Key indicators for starting a real Sales Ops strategy - Part 1
A few weeks ago, in our article " sales operations, the new ally for boosting your figures and your teams "According to LinkedIn's " State of Sales Operations 2021 " report, the number of Sales Operations Manager positions rose by 38% between 2018 and 2020.
As a reminder, Sales Ops' main mission is to focus on optimizing internal processes, and in particular :
- Redefine sales targets
- Adopt new systems, tools and technologies to support the sales effort
- Analyze data to identify company trends and areas for improvement
- Establish and refine your lead generation strategy
- Automate prospecting by implementing the right tools and processes, for example by personalizing sequences or harmonizing e-mail templates.
- Automate recurring tasks such as CRM data entry, reports, e-mail reminders, etc...
- Harmonize sales practices and help recruit sales forces.
But how do you know if your sales team is working properly? How can you evaluate your actions?
In this article, we'll explain how to measure your results using the main KPI's ( Key Performance Indicators ) used by Sales Ops. These KPI's fall into 5 categories, and we'll only cover the first two in this article: KPI's for analyzing your CRM and KPI's for analyzing your sales funnel.
1/ Your CRM hides essential KPIs
This first part focuses on the indicators you can extract by analyzing your CRM. As a reminder, CRM software helps you manage your interactions with your customers, leads and prospects by centralizing and analyzing your customer data to improve their satisfaction and maximize your sales. If you don't have a CRM, these KPI's are still essential, but they may be a little more complicated to produce and/or analyze.
Thanks to these KPI's, you'll be able to better manage your customer pipeline and better target your future prospects.
Average Deal Value says more than you think...
Your average basket represents the average amount of money your company earns per deal closed. Considering that not all your customers are the same, the average basket value tells you how much the average customer spends on your company's services.
Increasing the "Average Basket " can therefore be a powerful lever for boosting both sales and margins.But you need to know what that average basket is!
For packaging manufacturers who produce custom-madeproducts, and therefore carry out price studies, it is particularly interesting to compare this indicator with the Average Quote Value.
For example, on HIPEby cross-referencing your data on Projects, Configurations (*) and Customer Companies, you can quickly obtain measurements of these two indicators.
Let's imagine that the average basket is €2,500 and the average amount sold is around €3,200.
A number of questions arise when you have visibility of these 2 figures:
- Is it in line with your positioning and strategy?
- Is it in line with your machinery (equipment, production rates, etc.)?
What's more, you can also analyze from here:
- These indicators by company salesperson
- volatilityof the average basket and total amount bid
- Average basket by customer type and order type
- Order volume per customer account in recent years
- Average amount bid vs. ordered for each customer
- Analyze the difference between the estimated amount and the average basket
In our illustration on the right, it's interesting to see that Salesperson A is the only salesperson below the company's average basket.
- How can we explain and then model the outperformance of salesperson C?
- What unique methods and processes can he share with the A salesperson? ?
(*) this analysis is only possible with HIPE's "Price" module
On the 6th point (the analysis of the gap between the estimated amount and the average basket), HIPE is a very powerful tool, as it can enable you to concretely analyze the "market" positioning of your industrial equipment.
In fact, each quotation, each order corresponds to a manufacturing process, with the measurement of usage times. You can draw some very interesting conclusions, for example:
- For printing,
- For cutting,
- For folding and gluing, ...
- ... which machines are selected and how do they correlate with your conversion rate?
Other questions :
- Which operations/machines/subcontractors position you "negatively" in the market? If these operations, machines and subcontractors are generally less popular than your transformation rate, it's because they're too expensive, or because your know-how isn't recognized. These are just some of the ways in which you can adjust your industrial, equipment and purchasing strategy...
Ultimately, your work in Sales Operations will lead to :
- Align your strategy with real data
- Understanding and modeling success factors
- Adjust your internal processes and tools
All this, to increase your Average Basket in line with your strategy.
The art of closing a sale, or the Close Rate
A salesperson's closing rate is therefore a simple percentage, which nonetheless says a lot. It tells you the percentage of deals your sales rep has closed, in relation to the total number of deals opened. It can also tell you the percentage of prospects your sales rep has converted into a customer, if you only take new business into account.
The formula for calculating the Close Rate is very simple:
The closing rate isparticularlyimportant when your objective is to increase the lead/customer ratio.
This indicator is relatively simple to implement with HIPE.
