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Years ago, wholesalers relied on nothing more than basic reports and metrics like accounts receivable aging reports, inventory turnover and dead stock reports to determine whether their business was successful or not. But in today’s globally competitive marketplace, measuring your B2B sales performance with greater accuracy and precision is a necessity if you want to drive business growth.
Sales performance tells you how effective your sales team is, both as a whole and individually, at performing sales activities and achieving sales goals. It is measured by comparing your sales activity and results against your targeted expectations and quotas.
Measuring sales performance is vital to long-term business success. It makes your sales team more effective by optimizing their sales activities and making them more accountable. Tracking and measuring your sales activity also provides you with valuable sales data that you can use to predict future sales performance and set accurate sales targets. It also helps keep your sales reps focused so they can concentrate on doing what they do best — selling.
Basic Tips for Measuring Sales Performance
- Consistency is key. Any sales rep or sales team can have a one-off great month, but high-performing salespeople are able to meet and exceed sales targets for extended periods of time despite the circumstances.
- Document your success. Make it a practice to document and track your sales performance on a regular basis so that you can see the progress you are making and understand how it relates to your company’s overall success.
The Essential Sales Metrics Your Wholesale Business Needs to Track
1. Sales growth
Sales growth measures the ability of your sales team to increase revenue over a specific period of time. It is a direct reflection of both the revenue and profitability of your wholesale business, making it an important metric to measure. Tracking your sales growth allows you to set realistic sales revenue targets.
The formula to measure sales growth is:
As a rule of thumb, it is good practice to monitor your sales growth over a variety of time periods, such as monthly, quarterly, and yearly. This will provide a clear picture of where your business stands. Make it a goal to accelerate your sales growth each period, or at least keep it at the same percentage, e.g., month over month, year-over-year, etc.
2. Sales to date
Measuring your sales on a regular basis (i.e., monthly, quarterly) can tell you a lot about your wholesale business. It gives you a clear picture of your sales revenue over time; it provides an indicator of whether your business is growing or not; and it allows you to identify sales trends.
Tracking your sales over a set time period also gives you an opportunity to see what effect any changes you make to your sales process have on your sales revenue, as well as whether your B2B marketing efforts are successful.
The formula to measure sales to date is:
3. Product sales performance
Tracking product performance is especially important for businesses like wholesalers who typically sell multiple products that each have unique sales targets.
There are many metrics that can be used to measure product performance. The product performance metric is based on total product revenue for a given month and can provide vital sales data, including:
- how well a product is selling;
- whether there is potential to increase the product’s success and profit margin; and
- which products are not resonating well with your B2B customers.
When reviewing your product performance metrics, remember to take into consideration any special circumstances that might be contributing to a product’s success (or lack thereof), such as seasonality, a paid marketing campaign, or a competitor undercutting you with a similar product.
4. Lead conversion rate
The lead conversion rate metric tells you what percentage of your B2B sales leads are converting to customers. It is typically tracked monthly and/or quarterly, and the data helps you establish how many sales leads you need to generate to achieve your revenue targets and identifies whether your sales team is becoming more (or less) effective.
For example, if your lead conversion rate is increasing and the number of deals you are closing is the same number or better, then your sales performance is improving.
The formula to measure lead conversion rate is:
5. New leads per period
A lead is a potential customer who has expressed interest in your product or service. The number of new leads you generate over a given period effectively determines how many potential customers you will have in your sales pipeline.
Although on its own measuring new leads for a given period does not speak to the quality of those leads (see #6 below), tracking new leads is valuable for two primary reasons:
- you need it to measure your lead conversion rate noted in #4 above; and
- you cannot have customers without leads first.
6. Sales rep performance
There are a variety of sales metrics that can be used to measure the performance of your sales reps. These include:
- Close rate
- Average deal size
- Monthly sales
- Churn rate
- Lead response time
- Average days to close
One of the most popular is measuring whether your sales reps are hitting their sales quotas. A sales rep’s ability to achieve his/her sales quota is a direct result of the personal effort they put into the process, the time they spend serving the needs of their customers, and whether they are successful at establishing quality connections.
By monitoring your sales team’s ability to hit their sales quotas, you can identify which sales reps are excelling, and which are not.
7. Average deal size/average purchase value
Measuring average deal size/average purchase value shows you whether the deals your sales team is closing are getting larger, smaller, or holding steady. It also gives a window into the quality of the customers you are getting (rather than just quantity) and helps you identify potentially risky deals when something falls outside of the norm.
When your business understands better how much money each deal you make is generating, you can develop and implement stronger strategies for selling more efficiently.
The formula to measure average deal size/average purchase value is:
Whether you are a wholesaler, distributor, or other type of B2B business, your sales team is the direct link between your products and your customers. That is why it is critical to track and measure your sales performance on a regular basis.
Using sales metrics to measure your sales performance gives you a clear understanding of what is happening in your business in real time and shows you which aspects of your sales process are working well together, and which are not.
With this vital sales data in hand, you can then make improvements to your sales process and strategies that will allow you to achieve better results and grow your business more profitably.