Key indicators to start a real "Sales Ops" strategy - Part 1

A few weeks ago, in our article "Sales Operations: The New Ally to Boost Your Numbers and Teams," we discussed this emerging concept. According to LinkedIn's "State of Sales Operations 2021" report, the number of Sales Operations Manager positions increased by 38% between 2018 and 2020.

As a reminder, the main mission of Sales Ops is to focus on optimizing internal processes, particularly:

Redefine sales objectives
Adopting new systems, tools, and technologies to support the sales effort.
Analyze data to identify trends and areas for improvement in the company
Establish and refine the lead generation strategy
Automating prospecting by implementing the right tools and processes, for example, by personalizing sequences or harmonizing email templates.
Automating recurring tasks such as CRM entries, reports, email reminders, etc.
Harmonizing sales practices and assisting with the recruitment of sales forces.

But how do you know if your sales team is functioning correctly? How do you evaluate your actions?

In this article, we will explain how to measure your results using the main KPIs (Key Performance Indicators) used by Sales Ops. These KPIs are divided into 5 categories, and we will only cover the first two in this article: KPIs for analyzing your CRM and KPIs for analyzing your sales funnel.

1/ Your CRM hides essential KPIs

This first part focuses on the indicators that 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 KPIs are still essential, they will probably just be a little more complicated to extract and/or analyze.

Thanks to these KPIs, you will be able to better manage your customer pipeline and better target your future prospects.

The Average Deal Value says more than you think...

Your average deal value represents the average amount of money your company earns per closed deal. Considering that all your customers are not the same, the average deal value tells you how much the average customer spends on your company's services.

Increasing the "Average Deal Value" can therefore be a powerful lever for developing turnover but also margin. You still have to know this average basket!

For packaging manufacturers who do custom work and therefore price studies, it is particularly interesting to compare this indicator to the "Average Quote Value".

For example, on HIPE, by cross-referencing your Project, configuration (*), and customer Company data, you can quickly obtain the measurement of these two indicators.

Let's imagine that the Average Deal Value is around €2500 and the Average Quoted Amount is around €3200.

Many questions arise when having visibility on these 2 figures:

Is it in line with your positioning and your strategy?
Is it in line with your machine park (equipment, rates, etc.)?

Even more, you can also analyze from there:

These indicators per salesperson in the company
The volatility of the average order value and the total quoted amount
The average order value by customer type and order type
The volume of orders placed per customer account over the past few years
The average quoted vs. ordered amount for each customer
Analyze the gap between the quoted amount and the average order value

In our illustration on your right, it is interesting to see that Sales Rep A is the only sales rep below the company's average order value.

How can we explain and then model Sales Rep C's outperformance?
What unique methods and processes can they share with Sales Rep A? ?

(*) This analysis is only possible with the "Pricing" module of HIPE.

Regarding the 6th point (analyzing the gap between the quoted amount and the average order value), HIPE is a very powerful tool because it allows you to concretely analyze the "market" positioning of your industrial equipment.

Indeed, each quote and each order corresponds to a manufacturing process with measured usage times. You can draw some very interesting conclusions from this, for example:

For printing,
For cutting,
For folding-gluing, ...
... which machines are selected and what is their correlation with your conversion rate?

The art of closing a sale, or the Close Rate

A sales rep's close rate is therefore a simple percentage, which nevertheless says a lot. It indicates the percentage of deals that your sales rep has closed, compared to the total number of deals opened. It can also indicate the percentage of prospects that your sales rep has converted into customers if you only consider new deals.

The formula to calculate the Close Rate is therefore very simple:

The closing rate is particularly important when your objective is to increase the prospect-to-customer ratio.

This indicator is relatively simple to maintain with HIPE.

For example, on HIPE, by cross-referencing your Projects, configurations (*) and number of client Companies, you can understand each of your sales representatives' (internal or external, such as sales representatives) closing rate.

