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

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

  1. 1. 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
  2. 2. Agenda <ul><li>Value Proposition of Sales Performance Software </li></ul><ul><li>Profitable Revenue Growth Model </li></ul><ul><li>Top 10 Metrics </li></ul><ul><ul><li>Revenue / Expense </li></ul></ul><ul><ul><li>Profit / Product Mix </li></ul></ul><ul><li>Data is King </li></ul><ul><li>Sample TrueAnalytics Metrics </li></ul>
  3. 3. The Sales Performance Challenge <ul><li>Increasing </li></ul><ul><li>Profitable Revenue Growth </li></ul><ul><li>through Better Management </li></ul><ul><li>of the Sales Channel </li></ul>
  4. 4. Sales Performance Software Suite EIM Dispute Resolution Quota Management Territory Management Analytics
  5. 5. Value Proposition of SPM Software <ul><li>Accuracy an Timeliness of Payments </li></ul><ul><li>Lower Administrative Costs </li></ul><ul><li>Better Reporting </li></ul><ul><li>Lower Technology Costs </li></ul><ul><li>More Nimble Administration of New Plans </li></ul><ul><li>Faster to Market </li></ul><ul><li>Better Management of Sales Plans and Producers </li></ul>
  6. 6. Hidden Treasure of SPM... <ul><li>Robust Data for Analysis of: </li></ul><ul><li>Incentive Plans </li></ul><ul><li>Producers </li></ul><ul><li>Sales Channels </li></ul><ul><li>Revenue Results </li></ul>
  7. 7. Data Drives Analytics <ul><li>Timely and Trusted Data Provides Information Through Metrics </li></ul><ul><li>Actionable Metrics Drive Strategic and Tactical Sales Decisions </li></ul><ul><li>Timely Decisions Drive Increased Sales Performance </li></ul><ul><li>Sale Performance Leads to Greater Revenue and Profit </li></ul>
  8. 8. Profitable Revenue Growth Model <ul><li>Driving Profitable Revenue Growth </li></ul>Manage Product Mix & Profit Margins Enhance Total Sales Revenue Control Sales Expenses (& Incentives) Sales P&L
  9. 9. Revenue and Cost: The Starting Point <ul><li>Driving New Revenue </li></ul><ul><li>Controlling Sales Division Costs </li></ul><ul><li>Sale’s Divisions P&L </li></ul><ul><li>Incentive Pay a Leading Expense Factor </li></ul>
  10. 10. Most Critical Sales Metric <ul><li>Metric #1: </li></ul><ul><li>Total Sales Spend to Total Revenue </li></ul><ul><ul><li>Reflects overall efficiency of Sales Division </li></ul></ul><ul><ul><li>Includes all types of Sales expenses </li></ul></ul><ul><ul><li>Audience: Sales and Finance leadership </li></ul></ul>
  11. 11. Secondary Sales/Spend Metrics <ul><li>Metric #2 </li></ul><ul><li>Incentive Spend to Total Quota Achieved </li></ul><ul><ul><li>Total Incentive should match total quota </li></ul></ul><ul><ul><li>Uncovers problems with quota setting or incentive plan design </li></ul></ul><ul><ul><li>Audience: Sales leaders and Comp Design professionals </li></ul></ul>
  12. 12. Secondary Sales/Spend Metrics <ul><li>Metric #3 </li></ul><ul><li>Individual Incentive Earnings to </li></ul><ul><li>Individual Quota Achieved </li></ul><ul><ul><li>Shows how well incentives pay for sales </li></ul></ul><ul><ul><li>Distribution of earnings to quota should make sense </li></ul></ul><ul><ul><li>Identifies poor incentive design (ramp-up) </li></ul></ul><ul><ul><li>Audience: Sales leaders and Comp Design professionals </li></ul></ul>
  13. 13. Secondary Sales/Spend Metrics <ul><li>Metric #4 </li></ul><ul><li>% of Quota Achieved by Region </li></ul><ul><ul><li>Shows regional differences against quota </li></ul></ul><ul><ul><li>Highlights problems with quota setting, seller’s performance, or marketing strategy </li></ul></ul><ul><ul><li>Audience: Sales and Marketing leaders </li></ul></ul>
  14. 14. Secondary Sales/Spend Metrics <ul><li>Metric #5 </li></ul><ul><li>% of Quota Achieved by Market Segment </li></ul><ul><ul><li>Indicates market segment response to product design, pricing, promotion, etc. </li></ul></ul><ul><ul><li>Highlights misappropriation of quota </li></ul></ul><ul><ul><li>Audience: Sales, Marketing and Product Management leaders </li></ul></ul>
