Key indicators for starting a real "Sales Ops" strategy - Part 2

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Key indicators for starting a real Sales Ops strategy - Part 2

As we saw in our first part, but measuring your results using the main KPIs (Key Performance Indicators) used by Sales Ops can enable a complete optimization of your entire sales process.

If you're not up to date with what "Sales Ops" is or with Part 1 of this article, we suggest you start reading with : " sales operations, the new ally for boosting your numbers and your teams "before moving on to the first part of " key indicators for starting a real "Sales Ops" strategy ".

A few weeks ago, we asked ourselves:

  • How could managers know if their sales teams were working properly?
  • How do you assess them?

     

And we gave you the beginnings of an answer by telling you about the first 2 categories (out of 5) of KPIs to measure to kick-start your Sales Ops strategy. These KPIs concerned :

  • Your CRM, hiding essential KPIs

  • Your sales funnel and possible optimizations

So we're going to look at the next 3:

  • Procedure indicators,

  • Sales resource KPIs,

  • Financial KPIs. 

1/ Process Metrics

In the context of sales operations, process or procedural metrics assess the effectiveness and efficiency of your sales process, or of a specific stage in that process. The key performance indicators (KPIs) in this section serve as benchmarks to indicate which processes need to be optimized, improved or abandoned.

By regularly evaluating these metrics, you can identify bottlenecks and inefficiencies in your sales process, then implement improvements to enhance their efficiency and profitability.

Your sales teams may sometimes use different processes (and this is particularly true in the converting and printing of cardboard packaging). So it's a good idea to choose the right KPIs for each specific procedure used by the team.

 

Sales Cycle Length (SCL)

The length (or duration) of the sales cycle indicates how long it takes - on average - to go through all the stages of the sales cycle. These stages can include :

  • Data enrichment
  • Approaching prospects
  • Lead generation
  • Sales calls, videoconferences and meetings with prospects/customers
  • The conclusion of the case

Or even more, but it's often possible to streamline your sales cycle by reducing the total number of actions.

If you want to reduce the length of your sales cycle, it can also be interesting to track the number of contact points your sales teams typically have with a prospect before they set up an appointment.

With HIPE, you can easily measure the length of your sales cycle because you have access to :

  • Project opening date, 
  • Dates ofsales tasks(calls, prospect/client emails),
  • Data collection and configuration dates, 
  • The date on which the order was placed (Project won and/or Configuration won), 
  • The date on which the order was placed in "Production".

If you have a marketing team, you can even analyze customer-directed marketing actions (newsletters, trade shows, acquisition via the website) and obtain information that complements those of thesalesaction.

Ultimately, sales cycle time analysis is measured in terms of these key stages for you:

  • Prospect/customer acquisition/identification,
  • Opening a customer account,
  • Opening a Project,
  • Opening aninitialcollection / configuration,
  • Discussions: mock-ups, reconfigurations,
  • Ordering,
  • Validation of final elements, including graphics (BAT),
  • Going into production.

Lead generation (marketing vs. sales)

It's important to know your lead generation ratio, because it tells you where your leads come from. Is it thanks to your marketing actions (a trade show, for example) or the sales team?

B2C companies rely heavily on marketing to generate a higher percentage of leads. 

On the other hand, B2B companies often find it useful to invest in leads generated by sales , and don't always have a marketing team to speak of (which is probably the case for you).

In B2B, it's best to focus your marketing on your brand identity and make it easier to find (especially in SEO and keyword buying).

This is all the more true in our industry... Having said that, you need to know what is the right acquisition strategy to implement for industrial B2B: you need to know how many leads are coming in and through which channel.

With HIPEyou can find out :

What configurations/projects have been created by your prospects and customers that have never been "onboarded" by your sales force?

  • You need to distinguish between prospects/customers who have not spoken to a sales rep to place an order or simply initiated an initial inquiry (first configuration), and customers/prospects who have been brought to HIPE by your sales reps.
  • The percentage of inbound leads generated by your marketing efforts therefore corresponds to the projects/configurations created by autonomous customers/prospects on HIPE (first request, subsequent projects after the first request).

All the other associated Projects (and configurations) therefore correspond to your percentage of inbound leads generated by your sales efforts.

 

With this indicator, you can measure the ROI (return on investment) of each acquisition channel (marketing or sales).

From hereyou can :

  1. Boost the ROI of each channel, like choosing, with the right information, to invest differently in them.
  2. Re-measure how your actions, new tools and processes have enabled you to achieve your strategic objectives, and iterate again.