For example, on HIPEfor example, by cross-referencing your Projects, your configurations (*) and your number of corporate customers, you can determine the closing rate for each of your sales reps (internal or external, such as sales reps).
However, this indicator alone can be misleading. It should therefore be analyzed taking into account the number ofopportunities(Projects in HIPE) declared. Some sales reps will tend to declare onlyverymature Projects, while others will declare all opportunities, including those they estimate in advance of customer meetings, without any real prior request from the latter (which can be a good practice for the budget a sales rep gives himself on his customer base or as part of his commercial follow-up of each of his customer accounts).
In any case, analyzing and helping your salesrepsto increase their close rate will lead to an increase in your conversion rate (which we'll look at below), and therefore higher sales and profitability per sales rep.
Upsell rate
A sales agent's upsell rate indicates the frequency with which a customer ends up buying more than he or she originally intended. It can also be referred to as upselling.
You may think that upselling isn't particularly relevant to your business. But every company needs to offer upsells, whether during the sale or after a customer has bought.
Up-selling is an excellent way to increase your company's profitability. And best of all, itusually entailslittle or no additional marketing or sales costs. A high upsell rate will drastically increase your average basket.
Remember that you have a 60-70% chance of selling to an existing customer, but this figure is only 5-20% for new customers. So it's much easier to sell and increase salesto your existing customer base than tocreate a new one. That's why it's so important to develop your upselling strategy and know how to measure yourupsellrate, so you can improve it.
If you're still not convinced, consider that - especially in our made-to-measure industry - no (good) salesperson wants to be a pass-through or a mailbox between the customer and the sales office.'Office. They want to offer customers larger quantities to bring down the pièce'order price while increasing sales.'sales, alternative configurations with higher-quality, more eco-friendly paper and cardboard, packaging solutions with higher added value (design, printing, finishing).
By analyzing the configuration history for each Project, you can work with your sales teams to identify which configurations correspond to the initial customer brief vs. those which come from them, and the transformation rates according to their " origin ".
Imagine a picture like the one on the right:
We could even go further to see the upsell on Projects transformed into orders (second table):
With these indicators, you already have a measure of your salespeople's activity: Who offers upsells more often? Who converts more with their counter-proposal? ...
You can also analyze which parameters your teams have acted on:
- Packaging redesign: change of packaging solution
- Modification of construction options: addition of a gluing strip, case structuring proposal for customer mechanization (slitter offset, beveled flaps).
- Change of paper-cardboard choice: more premium, more eco-designed (FSC)...
- Decoration modification/additions: choice of digital to add variable data, hot stamping to increase packaging premium...
- Modifications / additions of finishes and coatings: addition of a screen-printed varnish, choice of a soft-touch laminate instead of a matt UV varnish...
Examining your upsell conversion rates and comparing them with average industry conversion rates and past rates can give you important insights.
For example, if your upsell rate is high, this shows that customers areveryinterested in your complementary products. This means you could probably raise the price without losing too many sales. Wouldn't this be a simple way to increase yourprofits?
On the other hand, if the conversion rate of your upsell proposals is low, it could mean that your complementary products are too expensive or simply a lack of interest for your customers. You may want to :
- Reduce prices to increase sales,
- Offer other complementary products instead,
- Conduct market research to find out what complementary products your customers would like.
What about the downsell rate?
We could even analyze the "downsell", which is the opposite measure of an order that is less important in terms of sales than the initial request quantified by the customer.
Does a high downsell rate indicate underperformance?
Here again, you can obtain all the source data for the analysis from HIPE; by cross-referencing your technical configuration data, Projects and customer information:
- Your sales strategy is aligned with your industrial capacity and positioning. In other words, if you want to increase your average basket, and your equipment is adapted to do so. And yet, sales people are "underselling". A customer asks for 3,000 parts, but the final order is for 2,000. Why do they do this?
- Does your production cost calculation match your machine capacity? Do your quotations show unjustified "overpricing"? What parameters need to be adjusted to eliminate the downsell?
- Your sales representatives, accompanied by their technical advisors (methods, quotations), analyze customer requests in detail and propose more tailored solutions, with paper/cardboard that is thinner but just as resistant to the customer's needs.
- They offer smaller quantities to avoid overstocking and increase customer satisfaction, while increasing the number of replenishments.
2/ Your Sales Funnel can be measured and optimized
Your sales funnel shapes your customer journey. Simply put, it attracts your potential prospects, interacts with them, and finally deploys your sales tactics in the hope of converting them.