However, this indicator alone can be misleading. It should therefore be analyzed taking into account the number of opportunities (Projects in HIPE) declared. Some sales representatives will tend to only declare very mature Projects, while others will declare all opportunities, including those they estimate before customer meetings, without a real prior request from the latter (which can be a good practice for the budget that a sales representative gives himself on his client base or as part of his commercial monitoring of each of his client accounts).

In any case, analyzing and helping your sales representatives increase their closing rate will lead to an increase in your conversion rate (which we will see below), thus increasing your turnover and profitability per sales representative.

The Upsell Rate

The upsell rate of a sales agent indicates how often a customer ends up buying more than they initially planned. This can also be referred to as upselling.

You may think that upselling is not particularly relevant to your company. However, every company should offer upsells, whether during the sale or after a customer has made a purchase.

Upselling is an excellent way to increase your company's profitability. Best of all, it generally involves little to no additional marketing or sales costs. A high upsell rate will drastically increase your average order value.

Remember that you have a 60 to 70% chance of selling to an existing customer, but that this figure is only 5 to 20% for new customers. It is therefore much easier to sell and increase turnover on the existing customer base rather than creating a new one. It is also important to develop your upselling strategy and know how to measure your upsell rate in order to improve it.

If you are still not convinced, consider that – especially in our custom industry – no (good) sales representative wants to be a mere intermediary or a mailbox between the customer and the Design Office. They want to offer customers larger quantities to lower the unit price of an order while increasing the order value, alternative configurations with more premium, more eco-designed papers and cardboards, packaging solutions with higher added value (design, printing, finishing).

By analyzing the history of configurations for each Project, you can work with your sales representatives to identify which ones correspond to the initial customer brief versus those that come from them, and the conversion rates according to their "origin".

Imagine a table like the one shown on your right:

We could even go further to see the upsell on Projects converted into orders (second table):

With these indicators, you already have a measure of your sales representatives' activity: Who offers "upsells" more often? Who converts more with their counter-proposal? …

You can also analyze on which parameters your teams have taken action:

Re-design of the packaging: change of packaging solution
Modification of construction options: adding a gluing strip, proposing a box structure for customer mechanization (deflector offset, beveled flaps)
Modification of the paperboard choice: more premium, more eco-designed (FSC)...
Modification/additions of decorations: choosing digital for adding variable data, proposing hot stamping to increase the premium feel of the packaging...
Modifications / additions of finishes and embellishments: adding a screen-printed varnish, choosing a soft-touch lamination instead of a matte UV varnish...

Examining your upsell conversion rates and comparing them with industry average conversion rates and your previous rates can give you important insights.

For example, if your upsell rate is high, it shows that customers are very interested in your complementary products. This indicates that you could probably increase their price without losing too many sales. Wouldn't that be a simple way to increase your profits?

On the other hand, if the conversion rate of your upsell proposals is low, it may mean that your complementary products are too expensive or simply a lack of interest for your customers. You may want to:

Reduce their price to make more sales,
Suggest other complementary products instead.
Conduct market research to see which complementary products your customers would like.

What about the downsell rate?

We could even analyze the 'downsell,' which is the inverse measure of a smaller order in terms of revenue than the initial request quantified by the customer.

Does having a high 'downsell' rate demonstrate underperformance?

Again, you can obtain all the source data for analysis from HIPE by cross-referencing your technical configuration data, Projects, and customer information:

It's an underperformance if:

Your commercial strategy is aligned with your industrial capacity and your positioning. In other words, if you want to increase your average order value and your equipment is suitable for this. And yet the sales representatives are 'under-selling'. A customer makes a request for 3000 pieces and the final order is finally at 2000. Why?
Is your production cost calculation in line with your machine capacity? Do your quotes show an unjustified 'surcharge'? Which parameters need to be adjusted to eliminate the 'downsell'?

It's not an underperformance if:

Your sales representatives, accompanied by their technical contacts (methods, quotes), carefully analyze customer requests and propose more tailored solutions, with thinner but equally resistant paper/cardboard for the customer's needs.
They offer smaller quantities to avoid customer overstocking and increase their satisfaction while increasing the number of replenishments.

