How to Measure Effectiveness In Sales

Aug 19, 2022
4 min read
Top sales organizations must be productive and efficient to operate at peak performance. These are 5 sales effectiveness metrics you should be measuring.

Sales effectiveness is a collection of metrics that together, give you a complete measurement of your overall sales team performance. Getting a clear understanding of your sales effectiveness is key to meet goals, drive revenue, and grow as an organization.

There is nothing more important to your business than sales. No amount of awareness, fanfare, or marketing matters if prospects are not converted to paying customers. While there is definitely a fine art to successful selling, you need to consider the science of sales performance to truly tap the motivational power of their incentive compensation management (ICM) initiatives and maximize results.

While there is a nearly endless list of metrics companies can track to monitor sales effectiveness, here are five you need to track to get a true understanding of your sales performance and identify opportunities for improvement.

1. Percentage of Reps Achieving Sales Quota

Quota attainment is a core marker of any sales rep’s success. What might be surprising however, is how often quota is missed. In 2018, the average quota attainment was only 54%, according to CSO Insights. Even more alarming, Salesforce estimates that this year, 57% of sales reps are expected to miss their quota. 

Using Xactly Insights® data, we analyzed the sales and incentive compensation patterns of SaaS companies to pinpoint the impact of compensation on sales performance. Surprisingly, the study revealed that sales effectiveness is a common problem. In fact, a large percentage of quota-carrying SaaS sales representatives are not hitting their goals: 79 percent of sales representatives miss quota and 14 percent never even achieve 10 percent of quota. That is a huge problem.

To optimize sales effectiveness, you need to analyze WHY this is occurring. Was quota planning off? Were elements of the incentive compensation plan too complex? Are all of your sales reps carrying their weight or does performance truly lie only with top performers?

To meet long-term company objectives of growth, retention and profitability, companies need to understand where reps are getting stuck on their path to quota attainment and what can be done to help more reps reach their goals.

2. Lead Response Time

The old adage, the early bird catches the worm certainly applies to sales leads. And time is of the essence when it comes to responding to a prospect. In fact, an Inside Sales stat noted that “if you follow up with web leads within five minutes, you’re nine times more likely to convert them.”

A Docurated post also noted that companies who “wait a full 24 hours before contacting the lead are 60 times less likely to qualify the lead than those who responded in the first hour.” It’s critical that sales is striking while the iron is hot, or in this case, currently engaged in your website or content. By responding in a timely fashion, your sales team ensures leads are hot and highly engaged for the best chance to move a deal farther along.

3. Sales Win Rates

Sales effectiveness is a fairly simple concept—to be effective and meet goals, , you need to win deals. But the most successful reps and leaders know that you need pipeline and multiple deals to realistically hit goals. It's unwise to "put too many eggs in one basket" and rely heavily on one major deal to close.

There are two parts to improving your sales win rates. First is aligning with marketing to help build consistent pipeline and finance to improve your sales planning and forecasting. The second part falls to sales leaders and managers' coaching. It's important for you to be able to identify the best time to provide additional coaching and jump into a deal to help move it farther along.

4. Ramp Up Time & Capacity Hiring

Per the above, it's critical to understand how coaching and training investments are helping, or hindering, a rep in moving the needle when it comes to performance. Most importantly, sales ramp up time is crucial in understanding your sales effectiveness.

When it comes to sales ramp and on-boarding, your ramp up time can be an indication of the effectiveness of your training. Are reps showing a marked improvement investing time in a certain set of materials? Are other materials or coaching efforts showing zero impact? Time is money for a salesperson, so ensuring they are not only investing the time to enhance their skills, but also investing that time in the most effective places is key.

By nailing down how long it takes the average new hire in your organization to fully ramp you can make the on-boarding process more efficient. In turn, this helps you maintain high levels of sales effectiveness and performance by optimizing your capacity planning to ensure you have the right amount of sales reps ramped for unforeseen turnover.

5. Sales Rep Engagement

Believe it or not, employee engagement—specifically sales rep engagement—has a huge impact on your overall sales effectiveness and performance. When reps are engaged in their role, they are motivated and achieve higher levels of performance. When engagement is low, however, it means your sales effectiveness is suffering.

Along with low rep engagement, sales burnout poses a big risk for potential turnover, which could hurt sales effectiveness even more. DePaul University’s Sales Effectiveness Survey estimates this cost to be upwards of $114,957. That likely doesn’t include the lost opportunity cost in sales, disruption to customers, and what you are paying new reps in draws as they get up to speed.

Happier, engaged reps are more motivated to reach their goals and to deliver a better experience to customers. As such, keeping a pulse on the sentiment of the sales team can be an important metric of a company’s overall sales health and potential. A drop in sentiment could be signaling sales issues to come. Discover how you can improve sales rep morale in this blog.

Getting the Right Data to Measure Sales Effectiveness

In all reality, measuring your sales effectiveness comes down to having access to the right data. Data plays a key role in every part of your sales planning, performance, and analysis. The best way to do this is to align your teams around a single source of truth. When your team has access to the same dataset, you can plan more effectively, make aligned decisions, and ultimately, become a stronger organization.

Want to learn how you can use your data more effectively to measure sales effectiveness, plan more strategically, and more? Download our guide to Unleash the Potential of Your Sales Team.

  • Sales Coaching and Motivation
  • Sales Performance Management
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Xactly News Team

The Xactly News Team reports on the latest product, events and market trends taking place within Xactly and throughout the revenue intelligence industry. Be sure to subscribe to get the news delivered straight to your Inbox.