Find your top sales performers

Say you have a bad feeling about one of your sales reps - you don't like the kind of tie he wears. The era of the novelty tie is long gone, you tell yourself. What planet is he on?

You don't like the way he sometimes sits at his desk and looks spaced out. 'Is he thinking or is he dreaming?' you ask yourself.

You don't like the long telephone conversations he has, the way he sometimes breaks into inane chortles when he has discussions with customers. You don't like the way he dithers into meetings fifteen minutes after everybody else.

So you ask yourself, 'Why am I employing this person? Is he more liability than asset?' Well, he may be, or he may not. You never know. You have to look at the numbers. If you find a way to shunt him out the front door, and you haven't looked at the numbers, you could conceivably have fired your top performer.

The crude performance indicators for a sales rep include:

sales volume in dollars;
number of calls made on customers;
number of new accounts developed; and
the amount of money used on entertaining customers.

These numbers are 'crude' because they require closer investigation to be useful. A high dollar figure for sales may look great but it may actually mask a net loss for your business - for example, their expenses may be very high or they have been landing deals based on steep discounts.

So the real indicator needs to be based on both the profit margin and the sales volume. A narrow margin may be fine, provided that the rep sells a high volume. A lower volume at a big margin may be fine too.

The number of customer calls can be an indicator, though it is less cut-and-dried than the dollar figures for sales. Some reps can sell effectively with fewer calls. They may work effectively on the phone and this may actually entail lower expenses for you.

The number of new accounts offers you a 'hard' indicator for sales performance, though you have to make some assessment of the quality of the accounts. Who are the accounts with, how much are they earning and what is their estimated earning potential in the future?

Your rep's customer entertainment budget will also offer a 'hard' indicator for sales performance. Though once again, you need to be confident that the dollar figure represents real performance. That is, that the money translates into sales.

Once you have the numbers, you can use them as a performance management tool. You can use them to set realistic targets. For example, you might start by analysing a rep's overall dollar profit (the sales volume in dollars, minus all their controllable costs and expenses).

You can further break that down into profit figures for specific industry sectors, geographic areas or account groups. You can then set targets for increasing that profit and assess progress on a quarterly basis (quarters being just long enough for you to get a sense of emerging trends). You can also keep track of costs. Try to set targets for controlling or reducing costs such as entertainment or travel expenses, while maintaining sales volume.

The bottom line is that the numbers are the most important things. If your sales rep has a penchant for tasteless novelty ties, but somehow seems to sell the highest dollar volume at the lowest expenses, think seriously before you meddle with him.

And if you'd like advice on calculating the real value that your sales reps provide, call your RAN ONE accountant. Ask us about an Activity Based Costing review to help you better understand what costs are driven by whom ... and the impact on your bottom line.

For more information contact your RAN ONE business professionals at
Academy of Business Excellence Limited