Another term for the sales funnel would be "customer pipeline". Measuring this pipeline gives you an overview of how your marketing positioning andoverall sales process is working.
Thanks to its key performance indicators, you'll discover which stages of your customer journey could be streamlined or better calibrated.
Customer Pipeline Forecast
Your pipeline forecast is a quarterly projection of the health of your sales funnel. Each salesperson needs to estimate how many prospects they will negotiate deals with, and what percentage of deals are likely to close. To do this, they will use the total number of open sales opportunities, as well as sales history, market trends and the current state of the sales pipeline.
With HIPE, your sales representatives can centralize all their customers' packaging projects:
- Projects without configuration: pure and simple projection (next year's budget for each customer based on information gathered over the current year).
- Projects with unclear configurations
- Projects with ready-to-order configurations
- Projects with firm orders, booked from your website via the HIPE configurator
Using the opportunity amounts and due dates per Project, you can quickly and easily get your projected sales each quarter for the current quarter/semester/year.
Open opportunities
In your sales process, "opportunities" are deals in progress. An open opportunity is a project with sales potential that has not yet been committed to. This is the earliest phase of a project.
The ratio between leads generated and opportunities opened tells you how effectively your prospecting strategy has been targeted. The total number of open opportunities helps you forecast sales.
Via Project statuses in HIPE, you can filter Projects "open " and "in progress " to measure the number ofopportunitiesopen or in progress - which you can also use for the previous indicator.
When there are a lot of open opportunities, a sales team may need to reorient itself to better distribute lead acquisition tasks. If open opportunities are left to languish, the team risks missing them altogether.
Win rate
The success rate is the ratio between the number of closed and won deals and the total number of open deals in the pipeline.
For example, suppose your sales funnel generates forty-five leads. At the end of the funnel, the sales team has closed nine deals. Your team has a 20% success rate.
You can, for example, try to maximize your win rate for customer reminder campaigns (e.g. for restocking) for which you need to expect a high transaction chance. The win rate then becomes a valuable indicator of your customers' satisfaction with their latest orders with you.
Conversely, a low win rate is not to blame when it comes to new prospects/projects. All these percentages should not be analyzed in the same way. You won't be comparing repeat business with new projects.
In another application, you can use the win rate to determine which periods, which sales representatives and which win/loss reasons produce the highest probability of a prospect becoming a customer for the company.
There's a simple formula for calculating your win rate:
In HIPEyou can of course extract all this data.
In the packaging industry, some companies choose to include the "No decision" category in their win/loss rate measurement, which means that if a prospect has had a sales appointment, seen a quote and ultimately decides not to buy from you or one of your competitors, this contact will count towards your win rate.
Other manufacturers divide gains only by the number of prospects who have made a buying decision - meaning that only prospects who decide to go (or stay) with a competitor count as losses against gains.
In our industry, these situations can make sense. However, the key here is to be consistent in the choice of accounts and projects that are and are not included in the calculation of your rate of gain (see our example of re-approval vs. new project).
For a good Sales Op strategy, the most important thing is :
- Analyze win/loss rates by criteria and clearly define the reasons for losses. For example, analyzing the success rate per sales rep can help you identify those sales reps who need further sales training.
- Clearly define the next steps. By defining and clarifying the next steps in the sales process, you increase your chances of closing the sale.
- Involve your customers/prospects as much as possible. One way to improve the success rate is to ensure that the decision-maker is involved in the process right from the start of the project. By involving the right people from the outset, you send more qualified prospects into the pipeline.
- Don't make assumptions. Identify their packaging needs and your ability to meet those needs.
To finish on a high note
As you've probably realized, not all the key KPIs that Sales Ops track and improve are presented in this article. We're preparing the rest of the key indicators for starting a real "Sales Ops" strategy in an article we'll be sharing with you in about ten days' time.
But above all :
Nour is organizing a webinar "Sales Ops: Boost your sales strategy" on Tuesday, March 07 at 5:00 pm with two exceptional guests:
- Rogelio Cárdenas Arriola, Revenue Operations Manager at Splio
and
- Lyes Boukeroui, Head of Sales Operations at Uptoo
Two specialists in the field, working in hyper-growth companies where they have been able to make a real impact. We are convinced that their valuable advice will be more than useful to you, and that their ultra-optimized sales methodologies will give you a definite competitive edge if you decide to apply them to your business.
We try to bring original and relevant content to our industry every month, so your presence at this webinar means a lot to us: