Sales Goal: Is Your Sales Team Good Enough?
Sales Goal: By Ryan Tognazzini on Sun, May 06, 2012
A round of interviews SBI recently conducted with CEOs revealed there are 3 obstacles to hitting the annual sales goal:
- Finding top sales talent
- Making new hires productive quickly
- The quality of the existing sales team
In the eyes of CEOs, it’s people who generate results. When it comes to sales compensation, the CEO looks at sales as an investment….and he wants a return!
Now, what about the people already in the job? Are you getting a return on your investment? How can you tell? Look at the facts.
Before continuing, use this Sales Rep ROI Benchmark Calculator available for free download to calculate your return on investment for both sales reps and sales managers.
How’d you do?
Based on the results, there are 3 implications to consider for sales reps:
- Replace – An ROI of <3.5 means your cost of sales for that individual is more than 28% of revenue. Keep in mind this metric is before adding in benefits cost. The implication of keeping this individual on your team means you cannot afford to hire additional people. He or she is sucking up your available capital. They are not good enough. Cut the dead weight.
- Improve – A result of a 3.5-4.9 ranking puts your cost of sales at 20-28% before benefits. The sales rep is making the grade…barely. He needs to improve quickly, or it will prevent you from achieving your annual revenue goal. If the sales team is going to hit quota, you better act fast with this group.
- Retain – Congratulations, you are generating a 5x return on your investment with this group. Your selling cost is below 20% and for every $1 you invest in this sales rep, he generates $5. Losing sales reps in this category will kill your quota attainment and ability to scale the organization. Make sure you are paying for the performance of this group. They are your future. You need to find more of them quickly.
For sales managers, the ROI metrics are normalized to align more closely with the overall sales budget. However, he or she is ultimately responsible for generating an ROI for the entire sales organization and should not be exempt from generating the ultimate return…revenue.
CEOs, especially those who’ve funded the company with their own money, want a return on their investment. It’s like owning a share of stock. If it doesn’t produce a return, it gets sold and onto the next one. If the investment in your sales compensation plan of your sales organization isn’t generating a healthy ROI, get ready to be sold.
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