Coordinate Sales Performance

Sales Performance
Sales Performance is the effectiveness of the sales team, both individually and as a whole, in
selling activities; the ability to achieve sales goals. Sales performance can be measured in
various ways depending on your industry and business goals, but common metrics often
include sales revenue, customer acquisition, and retention rate.

How to Evaluate Sales Performance

Sales is the backbone of nearly every organization. Sales can include business to business
interactions as well as sales to the general public. And while almost every industry has a sales
aspect, the companies that succeed are those who prioritize and optimize sales performance.

Companies must have a working sales performance definition before deciding what
constitutes “good” sales numbers. Depending on the type of sales and costs of what you are
selling, different performance rates may be considered “average.”

Therefore, before conducting a sales performance review, compare current sales rate to the
industry’s average. If it is near the norm, there’s no need to panic, but there are still ways to
bring up rates. If companies are well below the industry average, they have at least one
problem that they will need to address.

Average Order Value (AOV)

Average order value (AOV) tracks the average Birr amount spent each time a customer
places an order. To calculate company’s average order value, simply divide total revenue by
the number of orders. For example, let’s say that in the month of September, store’s sales
were $31,000 and it had a total of 1,000 orders. $31,000 divided by 1,000 = $31, so
September’s monthly AOV was $31.

A sales representative with one sale worth $5,000 earned more money than a representative
with 20 sales of $100 each. That said, if employees make roughly the same number of closed
sales, AOV will begin to set them apart.

AOV is a key performance indicator that businesses measure to understand their customers’
purchasing habits. Like other key metrics, AOV can be tracked for any time period, but most
companies monitor the moving monthly average.

Page 15
 Coordinate Sales Performance

Sometimes marketers focus much of their energy on increasing traffic to store when it would
more impactful and profitable to increase their AOV. Increasing traffic typically costs money,
while increasing AOV does not. Since there is a transaction cost associated with each order,
increasing your AOV is a way to drive direct revenue and increase your profits when
customers are already buying from your store.

Customer Acquisition

Some representatives might excel at bringing new customers aboard. Maybe they have the
perfect mix of genuine excitement that convinces someone to try a product. Whatever the
formula for success, bringing new customers into the fold is a valuable skill. Given that
gaining a new customer costs up to five times as much as keeping one already have, this is a
valuable skill to nurture in company’s sales team.

This is another valuable metric that companies should include in their sales performance
review template. If company increases customer retention by a mere 5%, you can see a 25%
to 95% increase in profit. There is a 60-70% close rate when selling to an existing customer
versus a 5% to 20% close rate for a new customer.

Number of sales

If a company has more lower-value items than big-ticket products, their sales goals might
revolve around total units sold. This would also stay true for products or categories that are of
the same value per unit. So it might make perfect sense for a company that only manufactures
one type of product to measure nothing but total units sold per employee.

For most companies, though, a good sales productivity formula will take all of the above
metrics into account. Once companies evaluate their salespeople by these standards, they will
see their primary areas of weakness, as well as which representatives stand out from the rest.

Factors that Affect Sales Performance

Research shows that 42% of companies report that 50% of their sales representatives meet or
exceed their quotas. And that spells trouble for many companies looking to increase their
sales and revenues. It can be frustrating to deal with continuous failures within sales
department time and time again. It feels even worse when company have done everything to
improve sales team’s performance.

Page 16
 Coordinate Sales Performance

There may be other factors at play that have not considered. Understanding how such factors
affect sales is the first step toward improving sales performance. Some of them include the
following.

1. The Quality of Product

The quality of product or service does matter. Best salespeople may be able to talk prospects
into buying what company has to offer the first time. But if the product is of low quality, it
would be difficult to convince them to become repeat clients.

The product quality, as well as customers’ perceptions of it, could be affecting sales volume.
Any feedback from salespeople indicating this should be passed onto other relevant
departments. These may include the marketing, engineering, and product quality assurance
departments.

