Measure Sales Success the Right Way

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Do you have a process to measure the success of your sales team? If your answer is actual sales versus budget, that’s certainly an important starting point. But in an environment where budgets are often obsolete before the ink is dry, measuring sales performance may be better served by a more sophisticated approach.

Don’t over-stress about the validity of data; focus on the trend. While no one wants to rely on questionable traffic levels or misleading sales comparisons, too often the meaningful answer can be found in the trend rather than the absolute numbers. If traffic-to-sales ratio is declining, it’s more than likely that any underestimating of traffic was also present when ratios were higher.

Define statistics clearly. A lot of bad sales data is really not the result of outright misrepresentation but rather fuzzy definitions of what you think you are reviewing. How do you count “be-backs?” If the same customer comes back to your sales office three times in a week, is that counted as three “be-backs” or one? It often depends on who you ask. Are your competitor’s year-to-date sales based on gross or net of cancellations?

Slice and dice the sales process and look for measurements of each segment. While traffic-to-sales ratio is the base line measurement of the new home sales industry, in today’s more sophisticated environment, it doesn’t provide enough insight on the entire sales process.

Begin with customer actions that occur before a prospect walks in the door. Measure the ratio of Internet leads, phone calls and on-site visits. A sales team that doesn’t count leads and phone calls most likely doesn’t understand the importance of these actions to gaining a sale.

Analyze total traffic-to-“be-back”-traffic ratio. It’s one of the most important and yet least analyzed ratios. Too few “be-backs” means you’re not making the first cut with visiting prospects. Lots of “be-backs” with fewer sales means you’ve either got the wrong sales professionals or you haven’t given them the necessary closing tools.

Track sales-to-cancellation ratio (sub-set out mortgage related cancellations). A low ratio may indicate a sales team that is too timid to ask for the order. A high ratio is often indicative of pushy sales professionals who fail to provide full details of the transaction or are less than empathic to the underlying needs of the buyer.