Sales effectiveness refers to the ability of a company's sales professionals to “win” at each stage of the customer's buying process, and ultimately earn the business on the right terms and in the right timeframe. Improving sales effectiveness is not just a sales function issue; it's a company issue, as it requires deep collaboration between sales and marketing to understand what is working and not working, and continuous improvement of the knowledge, messages, skills, and strategies that sales people apply as they work sales opportunities.
Sales effectiveness has historically been used to describe a category of technologies and consulting services aimed at helping companies improve their sales results. Many companies are creating sales effectiveness functions and have even given people titles such as VP of Sales Effectiveness. "By analyzing sales force performance, managers can make changes to optimize sales going forward. Toward that end, there are many ways to gauge the performance of individual salespeople and of the sales force as a whole, in addition to total annual sales." In a survey of nearly 200 senior marketing managers, 54 per cent responded that they found the "sales force effectiveness" metric very useful.
Purpose
The purpose of sales force effectiveness is to increase company revenues through increased customer acquisition, product/service sales, and up-selling/cross-selling additional products and services. The purpose of sales force effectiveness metrics is "to measure the performance of a sales force and of individual salespeople." "When analyzing the performance of a salesperson, a number of metrics can be compared. These can reveal more about the salesperson than can be gauged by his or her total sales. When analyzing the performance of a sales team, an increase in revenue-per-rep can indicate improvement in salesforce effectiveness."
Construction
An authoritative source lists the following ratios as useful in assessing the relative effectiveness of sales personnel. Sales ($) / Contacts with Clients (Calls) (#) Sales ($) / Potential Accounts (#) Sales ($) / Active Accounts (#) Sales ($) / Buying Power ($)
"These formulas can be useful for comparing salespeople from different territories and for examining trends over time. They can reveal distinctions that can be obscured by total sales results, particularly in districts where territories vary in size, in the number of potential accounts, or in buying power. These ratios provide insight into the factors behind sales performance. If an individual’s sales per call ratio are low, for example, that may indicate that the salesperson in question needs training in moving customers toward larger purchases. Or it may indicate a lack of closing skills. If the sales per potential account or sales per buying power metric is low, the salesperson may not be doing enough to seek out new accounts. These metrics reveal much about prospecting and lead generation because they’re based on each salesperson’s entire territory, including potential as well as current customers. The sales per active account metric provide a useful indicator of a salesperson’s effectiveness in maximizing the value of existing customers. Although it is important to make the most of every call, a salesperson will not reach his or her goal in just one call. A certain amount of effort is required to complete sales." Churchil published research work on “the determinants of salesperson performance”, and the antecedents of sales performance is based on the meta-analysis for the period 1918- 1982 (76 years of previous research work). The author suggested five factors that influence a salesperson’s job behaviour and performance along with different categories like skill level, role perceptions, motivation, aptitude, personal factors, and organizational factors with three moderators.
Cross Functional Sales Performance Factors
There are several cross-functional sales performance factors which affect the overall company sales performance. Cross-selling service climate provides very important boundary condition which affects both its formation and its impact on service sales performance. Organizations facing increasing complex customer requirements. Most of the salespeople globally do not achieve their targets. A salesperson is the only direct link between customer and company. The factors affecting sales force performance in rural or urban areas are the notable driver for any organizational success.