2. The Pricing of Your Product

Studies shows that 58% of buyers want to discuss the pricing on the first call? So, what
would happen if product price is considered expensive? Research shows that 35% of
salespeople consider overcoming objections to price as one of their biggest challenges.

Pricing may not be something that supervisors and sales representatives may have any control
over. But pricing is an essential factor when selling. So, something can be done to reduce
prices, like offer discounts for large volumes or base price be reduced altogether.

3. The Customer Care Service

By the time prospects get into contact with sales team, it is quite likely they have already
been in touch with other departments within company. They may have already contacted
marketing department or customer care representatives.

Customers are likely to refer others to company if they have had a positive experience. And
that positive experience is determined by the organization’s customer care representatives.

If sales representative’s report that many prospects complain about their issues not addressed
adequately, companies have a customer care service problem. That means companies must
reach out to their customer experience colleagues and request them to deal with the issue.
Otherwise, you will continue to miss many sales opportunities among existing customers and
thus fail to hit your sales quotas.

Page 17
 Coordinate Sales Performance

4. The Quality of Salespeople

Soft skills are some of the most underrated skills there are. Many people don’t think that
skills such as time management, communication, problem-solving matter. But they do. There
are also other challenges as well. About 46% of salespeople did not even intend to go into
sales as a career. Many sales representatives may not even have a passion for their jobs. And
68% of them already have one foot out the door because they are determined to look for
another position within the year. They are not happy with their job situation at the moment.

A bad hire is not something that companies can always wish away. The skill set of
salesperson’s matters. Some people don’t have it to be empathetic, time conscious, problem
solvers, etc. And if someone lacks passion for the job, then companies can’t force them to
display it when working.

If sales department is not performing well, it may be time for new hires. That may mean
coordinating with the human resource department to make it happen because it is their
responsibility. The choices they make in this regard will determine whether sales team
performs better in the future.

5. The Budget for Sales Activities

Companies need to spend money to make money. Activities such as prospecting, qualifying
leads, meeting prospects, driving to see prospects, making presentations, training, etc.,
require money to happen. But what if the company is underfunded? Or what if the company
does not provide enough financing for sales activities?

Research shows that around 20% of sales teams do not have enough resources to reinforce
their sales processes. Yet, companies with dedicated sales enablement have a higher win rate
of 52.1% than those who do not (45.5%).

So, if sales department is underfunded, sales representative need to talk to their managers.
Show them the need to have a bigger budget for sales processes. Because if sales team does
not get the funding it needs, overall performance will continue to be dismal. Companies
cannot expect every salesperson to produce great results when they are so ill-equipped for
their jobs.

6. The Lack of Enough Employees

Sales team to have a good performance, they must spend time selling your company’s
products. But this is not the case for many salespeople.

Page 18
 Coordinate Sales Performance

While some of these activities are relevant to the sales process, they distract your salespeople
from their core job, which is to sell. If your sales team is always doing many tasks that
prevent them from selling, it could indicate that company does not have enough employees.
And that is something that sales department may not have any control over. Companies try to
improve salespeople selling time by fighting for more staff to be added. If company is
operating on a tight budget, they could ask for freelance help, which is cheaper.

7. The Lack of Collaboration across Departments

Selling requires collaboration. It is not just members of sales team that should work together.
Sales department must also communicate with other departments to achieve company quotas.

Top salespeople believe social selling tools, CRMs, sales intelligence tools, productivity
applications, email tracking tools, etc., are essential to their success.

Collaboration across multiple departments is necessary for sales teams to succeed. But not
every company has a collaborative work environment. Some organizations have departments
that are too autonomous. As a result, they fail to share information and work together to
improve their bottom line.

If this is the case, improving sales team’s performance will continue to be an uphill battle. It
doesn’t matter how streamlined company department’s operations are. Neither does it matter
how good sales process is. The entire company culture would first need to change.

8. The Market Forces

Sometimes, sales performance will be subject to market forces. The economic forces of
supply and demand sometimes have nothing to do with government or company policy. They
tend to be external. Unfortunately, life is unpredictable. Covid-19 pandemic is an excellent
example of just how unpredictable life can be. The pandemic has had a catastrophic effect on
working hours and earnings. It has disrupted supply chains at a global level. Its impact has
affected the market forces and prospects’ ability to buy.

Not every sales performance issue is within sales department’s control. Some situations are
caused by the company policies that are within other people’s power. And others are caused
by external issues that company cannot safeguard itself against. It pays to understand the
factors that affect sales team’s performance so that companies know what to do. Sales
department may be forced to communicate with other departments within organization to

Page 19
 Coordinate Sales Performance

remove the barriers. But sometimes, sales people will have no choice but to think outside of
the box. Preparation is the key to business survival.

Location and Sales Performance

Geographic location has a significant influence on firm’s profit margin and success. This
might be due to availability and proximity of raw materials and labor, proximity to customers
and competitors, infrastructure and transportation costs. According to Kotler and Armstrong
(2004), retailers should be location near their target customers thus ensuring accessibility.
Retail stores located far away from their customers have a negative effect on their purchase
intention.

It’s commonly believed good location is the key element to attracting customers. A well
located store also makes supply and distribution easier. Location can influence a retailer’s
ability to market itself, and to deal with the competition it faces from other businesses.
“Getting the location right is therefore really important.”

Location is a mantra for retail success. Store location is a retailer’s most costly and long-term
marketing-mix decision. Unlike a bad pricing or promotional decision, a poor store location
adversely affects retailer performance for several years. We know that retailers prefer to
locate close to consumers, but doing so exposes them to competition from other retailers that
also want to be close to consumers. From the retailer’s point-of-view, proximity to consumers
means proximity to other stores.

Location Advantages

Location advantage is advantages enjoyed by a firm that derive from the places in which it
operates. These can be advantages such as the natural resources or its labor resources. It can
also be its location around particular markets which provide certain advantages to businesses
there. Five location advantages you should consider are trade access, consumer/market
proximity, adjacent business communities, proximity to talent sources and lower costs.

Trade Access

One of the biggest location advantages for a company that sells physical products is access to
a comprehensive trade network. Trade agreements can reduce tariffs, making it cost-effective
to enter new markets and making your products cost-competitive with similar offerings.

Page 20
 Coordinate Sales Performance

Consumer/Market Proximity
Like trade access, strategic consumer/market proximity is about moving product, but the
objective is to minimize travel time while maximizing the number of potential customers. For
example, if your company sells automotive parts or products, it is advantageous to locate near
automotive manufacturers and suppliers. If you sell consumer goods, you will want to locate
within a short distance of large population centers.

Business Community and Culture

A strong local ecosystem that supports type of business is invaluable and can be a primary
reason for expanding to a particular community. Is there similar businesses? Is the culture
cutthroat, collaborative, or somewhere in between? What kinds of support organizations
accelerators, research supports, etc. are available? The answers to these questions can have a
strong correlation to your ability to find experienced talent, innovate new products and,
ultimately, grow your business.

Proximity to Talent Sources

You cannot have a successful expansion or a successful business if you do not have access to
talent. Expanding to improve talent attraction and retention through greater proximity to
existing workforces or strong talent pipelines is the primary location advantage for many
companies. Communities that have a strong existing workforce have demonstrated that they
can retain talent. Strong talent pipelines are built on excellent post-secondary education.
When looking at potential locations for expansion, consider the quality of the educational
institutions in the area, including the programs they are best known for.

Lower Costs

This is very likely the most obvious location advantage lower costs. Cost savings come in all
shapes and sizes, including labor costs, office rental, energy rates, business taxes, etc., and
each one of these types of costs differ between locations.

Page 21