Setting business goals is all about knowing where you’re at now, and where you want to be in the future. To do so, you have to understand how to evaluate your sales process and track sales metrics that tell you how you’re doing and what you need to improve.
Here, we will briefly describe a few key components of your sales process and how to evaluate them.
Average Transaction Value
All sales managers should know their average transaction value. This is an important metric to help you learn about your customer. It is, quite simply, the average total amount that a customer spends in a single transaction. You should remain aware of whether your average transaction volume is going up or down. Software such as Sales Force makes seeing this sort of information easier than ever.
Of course, if average transaction volume is going down, it’s time to dig a little bit deeper to figure out why. Develop strategies to get customers spending more while still delivering the high level of value they expect.
Your win-rate will tell you whether you’re closing sales or losing out on opportunities. It’s a metric you can use to evaluate how well each salesperson on the team is performing, showing you if you have an effective overall sales team and process. It works like this: first, look at how many opportunities have been closed. Then, compare it to the total number of opportunities that were available during that time. The result is your win-rate.
With win-rate, you can track how much more money the company could be making if a certain increase is achieved. Targeting win rate is one of the best ways to improve your sales effectiveness. Come up with a win rate goal complete with some KPIs, and then make a plan to get there. With a CRM, or Customer Relationship Management software, you can look into all the details for every sales opportunity and automatically calculate win-rates. Every sales organization should use a CRM, as its one of the best digital tools for success in sales. A CRM will keep you organized, increasing the effectiveness of your team.
You can also look into hiring sales enablement consultants. These sales professionals can help make the most of understanding win-rate and other metrics, and coming up with growth strategies based on what you find.
Evaluating your sales cycle will give you a better idea of the overall performance picture, which will help you close more. Get insight into your sales pipeline by using monthly segments that track when an opportunity has crested, and when (or if) it has closed. By becoming better-acquainted with what your sales funnel looks and acts like, your team can do a better job building relationships and sign more deals.
Look at the timeline and overall duration of the sales process. Then, find inefficiencies and create strategies to solve them. If the closing process is long, you probably have some areas that need fine-tuning. Slow sales performance could boil down to being a prospecting problem—maybe you’re seeking out the wrong prospects? Ask yourself, are your sales reps selling the service or product to your ideal customer?
Evaluating a sales process is a little bit art, and a little bit science. There’s plenty in the way of tried and true sales methodology, but ultimately it all comes down to experimentation to figure out what works for your company and clients. As the sales manager, it’s up to you to create a team of sales leaders by constantly streamlining processes and fine-tuning your most valuable resource: your people.
By deriving insights from your sales cycle, win-rate, average transaction value, and other metrics, it won’t just help your current sales reps sell more. It will also help you improve your process for training new employees, no matter what types of salespeople you’re hiring.
Early stage start-ups have to pivot all the time, switching up their business model or changing the types of prospective customers they pursue. But a smart sales organization that reaches their sales goals is created through an ongoing process. Once your sales process is optimized, you’ll improve your conversion rate, sell more of your product or service, and be able to grow your business to the next level!