How to measure and improve the effectiveness of your sales process?
6 minutes read
A sales process is a set of repeatable steps that a salesperson takes to take a prospective buyer from the early stage of awareness to a closed sale. Typically, a sales process consists of 5-7 steps: Prospecting, Preparation, Approach, Presentation, Handling objections, Closing, and Follow-up.
A well-created and implemented sales process clearly defines various stages of sales, right from how a prospect goes from being an email address in the CRM to a paying customer. This facilitates a road map for the sales reps to achieve sales success.
Various studies also indicate that a well-implemented sales process delivers the following benefits:
Reduces sales cycle length by 20%. A cycle of three months would be reduced by 18 days.
Improves win rate by 24%. A win rate of 25% would improve to 31%.
Increases average sale price (ASP) by 15%. An ASP of $250k increases to $287k.
But how do you actually go about measuring the effectiveness of the sales process? Here are some metrics that you should take into account while measuring the effectiveness of your sales process.
Metrics to measure the effectiveness of the sales process
1. Process Utilization
For a process to be successful, it must be adopted and used by the people. Lack of adoption and utilization of the sales process might result from the following reasons,
Your salespeople feel that the process is too complicated and do not understand it completely
They feel that the process is time-consuming
They are not well versed with using the tools that need to be used as a part of this process
2. Forecast Accuracy
Sales forecast accuracy is another important measure of an effective sales process. You need to check how accurately are your salespeople forecasting about,
The sales pipeline
The number of products that would be sold over a period of time
The amount of revenue that is going to be generated over a period of time
3. Sales Cycle Length
Sales cycle length is the amount of time it takes for the opportunities to move through all the stages of the sales process. A good sales process is that which does not have any friction or extra sales cycles in it. As a result, it drives the opportunities faster through all the stages. And hence the sales cycles will be shorter.
Pro-tip: You can also measure the amount of time it is taking for the opportunities at each stage. Assign a realistic average time for each stage in the sales process and then see if each prospect progresses through the stages in the expected time.
4. Close Rates
Close rate is the number of deals that your sales reps close over a period of time. Now as discussed earlier, a good sales process improves the forecast accuracy and shortens the sales cycle length. And this, in turn, results in your sales reps closing more deals faster. So, keep a track and see if your team’s close rate has increased with the sales process.
5. Deal Size
If your deal sizes/ sales prices are increasing then it is a strong indication that your process is,
Aligned with your buyers’ buying style
It is enabling your reps to provide value to your customers and drive bigger sales
And it is enabling the buyers to see the value in your brand, not the price
6. Pipeline Movement
Pipeline movement is a valuable measure of how dynamic your pipeline is. It simply keeps a check on the movement of the prospects to ensure that they are moving continuously within the pipeline.
Your pipeline’s movement might come to a halt because of one of the following reasons:
If you are working opportunities more slowly than you are generating them, you will end up with a backlog in your pipeline and may end up with stale opportunities. You’ll need to have a plan for nurturing those opportunities on a timely basis.
On the other hand, if you are constantly running out of leads, you have a generation problem. In this case, you need to scale up your prospecting.
Now, let’s say that you have measured these parameters and found that your sales process is not functioning very effectively. What can you do to improve it?
How to improve the effectiveness of your sales process?
Here are some measures that you can take to improve the sales process
Make the front-line sales reps understand the importance of operating in accordance with the sales process
Get the front-line sales managers to advocate the utilization of the process
Provide thorough training to the sales reps on the sales process and on the sales tools that they should be using at various steps
Conduct pipeline reviews regularly and instantly resolve any issues that arise
Encourage managers to closely observe their sales team’s progress and provide coaching to the reps on opportunities that are stalling.
Appreciate and reward people who adhere to the process efficiently and produce great results
Gather feedback from the sales reps on how the process can be improved
Want to learn how to select and implement the right sales methodology for your sales department?
Learn how to efficiently overcome prospects’ resistance
Learn how the sales enablement team play a crucial role in enhancing the customers’ engagement
Learn about the 6 buyer personas that every sales rep encounters and the best ways to deal with each of them
Published on Tue Jul 13 2021