Measuring Sales Quality
Measuring Sales Quality is Tough!
We’ve all experienced the pain of “bad” sales. Indeed, not EVERY sale is a good, profitable sale or a good match with customer needs! It’s also said “we get what we inspect.” So, if we don’t measure sales quality, how can we ensure we get the long- term benefits (e.g. more repeat sales, higher profit margins)?
Often lost in our sales measurement systems is the fine art of measuring sales quality, a factor that can have a major impact on customer satisfaction and future sales results. While our focus on the “sales numbers” can indeed increase sales, a decline in sales quality (e.g. over promising to get orders, rushing deliveries causing product quality issues, selling customers items they didn’t need) may occur and can lead to long-term sales declines.
In the longer run, these very sales quality issues can lead to suboptimal results, which in turn causes a vicious quantity-quality cycle. This cycle has the potential to cause a downward sales spiral. Several enlightened firms are finding a balance between sales quantity and quality in order to achieve sales results and the long-term results customer retention.
Defining “sales quality” is clearly a management function, perhaps with input from employees. What constitutes a quality sale? Should there be a well-defined sales process that salespeople are motivated to follow? And how would a firm quickly determine shifts in sales quality? Does the firm understand the costs of a low-quality sale (e.g. higher product return rates, increased credits and refunds or a noticeable lack of repeat orders)?
Sales Quality Issues
Below are some examples of measurements and trends that can indicate sales quality issues:
1). The percentage of forecasted sales that close within the expected time frame is declining
2). Line items per order (or the dollar value) are decreasing
3). The percentage of customers placing repeat orders is decreasing
4) Gross margins are declining while instances of discounting are on the rise
5). Overall market share is declining even though sales are increasing
6). The percentage of customers who complain each year is increasing
7). The percentage of revenues generated from new (versus existing) clients is declining
8). The percentage of on time and accurate shipments has been decreasing
9). Product mix objectives are not being met
10). Undesirable salesperson turnover has increased while sales quality has decreased
Particularly during tough times when many markets are simply not growing, enlightened firms are expanding their market shares by redoubling their efforts to ensure their customers have a high-quality experience. Without a doubt, both sales quality and quantity are predictors of success and need to be continuously monitored to ensure optimal and sustainable results.
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