Looking for the essential KPIs
for a field sales team? Start by analyzing the most important processes in your
business and setting up requirements for each of them.
Choosing
the right KPIs relies upon a clear understanding of what is really meaningful
for a business process. Sales representatives play a significant role in
generating revenue for organizations. The main duty of sales reps is to visits
to the points of sale to sell products and address emerging issues with customers.
The performance of sales representatives is relatively easy to measure, because
there are plenty of objective criteria. In this article we’ll talk about the
KPIs related to sales. It’s natural that for field reps, whose primary function
is to sell, the essential KPIs are one way or another related to sales. Below
you’ll find some recommendations that will allow you to develop a set of
effective KPIs for your sales team.
Estimate sales volume. Most of the companies tend to assess the
long-term success of a sales representative on the basis of the sales numbers
he produces. However the sales volume itself doesn't provide a meaningful
picture of sales performance, and therefore cannot be regarded as an effective
indicator. The number itself doesn’t mean much. To create a KPI, that makes
sense, sales volume should be analyzed regarding some other numbers. Sales reps
normally get quotas for a certain period of time, based on their territory and
sales experience. So, there are the following ways an effective KPI can be
created:
- Compare a sales representative's actual performance to his previous performance for the equal time periods (sales growth metrics).
- Compare over time a sales reps’ actual performance to his quotas.
- Compare a sales reps’ actual performance to the performance of his peers.
Analyze the ratio of order and shipping volumes.
An effective KPI can be
generated when comparing of order and shipping volumes (for the same sales
rep). The shipping volumes are generally lower than the order volumes due to
the fact that the particular products can be out of stock, not been found by a
person, responsible for loading, or returned by a customer. Having noticed a
significant difference between the ordered and shipped products, it's possible
to find out the reasons of this event and take corrective actions.
Calculate the run rate. A run rate is another KPI that is used to define
the performance of a sales rep in the current period and to adjust sales
strategy, if necessary, to achieve the required quota. A run rate is an estimate
of how much a sales rep will sell over a period of time, and allow managers to
project sales through the end of the period. To calculate run rate for a year
you have to divide year-to-date sales by the number of remaining sales periods and
add it to your year-to-date sales.
A run rate can be calculated
for any period of time. E.g.: by 15 July a sales rep has sold products worth
$5000 in 11 business days. His monthly quota is $13000 and there are 12 more
business days left in August. Calculating the run rate, ($5000 (actual sales volume for 10 days)/(11 (the number of past
days)*23 (the number of business days in August)= $10455), a field team
manager can figure out that if the sales rep continues at the same pace till
the end of the month, he will not fulfill his quota. Having this knowledge in
the middle of the month, a field team manager still has enough time to correct
the situation.
Evaluate the number of orders and returns. Estimating the number of
orders and returns for each field reps over time and comparing to the same
indicators for his peers you’ll be able to identify the most productive reps
and to take appropriate measures if there are too many returns for a particular
sales rep.
Assess the average size of an order. To get this number, divide
total sales volume for a certain period by the number of orders. Sales reps,
having average order size less than the others either sell customers a smaller
number of products, or sell cheaper products. This KPI allows managers to
identify weak points of territory division between field reps.
Getting all the data to analyze
KPIs at first glance may seem complicated. The good news is that today a
comprehensive mobile solution for retail
execution is really affordable for any company. A mobile application for field sales reps not
just allow them to make orders and returns, using their tablets and
smartphones, but also provide managers with the ability to aggregate and
instantly analyze sales data. Register today at www.visitbasis.com
to get your free access to retail execution
software that will allow you to develop meaningful KPIs for your field
sales team.
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