Lead response time: a problem? 

We're talking about the time it takes one of your sales reps to respond to an identified prospect.

Identified prospects are those who accept sales solicitations by downloading white papers, subscribing to newsletters or completing surveys on landing pages.

Noting this response time can help you determine which segments of the sales cycle take the longest. It can also show you at what point in the sales cycle time investments are most profitable.

Your teams' response time to prospects and customers is a common pain point in the packaging industry, 

HIPE is a powerful generator of (highly) qualifiedleads when linked to a website.Whenyour prospects and customers use it independently, how long does it take you on average to receive and process a new request ?

With HIPE, from the creation of an incoming request by a prospect or customer, to its handling by thesalesrep, it's relatively simple to measure the time spent.

 

We find it particularly interesting to analyze this indicator in conjunction with your conversion rate. You should find thata low lead response time correlates with a higher conversion rate.

Other "response times" can be measured when you go down the funnel of a packaging manufacturer:

  • Feasibility study and/or quotation time
  • Mock-up management time: from initial request to production, shipping, delivery to customer, follow-up by sales and customer feedback (positive or negative).
  • Production management time: after approval of the quotation, finalization of the elements, especially the graphics, to launch production.

In fact, when HIPE produces quotes in real time, it also helps to reduce quote response time, which we feel is a real pain point for customers in our industry.

Be precise about your sales forecasts (Sales Forecast Accuracy)

The sales forecast gives you the big picture. It tells you how close a sales manager's projections are to the exact sales figures after the fact. The best sales forecasts take into account both internal and market data.
Accurate sales forecasts are necessary for effective downstream decision-making. Analysis software, accurate input data and rationality can all improve the accuracy of sales forecasts.

The " Pipeline Forecast" KPI must itself be measured in terms of the accuracy it can be expected to deliver.

For example, by comparing initial and actual forecasts on a quarter-by-quarter basis, you can identify the biases and factors that generatethe biggestdiscrepancies .

By eliminating them, you improve your future visibility of your business and make betterdecisions.

With HIPE, we explained how togenerate the pipeline forecast.

You can, of course, consolidate orders by quarter by filtering your "ordered " configurations over the chosen period.

All you have to do is keep this analysis up to date and measure anydiscrepancies.

2/ Sales resource KPIs

KPIs enable operations managers to evaluate a sales team from a more personal point of view. Human resources are a key partner in these assessments.

Poor sales resource performance (indicated by the following KPIs) tells the company that it needs to rethink its approach to recruiting, training and incentivizing sales reps.

In terms of Sales Efficiency

Sales efficiency indicates how much revenue a sales team generates per euro invested.

To determine sales efficiency, all selling expenses for a given quarter must be added together. These include :

  • Recruitment,
  • Training,
  • Overheads,
  • Salaries,
  • Compensation and bonuses,
  • Sales team travel expenses, 
  • Sales management software (and other tools),
  • Sales-related marketing expenditure

Next, add up the total revenue generated by the sales team during that quarter. Finally, take the sum of revenues and divide it by the sum of expenses.

This figure shows you the sales team's return on investment per euro and per quarter.

In our B2B custom-built industry (cardboard converters, cardboard boxes, etc.), where the sales effort often (if not always) exceeds the marketing effort by far, it is crucial to monitor this indicator.

For a cardboard plant, we consider it essential to extend the evaluation of expenses to all sales-related teams, based on the proportion of these teams' time dedicated to the commercial effort of placing orders, i.e. :

  • Sales administration
  • The quote
  • The Design Office

Admittedly, it is likely that these "sales support" teams spend a significant part of their time structuring production methods and supporting the production effort: so only count the expenses in proportion to the time spent managing customer/prospect requests, creating files, making quotations, studies, mock-ups...

All the more so as soon as you implement Sales Ops best practices, as this indicator will also enable you to measure the ROI of your Sales Ops.

For example, imagine :

  • Your sales for the quarter totaled 3 million euros. 
  • Your "sales" expenses for one quarter amount to €300,000. To which you need to add the pro rata of the "support" teams: €300,000 again.
  • Your sales efficiency ratio is therefore 5 euros of sales for every euro invested in your sales effort.

Track this indicator every quarter, and measure its evolution in comparison with the previous year to understand seasonality. With the best practices of the Sales Ops concept, you should be able to significantly improve this indicator.

