article | August 14, 2011
Sales Performance Management: Mixing Model Metrics?
First, the three sales models per Neil Rackham and John DeVincentis in their book “Rethinking the Sales Force”:
Order-taking. The buyer knows what they need in the product, is price conscious, and is looking for ease of acquisition.
Looking for value-add. The buyer has problem(s) that they need solutions for and they want an advisor to help them find and receive benefits from the solution.
Trusted business partners. The buying organization is interested not primarily in the seller’s products, but in the selling organization’s total assets and capabilities that can be leveraged.
Which metrics to use, then?
1. Cost metricsare key to keeping the sales reps from “overselling” a single customer at the expense of getting orders from others.
- cost per transaction
- sales cost per customer
- expense to revenue ratio
2. Customer’s ease of acquisition metricsput focus on ensuring the buyer is satisfied and will do repeat business if applicable.
- time per transaction
- order to implementation time
- number of steps in buying process
1. Sales process-based metrics – Consultative selling works best when using a sales process customized for your business and the buyers you interact with. Since sales campaigns are more effective using the process, measure against the stage transitions for tracking progress (and for knowing what Reps need coaching on).
2. Team-based measures -Since it’s more than just taking an order, the Sales team is normally comprised of multiple players in the consultative model – whether multiproduct or multifunction.
- Product mix
- Total Account Performance
- Meeting of customer needs
- Account satisfaction score
- Delivery/implementation target time attainment
3. Value creation proxies – Difficult to measure in Sales Performance Management, but important to show if the consultative engagement is doing what the customer wants – giving value and benefits from the seller. These metrics are about what value the customer is receiving, not what value the seller is realizing. I’ve listed a few below, but more metrics, as well as how to quantify them, are found in the blog entry here.
- Buyer education
- Flexible terms
- Free consulting
- Assessment results
1. Investment tracking metrics to show how each party has committed to the partnership. These help to assess whether the high cost of the engagement is worthwhile.
- Committed resources and their costs (from both sides)
- Materials costs
- Goodwill costs
2. Value creation proxies – as above but showing the benefits that both parties are receiving from the enterprise partnership.
3. Improvement metrics to help show how both sides are continuously improving the engagement for the benefit of both parties. From the seller’s side, tracking metrics with an eye for improvement will uncover new opportunities. The key with these metrics is to gather an accurate, robust baseline at the beginning of the partnership in order to measure whether improvement is happening or not.
- Buyer-side improvements based on seller’s solution(s)
- Seller-side improvements in delivery
- Seller-side improvements in products because of this engagement
- Improvement target attainment
4. Strategic goal measurement -Enterprise sales engagements are not entered on a whim, but because of a strategic proposition. The buyer and seller both hope to meet some strategic goals through this partnership. The progress towards the strategy must be monitored and not lost because of tactical and operational level metrics.
- Expected contribution of each party to goal attainment
- Actual contribution
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