  15. 15. Secondary Sales/Spend Metrics <ul><li>Metric #6 </li></ul><ul><li>Sales Rep Expenses to Territory Revenue </li></ul><ul><ul><li>Shows how effectively a rep is producing revenue </li></ul></ul><ul><ul><li>Indicates poor territory design, poor decisions on discretionary spend </li></ul></ul><ul><ul><li>Audience: Sales leaders and Financial Analysts </li></ul></ul>
  16. 16. Profit (and Product Mix): The Rest of the Profitable Sales Growth Equation <ul><li>Revenue and costs are only 2/3 of the story </li></ul><ul><li>Profit is largely determined by product margins and product mix </li></ul>
  17. 17. Most Critical Profit Metric <ul><li>Metric # 7 </li></ul><ul><li>Profit as Percent of Revenue by Product </li></ul><ul><ul><li>Measures overall profit margins by product </li></ul></ul><ul><ul><li>Highlights pricing decisions, discounting and price realization in the marketplace </li></ul></ul><ul><ul><li>Monitors profit margins against plan </li></ul></ul><ul><ul><li>Audience: Sales, Finance & Product Management Executives </li></ul></ul>
  18. 18. Secondary Profit/Mix Metrics <ul><li>Metric #8 </li></ul><ul><li>% of List Price Achieved by Product </li></ul><ul><ul><li>Highlights problem with product pricing </li></ul></ul><ul><ul><li>Identifies excessive discounting by sale reps </li></ul></ul><ul><ul><li>Must balance competitive pricing to discounting to achieve quota </li></ul></ul><ul><ul><li>Audience: Sales and Product leaders </li></ul></ul>
  19. 19. Secondary Profit/Mix Metrics <ul><li>Metric #9 </li></ul><ul><li>% of List Price Achieved by Sales Rep </li></ul><ul><ul><li>Shows profit margins by territory </li></ul></ul><ul><ul><li>Identifies sales reps who discount excessively </li></ul></ul><ul><ul><li>Audience: Sales Managers </li></ul></ul>
  20. 20. Secondary Profit/Mix Metrics <ul><li>Metric #10 </li></ul><ul><li>Product Mix Compared to Sales Plan </li></ul><ul><ul><li>Margins vary by product </li></ul></ul><ul><ul><li>Product mix critical to overall profit </li></ul></ul><ul><ul><li>Identifies product mix variations from plan </li></ul></ul><ul><ul><li>Audience: Sales, Finance, Product and Comp Design leaders </li></ul></ul>
  21. 21. Secondary Profit/Mix Metrics <ul><li>Metric #11 </li></ul><ul><li>Product Mix Achieved by Sales Rep </li></ul><ul><ul><li>Identifies which reps are selling a product mix different from plan </li></ul></ul><ul><ul><li>Territory differences or bad quotas may be to blame </li></ul></ul><ul><ul><li>Audience: Sales Managers </li></ul></ul>
  22. 22. Key to SP Metrics: Quality Data <ul><li>Accurate </li></ul><ul><li>Complete </li></ul><ul><li>Timely </li></ul><ul><li>Fact-Based </li></ul><ul><li>Trusted </li></ul>
  23. 23. But…. <ul><li>Most organizations lack data for analysis </li></ul><ul><li>80% of Sales Organizations will face data quality issues (Gartner) </li></ul><ul><li>“ 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 </li></ul>
  24. 24. Barriers to SP Data <ul><li>Scarcity of Compensation and Sales Data </li></ul><ul><ul><li>What’s been sold </li></ul></ul><ul><ul><li>Where </li></ul></ul><ul><ul><li>Quota attainment </li></ul></ul><ul><ul><li>Product mix </li></ul></ul><ul><ul><li>Price realization </li></ul></ul><ul><li>Consolidating data from spreadsheets or multiple comp systems </li></ul>
  25. 25. SPM Software to the Rescue <ul><li>Complete, Timely and Trusted Data </li></ul><ul><li>Reflects what Has Really Happened </li></ul><ul><li>A Single Version of the Truth! </li></ul>
  26. 26. Using the Data: Analytics <ul><li>Great Data Just the Start </li></ul><ul><li>Powerful Analytical Tools Create Information & Knowledge </li></ul><ul><li>Knowledge Drives Insight into Opportunities and Risk </li></ul><ul><li>Metrics become Actionable…and Sales Performance is Enhanced </li></ul>
  27. 27. Summary <ul><li>Timely Strategic and Tactical Decisions </li></ul><ul><li>Timely Decisions Achieve SPM Provides Timely, Trusted Data…. </li></ul><ul><li>Trusted Data Delivers Actionable Metrics… </li></ul><ul><li>Actionable Metrics Drive Greater Sales Performance </li></ul>

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