How to Track Sales Performance

by Jack Burton; Updated September 26, 2017
Maximizing return on investment is the goal of tracking sales performance.

Businesses have come a long way since a salesperson was sent out with a smile and shoe shine and expected to succeed. Many vendors now offer companies a variety of commercial software to track the sales performance of the individual salesperson and the team.

Some are dashboard style, while others are tied into Customer Relationship Management software. While each one is different in style, they all emphasis the same point: without the ability to analyze good data, management decisions will always be harder to make. Obtaining the software is only the beginning, though. A plan needs to be constructed on how best to use it.

Step 1

Decide the key performance objectives to measure.

Financial tracking is the only real measure of performance by a salesperson. Such measures include the overall value of a client contract and what is known as the Lifetime Value of a client. This is the total dollar amount the client brings to the company. Comparing that to the cost of having that salesperson enables the company to assign a value to each individual salesperson.

For example, a salesperson who costs the company $100,000 per year through salary, taxes, expenses and other costs and whose client list averages $500,000 in Lifetime Value would have a ratio of 5. Another sales person may cost the company $40,000 per year, but their clients’ Lifetime Value may only be $80,000. Their ratio of 2 shows their value to the company is much less.

Step 2

Provide detailed directions to the sales staff and support team as to what is being tracked and why. Ensure everyone is involved with the tracking and measuring of the numbers and are aware of the importance of good data. Set both group and individual objectives for the sales staff that are both reasonable and obtainable and have a reward for meeting those goals.

Step 3

Give feedback on metrics and assistance where necessary. If a salesperson is failing to meet objectives but is considered worthy of extra management effort, then that is also factored into the sales performance tracking. Over time, a pattern should develop through data analysis to determine if the extra training has a positive factor in the sales improvement. This enables the company to make changes as necessary.

Step 4

Extend the tracking to include such variables as geographical territories, categories of businesses and acquisition methods. A company can use these to assign various ratios to determine the best territories, types of businesses to call upon and how best to market to them.

Step 5

Continue to track with a consistent measurement for years. This database then becomes a tool that is used to project the value and performance of individuals and the group, the ability of the management team and the income of the company.

Tips

  • Some companies make the mistake of confusing activity with performance and measure the wrong criteria. A busy salesperson is not always a productive one.

Warnings

  • Any analytical tool is only as good as the quality of the data put into it and the experience of the people using it

    Analytics is a guide and should not be the decision-maker. For example, if a territory is grossly under- performing, it may mean that the company should leave it and cut their losses or that there is an untapped market in the making if the company can figure out how best to exploit it.

About the Author

Jack Burton started writing professionally in 1980 with articles in "Word from Jerusalem," "ICEJ Daily News" and Tagalong Garden News. He has managed radio stations, TV studios and newspapers, and was the chief fundraiser for Taltree Arboretum. Burton holds a B.S. in broadcasting from John Brown University. He is a 26-year veteran of the U.S. Navy/Navy Reserves and the Navy Seabees.

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