Benchmark And Sales Quotas - How To Raise The Bar And Make More Income
Almost all companies benchmark their sales team
. Typically it is how companies determine how to pay their sales team. How does your company benchmark its sales staff?
Do they use revenue? Do they use sales? Do they uses units? Is it gross margins? Or do you use a combination of these or other key performance indicators (KPI's)?
Every year sales people get assigned some sort of target (or at least you should be assigned a target). In a lot of cases it is based on sales, but targets can be a combination of several different KPI's.
When you get your number, you should be able to work that number backwards to be able to tell what you have to do to make sure that you are on track for the year or for whatever unit of time you will be measured on (such as a quarter, month, week or daily).
For example, lets keep this simple; you get assigned a $1.2M quota in sales. If you work this backwards here is what you have to be able to accomplish to hit this target:
Semi-annually: $600,000
Quarterly: $300,000
Monthly: $100,000
Weekly (based on 4 weeks/month): $25,000
Daily (based on 5 days/week): $5,000
This doesn't take into account any holiday time, so you would have to adjust accordingly.
Now, if you are tracking your sales calls to closes, or contacts to closes or phone calls to closes (etc.) and you know the average order size of the product/service you sell, you should be able to figure out approximately what you need to do to achieve this number. If you are not tracking this, you really should do it so that you know your call to close ratio.
Let's say that your average order is $2,500 and you have to make 10 contacts to get a sale, then you know that on a daily basis, you will need to make 20 contacts. Weekly are 100, monthly are 400, quarterly are 1,200, Semi-annually are 2,400 and annually are 4,800. This allows you to start planning your days, weeks, months, etc. appropriately.
Armed with this information, you now know that based on the time it takes to make a call, you will be able to see what you will need to do in a day to accomplish your goal. So if a call is approximately 15 minutes to prepare for and you have to make 2 sales a day, you will need to set aside at least 5 hours a day to make calls. This number is found by taking 20 calls time 15 minutes per call to give you 2 sales.
Once you know that you can do this in 5 hours a day, then you can look at what you need to do with the other 3 or so hours you have left in the day. Perhaps you could make more calls and increase your income?
By breaking your numbers down you will be in a better position to understand how to best allocate your time. So know that you know this, go ahead and do it for yourself.
by: Chris Hamilton
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