2/ Your sales funnel is measured and optimized

Your sales funnel shapes your customer journey. To put it simply, it attracts your potential prospects, interacts with them, and ultimately deploys your sales tactics in the hope of converting them.

Another term for the sales funnel would be 'customer pipeline'. The measurements of this pipeline give you an overview of how your marketing positioning and your sales process as a whole are functioning.

Thanks to its key performance indicators, you will discover which steps of your customer journey could be streamlined or better calibrated.

Your Pipeline Forecast

Your pipeline forecast is a quarterly projection of the health of your sales funnel. Each sales representative must 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, based on sales history, market trends, and the current state of the sales pipeline.

With HIPE, your sales representatives centralize all their customers' packaging Projects:

Projects without configuration: pure and simple projection (next year's budget for each customer based on information collected on the current year)
Projects with still imprecise configurations
Projects with configurations ready to be ordered
Projects with firm orders, recorded from your website, via the HIPE configurator

By using the opportunity amounts and due dates per Project, you can simply and quickly have your revenue projection each quarter for the current quarter/semester/year.

Open opportunities

In your sales process, "opportunities" refer to ongoing deals. An open opportunity is a project with sales potential that has not yet been committed to. This is the earliest stage of a project.

The ratio between generated leads and open opportunities indicates the effectiveness of your prospecting strategy's targeting. The total number of open opportunities helps you forecast sales.

Via the Project statuses in HIPE, you can filter "open" and "in progress" Projects to measure the number of open or in-progress opportunities – which also serves as an indicator for the previous point.

When there are many open opportunities, a sales team may need to refocus to better distribute lead acquisition tasks. If open opportunities are left unattended, the team risks missing them altogether.

Win Rate

The win rate is the ratio between the number of closed and won deals and the total number of deals opened 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 win rate of 20%.

For example, you can try to maximize your win rate for customer recall campaigns (e.g., for reorders) for which you should expect a high transaction probability. The win rate then becomes a valuable indicator of your customers' satisfaction with their latest orders from you.

Conversely, a low win rate should not be blamed in the context of new leads/projects. Therefore, all these percentages should not be analyzed in the same way. You would not compare reorders with new projects.

Another use case: you can use the win rate to determine which periods, sales representatives, and reasons for winning/losing produce the highest probability of a prospect becoming a customer for the company.

There is a simple formula to calculate your win rate:

In HIPE, you can obviously 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 meeting, has seen a quote, and ultimately decides not to buy from you or one of your competitors, this contact will be taken into account in your win rate.

Other manufacturers divide the wins only by the number of prospects who have made a purchase decision – which means that only prospects who decide to go (or stay) with a competitor count as losses compared to wins.

In our sector, these situations can make sense. However, the key here is to be consistent in choosing which accounts and projects are and are not included in the calculation of your win rate (see our reorder vs. new project example).

For a good Sales Op strategy, the most important thing is:

To analyze the win/loss rate by criteria and clearly define the reasons for losses. For example, analyzing the win rate per representative can help you identify representatives who need more in-depth sales training.
To clearly define the next steps. By defining and clarifying the next steps in the sales process, you increase your chances of closing the sale.
To involve your customers/prospects as much as possible. One way to improve the win rate is by ensuring that the decision-maker is involved in the process from the start of the project. By involving the right people from the start, you send more qualified prospects into the pipeline.
Not to make assumptions. Identify their packaging needs and your ability to satisfy those needs.

To finish on a high note

As you have surely realized, not all the key KPIs that Sales Ops follows and improves are presented in this article. We are preparing the continuation of the key indicators to start a real “Sales Ops” strategy in an article that we will share with you in about ten days.

But above all:

We are organizing a webinar “Sales Ops: Boost your sales strategy” on Tuesday, March 7 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 had 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 advantage if you decide to apply them in your company.

Each month, we try to bring original and relevant content to our industry. Your presence at this webinar means a lot to us:

Key indicators to start a real “Sales Ops” strategy – Part 1

Key indicators to start a real "Sales Ops" strategy - Part 1

1/ Your CRM hides essential KPIs

The Average Deal Value says more than you think...