Turnover rate of your sales team (Sales Agent Turnover Rate)

Employee turnover is a growing reality in today's world. Research organization Gartner predicts that total annual employee turnover will be 20% higher this year than last.

And this applies to all sectors...

Staff turnover can be costly. Every time a sales representative leaves, the company has to spend time and money hiring and training a replacement. 

This is especially trueforconverters of cardboard packaging,and more generally for packaging manufacturers.A sales representative must :

  1. Be a "good " salesperson,
  2. A fairly advanced technical knowledge ofpackaging,
  3. Understand your customers' marketing and supply chain challenges,
  4. Be comfortable with complex sales and time-consuming processes to close the sale of customized andmade-to-measurepackaging

The alternative would be to shift this employee's workload onto the other sales agents. But this could lead to even greater turnover in the long term.

To calculate the turnover rate of your sales agents : 

As with the previous indicator, we recommend extending this analysis to "sales support" functions.

Imagine that your team consists of 6 sales representatives, 3 sales administrators, 2 currency traders and 2 design engineersin2022. That's 13 people.

In 2023, a junior salesperson joins the team, but another salesperson retires and 1 salesperson resigns. Your turnover rate is therefore 2/(13+1) = 14%.

Note We believe that this indicator only makes sense forverylarge companies with sales teams of over 50 people. Below this level, "exceptional " items such asretirementsmay confound the analysis of this indicator.

  • For SMIs (small and medium-sized industries), measure the level of satisfaction of your teams.quipes via internalFor small and medium-sized industries, we feel that it would be more appropriate to measure staff satisfaction via internal surveys or the sick leave rate in relation to the number of days worked.

3/ Financial KPIs

Financial KPIs concern the sales team's impact on the bottom line. They show the sales manager how his sales force is closing deals and how much they're worth. These indicators are very concrete!

Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV) literally means " Customer Lifetime Value ". This indicator shows the average profit generated by a customer, not on a single transaction, but throughout his or her relationship with the company, from the first order to the end of the collaboration.

Customers with a higher budget or greater brand loyalty have a higher CLV.

To determine the CLV :

  1. Measure your retention rate: this is the proportion of customers who place orders with you from one period to the next,
  2. Determine the "lifetime" of your customers,
  3. Identify your customers' average basket and purchase frequency

Finally, CLV is :

Let's take an example with HIPE by cross-referencing your Company and Project information:

  • You can determine when the customer placed his first order and when he placed his last order, before leaving you: because he found another packaging supplier, because he filed for bankruptcy or for any other reason.
  • In the example below, by cross-referencing your "Configurations" and "Projects" information, you determine that this customer brought you €17,000 between December 07, 2021 and January 10, 2023, the date at which you know he will no longer recommend your company - i.e. 14 months of activity.
  • The Customer Life Value (CLV) of this customer is therefore €17,000 and the monthly CLV is €1,214.

By exporting your complete data, and analyzing the "lost" customers, you can obtain this figure on average for all your customers and classify your customers :

  • Strategies (above VVC or monthly VVC)
  • Typical (average) customers
  • Non-strategic customers (below VVC)

 

And bring a very different analysis, strategy and actions according to this reading grid...

Your users' churn rate (Customer Churn Rate)

This is the percentage of customers who leave the service you offer after a given period. This period can be monthly, quarterly or annually. A low churn rate indicates that you are retaining more customers, whilea high churn rate is not a good sign as it means you are losing revenue by not generating quality leads.

Here again, with HIPE, and using the same data export as for the previous analysis, you can determine each year: which is your active customer base (for example, customers who have placed at least 1 order) and which are the active customers from theprevious year.

Let's say you have 750 active customers in 2022, and 120 active customers in 2021 are no longer active in 2022. This gives a churn rate of 16%.

The aim, once this data has been structured and analyzed, is to lower this rate, which in turn increases customer loyalty.

To do this, you'll need to call on your sales team to analyze each customer case, provide a qualitative response, and then structure the cases that explain the attrition:

  • Filing for bankruptcy,
  • An internal desire to stop working with the customer (poor payer, non-strategic customer who requires a lot of studies and estimates and orders little or nothing),
  • Loss vs. competition due to poor service quality,
  • Loss vs. competition due to poor price positioning
  • Loss vs. competition due to failure to meet production deadlines,
  • Loss vs. competition due to non-compliance with manufacturing problems,
  • ...

From then on, you'll have a clear view of the actions to be taken, and the tools and processes to be put in place to deal with each case.

A few examples?

