Sales productivity along with sales force density completes the equation for sales revenue. Sales force productivity can be defined as the quantum of sales done by a sales person in a given period of time. The quantum can be further measured in different ways.
- Value of sales.
- Number of sales units.
- Quality of sales:This includes the kind of product sold, the customer potential, the number of days of credit, risk associated with the sale etc..
For this topic, we will limit ourselves to the question of sales value and sales numbers, as this chapter is for sales revenue management.
The sales productivity has following success drivers and influencing factors
- The tenure of sales person.
Though it is not a universal truth, but in most cases, the sales productivity rises with the tenure a sales person spends in the given environment. A sales person over time improves his under-standing of the product, company, customer needs, network of contacts, references and his overall experience.
Training is key for performance (we will cover it in greater detail in HR management). The great organizations invest in training of sales people and their partners to maximize the sales productivity. Training includes product training, prospecting training, sales pitch training, usage of sales collateral training and much more. Apart from this the training to sales leadership in building and sustaining a good sales force is part of the key.
Quality of leads in terms of being warm leads, reasonable information about the prospect, and high value (larger ticket size) and high confidence leads (higher probability of conversion). Refer Leads classification and prioritization.
IT and facilities support in terms of reporting, training databases, customer profile and relationship management systems, sales person's personal productivity tools (like sales contacts management, commission management, calendar management..), field systems like quotation system, product comparison system, financial planner system (for selling retail financial products..) etc. can add considerably to the sales productivity. Many surveys show that there is an increasing (though not dominant) share of field technologies investments.
Higher is the level of ownership of other activities that operations can take-over, greater is the amount of time available with the sales staff to focus on selling. Responsible supply chain (order placement to delivery), customer service (post sales service and customer touch) and financial operations (collections/accounts receivables) functions, can allow sales staff to spend most of their energies in building top line.
- Direct sales force vs. indirect sales force
Direct sales force fundamentally have a higher level productivity because of the commitment from an employee and investment from the organization, which comes along with this model. The indirect sales force via tied agents and distributors has typically a lesser level of productivity, and the non-exclusive tie-ups have the least. The reason is declining level of commitment and investment from either side. A decision on the mix of direct vs. indirect is a key management decision.
- Emerging vs. mature market
An emerging market has more business and growth potential and thus a greater productivity. A matured market will have diminishing returns to the investments, as more sales people fight for low growth OR stagnant market.
- Sales collateral/material
Sales material along with sales training forms and good set of field systems are great enablers for a salesperson on the road. Sales material in a way helps to standardize the message to be given to a prospect, and also helps in earlier closing of a sale. Sales material includes the brochures, sales order/application forms, demonstration material, media coverage albums, quotes from the customers, distribution and service outlets list, a sample of contractuals linked to the product, price list, product comparison sheets, premium/EMI calculation sheets (for financial products) etc.
- Maximizing the seasonality OR a campaign
A ready sales infrastructure to meet the upsurge in demand enables higher productivity. This includes all the works of lead-generation, infrastructure, advertizing and promotion support etc.
Measures of sales productivity
- Sales value
- Sales number of units
- Sales value per unit
Metrics linked to Sales productivity
- Sales value per sales person per period of time.
- Sales number of units per sales person per period of time.
- Sales value per unit of sales per sales person per period of time
Dimensions linked to productivity of sales
- Product (you can have different level of productivity given the complexity/demand of a given product)
- Business unit
- Tenure slab of sales staff
- Sales channel
Typical management decisions linked to productivity of sales
- What should be the mix, in terms of sales density vs. the sales productivity?
- The level of investment in IT support and productivity enablers. For example- should we give lap-tops OR PDAs to sales staff?