Top 10 Sales Metrics For Effective Sales Performance Management (SPM)

What’s On Your Dashboard For Tracking Sales Performance? Top 10 Metrics for Effective SPM Jim Lazarz Former AVP of Compensation, CUNA Mutual Group Lazarz Consulting

Agenda
Value Proposition of Sales Performance Software
Profitable Revenue Growth Model
Top 10 Metrics
Revenue / Expense
Profit / Product Mix
Data is King
Sample TrueAnalytics Metrics

The Sales Performance Challenge
Increasing
Profitable Revenue Growth
through Better Management
of the Sales Channel

Sales Performance Software Suite EIM Dispute Resolution Quota Management Territory Management Analytics

Value Proposition of SPM Software
Accuracy an Timeliness of Payments
Lower Administrative Costs
Better Reporting
Lower Technology Costs
More Nimble Administration of New Plans
Faster to Market
Better Management of Sales Plans and Producers

Hidden Treasure of SPM...
Robust Data for Analysis of:
Incentive Plans
Producers
Sales Channels
Revenue Results

Data Drives Analytics
Timely and Trusted Data Provides Information Through Metrics
Actionable Metrics Drive Strategic and Tactical Sales Decisions
Timely Decisions Drive Increased Sales Performance
Sale Performance Leads to Greater Revenue and Profit

Profitable Revenue Growth Model
Driving Profitable Revenue Growth
Manage Product Mix & Profit Margins Enhance Total Sales Revenue Control Sales Expenses (& Incentives) Sales P&L

Revenue and Cost: The Starting Point
Driving New Revenue
Controlling Sales Division Costs
Sale’s Divisions P&L
Incentive Pay a Leading Expense Factor

Most Critical Sales Metric
Metric #1:
Total Sales Spend to Total Revenue
Reflects overall efficiency of Sales Division
Includes all types of Sales expenses
Audience: Sales and Finance leadership

Secondary Sales/Spend Metrics
Metric #2
Incentive Spend to Total Quota Achieved
Total Incentive should match total quota
Uncovers problems with quota setting or incentive plan design
Audience: Sales leaders and Comp Design professionals

Metric #3
Individual Incentive Earnings to
Individual Quota Achieved
Shows how well incentives pay for sales
Distribution of earnings to quota should make sense
Identifies poor incentive design (ramp-up)
Audience: Sales leaders and Comp Design professionals

Metric #4
% of Quota Achieved by Region
Shows regional differences against quota
Highlights problems with quota setting, seller’s performance, or marketing strategy
Audience: Sales and Marketing leaders

Metric #5
% of Quota Achieved by Market Segment
Indicates market segment response to product design, pricing, promotion, etc.
Highlights misappropriation of quota
Audience: Sales, Marketing and Product Management leaders

Metric #6
Sales Rep Expenses to Territory Revenue
Shows how effectively a rep is producing revenue
Indicates poor territory design, poor decisions on discretionary spend
Audience: Sales leaders and Financial Analysts

Profit (and Product Mix): The Rest of the Profitable Sales Growth Equation
Revenue and costs are only 2/3 of the story
Profit is largely determined by product margins and product mix

Most Critical Profit Metric
Metric # 7
Profit as Percent of Revenue by Product
Measures overall profit margins by product
Highlights pricing decisions, discounting and price realization in the marketplace
Monitors profit margins against plan
Audience: Sales, Finance & Product Management Executives

Secondary Profit/Mix Metrics
Metric #8
% of List Price Achieved by Product
Highlights problem with product pricing
Identifies excessive discounting by sale reps
Must balance competitive pricing to discounting to achieve quota
Audience: Sales and Product leaders

Metric #9
% of List Price Achieved by Sales Rep
Shows profit margins by territory
Identifies sales reps who discount excessively
Audience: Sales Managers

Metric #10
Product Mix Compared to Sales Plan
Margins vary by product
Product mix critical to overall profit
Identifies product mix variations from plan
Audience: Sales, Finance, Product and Comp Design leaders

Metric #11
Product Mix Achieved by Sales Rep
Identifies which reps are selling a product mix different from plan
Territory differences or bad quotas may be to blame
Audience: Sales Managers

Key to SP Metrics: Quality Data
Accurate
Complete
Timely
Fact-Based
Trusted

But….
Most organizations lack data for analysis
80% of Sales Organizations will face data quality issues (Gartner)
“ The inability to quickly access insightful data prevents us from making mid-course corrections…by the time we have the data out and analyzed , it is three months old”…Global High Tech Manufacturer

Barriers to SP Data
Scarcity of Compensation and Sales Data
What’s been sold
Where
Quota attainment
Product mix
Price realization
Consolidating data from spreadsheets or multiple comp systems

SPM Software to the Rescue
Complete, Timely and Trusted Data
Reflects what Has Really Happened
A Single Version of the Truth!

Using the Data: Analytics
Great Data Just the Start
Powerful Analytical Tools Create Information & Knowledge
Knowledge Drives Insight into Opportunities and Risk
Metrics become Actionable…and Sales Performance is Enhanced

Summary
Timely Strategic and Tactical Decisions
Timely Decisions Achieve SPM Provides Timely, Trusted Data….
Trusted Data Delivers Actionable Metrics…
Actionable Metrics Drive Greater Sales Performance

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Top 10 Sales Metrics For Effective Sales Performance Management (SPM)

by Callidus Software on Nov 12, 2007

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