Measuring Sales Performance

All companies carry out sales performance measurement to one degree or another. But today with the increasing use of sales force automation software and theories such as the Balanced Scorecard--a methodology which posits that measurement techniques can be used to gauge the future health of a company--gaining ground, the process can be refined to a previously impossible level.

Building into the evaluation process measurement techniques that trace sales from an initial contact with a customer to the final closing stages and everything in between, data can be analysed to provide a view about the effectiveness of the sales force. Such analysis also allows companies to become customer-centric within a relatively short space of time, because they can see which products are selling, which ones are not selling and which ones may sell in the future. A comprehensive view of customers' present and future needs can in turn influence either the service delivery or manufacturing process.

By using the data to improve effectiveness or influence manufacturing, sales performance measurement moves on a step further from opportunity management, where the aim is simply to get a better hold on what sales opportunities exist.

In theory, giving the sales force a wider strategic role by introducing new measurement criteria means the whole company benefits. But a word of warning. Any sales measurement process is built on the foundation of key performance indicators (KPIs) and if these are not set with a great deal of thought and clarity, an implementation can easily fall down. This is an easy mistake to make, as a legion of consultants will testify. Traditionally sales measurement criteria have been very crude and have not been subject to analysis because there has been little alternative. But with the opportunity to extract more information from the customer and record it, it is worth spending time accurately defining the KPIs.

Companies can also use sales measurement techniques to improve and refine their marketing processes. As leads are passed on from marketing campaigns further questions can be posited by the salespeople to determine the nature of the enquiry, the buying power of the enquirer, the company's buying cycles, market positioning and so on. The data can be analysed to determine the success of the marketing campaign and whether marketing focus needs to be shifted.

While these measurement techniques can bring some immediate benefits, sophisticated analysis depends ultimately on a company's ability and determination to capture a wide range of data. And while organisations are latching onto the benefits of the technology, it does not solve all the problems, and often results in further analysis of what and how a company can improve on its performance.

Alto Digital Case study
Last year office digital equipment and stationery supplier Alto Digital spotted an unexploited opportunity in the small business market. It realised that many firms were unwilling to shell out what seemed like inordinate sums of money to have a bespoke Website built. So in September last year the company spun off a dot com operation and launched its own service offering to build very cheap sites. It consolidated the offering by also launching an online office equipment trading facility, and it now plans to make up to 100,000 products online.

The business was built around a large field staff operation supported by telesales. Apart from its existing database, which held 24,000 customer records, the company also bought in sample databases. Realising that running a cost-efficient operation required that performance of both its telesales and field sales staff be measured, Alto installed Goldmine FrontOffice 2000.

Astrud Burgess, marketing manager, says the software was initially used to monitor the number of calls telesales staff were making and the number of appointments made for the field staff, and to this end it has so far been successful. "When we buy in a database we can bring the data into Goldmine, break it up according to locality, and schedule a predetermined number of calls into the telesales activities, because we need to get these calls made within a certain time frame.

"It provides detailed information about what field sales staff are doing too. They log in the result of their appointments, and we know how many appointments were needed before a sale was made and how much time there was between appointments."

This ability to build up a database of customers and measure the calls made to them against the number of sales is only a short-term objective. The long-term aim is to track carefully the launch of new products and what is being bought, in order to build predictive models for future sales. Burgess adds that to date this is only at the concept stage, as the methodology has not yet been developed, and, as she admits, the company is still "working very hard to understand the capability" of the software.

Using the marketing functionality, the company is also attempting to track the number of sales against marketing campaigns in the press and on the radio. By entering the campaign name in the customer information field, the company is tracking not only how effective the campaign was initially, but also the long-term profile of the customers and the likelihood of future sales based on that information. However, there have been a few drawbacks. The reporting capability of Goldmine's Front Office product only allows a basic level of analysis, and in order to undertake a high level reporting and analysis the company had to bring in a Crystal Reports package from Seagate.

The company's original server has also been upgraded and the number of customer records has "grown massively" says Burgess, as a result of the bought in databases. "We had some difficulty managing remote synchronisation with the server." In the end the company was growing so fast, in terms of the number of sales staff taken on, that its reseller partner suggested it moved from its Access database to Microsoft SQL server. The move has resulted in a significant improvement in the service.

Tektronix Case study
In 1946 two ex-servicemen turned their attention from military duties to the commercial application of oscilloscopes, which measure currents across electrical circuits ranging from huge networks to tiny computer chips. The company which was formed, Tektronix, has gone on to establish itself as a leading player in the field and holds kudos-winning accounts such as Intel, with which it has played a role in developing the next generation of chips.

Taking advantage of the new generation of business-enabling software that was becoming available in the early Nineties, the company implemented a salesforce contact management tool, SPS, from mid-market vendor Saratoga. This allowed it to automate various sales processes such as lead generation and opportunity management, but following the release two years ago of Avenue, Saratoga's full-blown salesforce automation product, Tektronix decided to avail itself of the sales measurement capability in order to refine its sales data gathering and, in the long term, build forecasting techniques to govern the manufacturing process.

Nigel Fletcher, European Information Systems manager, said that previously it relied on the sales funnel tool available in SPS, which was adequate at the time but which only allowed an "ordinary level of sales prediction". The sales funnel within Avenue provides a more detailed level of information about whether leads are likely to become sales, and as a consequence the data coming out of it is more accurate.

Manufacturing can now be tailored according to the number of orders. "Sales measurement is key to becoming a lot stronger on predictive closure rates which in turn is going to influence our manufacturing processes," he adds. He also believes the system helps it get around the issue of the "eternal optimist" salesman who is convinced that a deal can be closed. The system demands that certain criteria, determined by the company, which govern the factors that influence a deal are marked up. These include whether the right person is being spoken to, what the company's buying cycle is, what equipment they already have and what they are likely to need, and so on, and increase the predictive ability.

Information from a marketing system, supplied by US vendor Aprimo, is also fed through to the salesforce to supply leads from people who have responded to anything from seminars to trade press ads or leads from a database "cold list". The sales team will follow up the responses, and their success or failure will be measured according to the pre-determined criteria. Campaigns and selling processes can be tweaked accordingly.

The data gathered covers a wide area, including number of sales closed in any given period, influencing factors, likelihood of future sales and deals in which competitors won out and why. It is being pulled together to build future predictive models. However, Tektronix has also taken the application of its information a step beyond measuring sales performance. Regionally-based business development managers are receiving data to inform the development of future products and direction of marketing campaigns.

As far as the implementation was concerned, Fletcher states that despite needing to integrate 18 distributed databases and give 300 staff access to the synchronised operation, it was a fairly straightforward operation.