  • Internal desire to stop working with the customer: bad payer. In this case, you can better analyze customer information before listing them, and request down payments or payments on order above certain financial thresholds.
  •  
  • Loss vs. competition due to poor service quality (response time). In this case, analyze and understand the steps that take too much time internally, streamline information (from request to response), provide a tool and processes that reduce response times by reducing the team's workload (HIPE for example).

Customer Acquisition Cost (CAC)

Customer acquisition cost (CAC) tells you the average amount your company spends to acquire a new customer. It starts with the sum of several costs over a given period, including :

  • Marketing and advertising campaign costs,
  • Costs of CRM, website, E-Commerce or HIPE tools
  • Salaries and overheads for the extended sales team (*)
  • Marketing team salaries and overheads

(*) : including the relevant ratio of Sales Administration, Cost Estimation and Research Department teams when they contribute to the acquisition of a new customer.

Once you have this amount, divide it by the number of new customers acquired during this period. This gives :

NOTE A subset of the cost of acquiring a customer is the cost per lead (CPL).

Let's take the example of the KPI "Sales Agent Turnover Rate". Your team is made up of : 6 sales agents, 3 sales administrators, 2 currency traders, 2 design engineers and 1 marketing manager in 2022.

If you value the salaries and associated costs of the sales and marketing team, plus the share of other people's salaries in proportion to the time spent on the sales effort to acquire a new customer, you get an expenditure of €300,000 over the year.

Over the year, you gained 450 new customers.

Your Customer Acquisition Cost is therefore €6,666 per customer.

High or low? Only an analysis of this indicator in relation to the VVC indicator can help you answer this question.

You therefore need to calculate your VVC/CAC ratio, as it shows the long-term viability of your business, while also indicating whether your acquisition costs to convert new customers are too high.

Some market indicators :

  • A 1:1 ratio means that you spend as much to acquire a new customer as they bring in over their lifetime with you. The more you invest in acquiring new customers, the more money you lose. 
  • A 3:1 ratio is probably a sign of strong growth for your company. 
  • A 4:1 ratio is proof of an excellent business model.

Customer Management Cost (CMC)

For us, this indicator is also a relevantfinancialanalysis tool for your sales performance, as it is not limited to the cost ofacquisition. It includes allyour marketing and sales expenses, including those of your support teams (sales administration, quotations, engineering). 

Let's go back to the previous example. Your team consists of : 6 sales representatives, 3 sales administrators, 2 currency traders, 2 design engineers and 1 marketing manager in 2022.

By valuing the salaries and associated costs of the sales and marketing team, plus the share of other people's salaries in proportion to the time spent on the complete sales effort this time, you spend €1,000,000 over theyear.

You have 750 active customers, including those acquired during theyear.

The CMC is therefore €1,333.

By deducting the share of expenses linked to pure acquisition, you can then check how much aloyalcustomer really costs you.

Taking out the 45 new customers, youhave705 active customers on whom you spent €700 ,000 over the year. Thisloyalcustomer base has a CMC of €992, almost 7 times less than the acquisition of a new customer.

In this example, it's clearly more profitable to build customer loyalty than to attract new ones.

In all cases, you need to acquiremore new customers than you lose (attrition) to guarantee your business development, at constant CVV.

To sum up

Streamlining sales operations with HIPE will not only save you time, but also improve your KPIs.

It'sapowerful tool, implemented within the framework of your company's 5 pillars: strategy, people, data, processes and tools. 

By the way:

  • HIPE vs.strategy: a customizable tool to support yourstrategy > modules according to strategy (ecommerce, cofn to accelerate and improve studies, intranet with prices for sales reps, etc.),
  • HIPE vs. people : designedfor trade and trade flow management - the solution's main users in fine,
  • HIPE vs datas: HIPE collects millions of structured dataitems, which then need to be analyzed and tracked,
  • HIPE vs. process: HIPE mustbe designedin line with your processes. It can either conform to them, or challenge them to better serve yourstrategy ,
  • HIPE vs tools: HIPE is a tool. And onlyatool. You can only use it if you implement it in phase with the other 4 pillars.

 

Sales operations are complex. But they don't have to be overwhelming.

Track your progress with a wide range of key performance indicators for sales operations with HIPE: Improve, strengthen and optimize your sales approach.

Want to know what HIPE can do for you? Contact our experts today.

Did you like this article? Would you like to know more?

__________________________

Meet us on Tuesday, March 07 at 5:00 pm for our webinar "Sales Ops: Boost your sales strategy" with our two special 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:

I'm in!

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