, Power BI, and Tableau Software offer advanced business intelligence solutions, making them essential for monitoring and managing sales performance effectively.
- CRM (Customer Relationship Management)
At the heart of customer relations, CRM tools play a vital role in collecting, managing and analysing customer data. This software enables sales processes to be automated and streamlined, while also personalising interactions to build a special relationship with each customer.
- Marketing analysis tools
As part of acquisition campaigns, Google Analytics, SEMrush and MailChimp are all specialised tools that enable you to analyse the performance of your communication and marketing campaigns with great precision.
How do you define your sales objectives?
If you want to achieve good sales performance, the first essential step is to define clear and precise objectives. Ideally, these objectives should be SMART: specific, measurable, achievable, realistic and timed. For example, ‘Increase the lead conversion rate by 10% by the end of the year’ or ‘Increase sales by 15% in the new car segment over the next 6 months’ are clear objectives. Involving your sales teams in setting objectives is often a key driver of performance and commitment.
How can you motivate your sales teams?
Motivating the sales force is an essential corollary to any sales performance. To motivate your teams over the long term, here are a few basic points to bear in mind:
Clearly expressed objectives: To be successful, sales staff need to be fully committed. To achieve this, they need to understand how their efforts will impact on the company's results. Salespeople need to understand how their efforts impact company success to stay motivated.
Rewarding success : Bonuses, exceptional bonuses, but also new challenges and recognition of performance by the hierarchy. Offering bonuses, incentives, and career growth opportunities can drive stronger performance.
Appropriate training: Focus on ongoing training to help your teams develop their skills.
- Effective tools: Provide sales staff with simple, effective tools to facilitate their day-to-day work.
Optimising sales performance through processes
Sales performance is part of a continuous improvement approach. Optimising processes should help to resolve malfunctions, speed up sales cycles and increase conversion rates. Process optimisation can take the form of
Automating repetitive tasks by integrating software that automates the follow-up of reminders, the generation of activity reports, etc.
Aligning marketing and sales by streamlining collaboration between these two strategic departments;
- Analysis of potential friction points to identify bottlenecks and remove obstacles in the customer journey.
Customer loyalty and sales performance
It's a truism shared by all companies: acquiring a new customer costs more than retaining an existing one. Improving your sales performance therefore automatically involves improving the loyalty of your customer portfolio. To improve customer loyalty, you need to focus on :
- An impeccable customer service capable of responding effectively to your customers' requests;
- A personalised sales approach, with offers tailored to each customer's profile.
- High-quality after-sales follow-up to ensure customer satisfaction and build a long-term relationship.
Conclusion
Measuring and improving sales performance involves putting in place a comprehensive approach combining the analysis of relevant KPIs, the use of high-performance tools and the continuous improvement of processes and teams. Far from being reduced to an accumulation of figures, sales performance is built on a continuous quest for motivation, innovation and customer satisfaction. By putting the customer at the heart of its concerns, and by adopting a coherent strategy, companies have all the cards in hand not only to achieve their short-term sales objectives but also to guarantee sustainable growth.
Are you a successful salesperson in the IT equipment and services or leasing sectors? Would you like to be more autonomous in your business and earn a flat-rate income? The status of sales agent may be of interest to you.
Econocom, the European leader in digital business transformation, is recruiting 100 sales agents across Europe.