Salespeople are measured rigorously on many different factors, but sales managers are typically measured on end results alone. We know that successful sales managers play a significant role in the productivity and performance of their sales team. Why wouldn’t we invest in their development and ensure we have metrics that help them improve along the way to drive engagement and high performance?
Accurately measuring sales managers’ performance is critical to understanding the impact they have on your organization. There are many metrics; which ones will truly determine if they are adding value?
Leading and Lagging Indicators to Measure Sales Manager Performance
In measuring sales managers, it is helpful to think in terms of activity metrics, pipeline metrics and results metrics. Activity metrics and pipeline metrics are leading indicators, whereas results metrics are lagging indicators.
1. Activity Metrics
It’s helpful to look at proactivity: the number of “reach outs,” phone calls or emails by the sales manager’s team. You can also look at meeting activity, such as the number of introductory client meetings, follow-up meetings and how many proposals were sent as a result.
Even though it isn’t the sales manager performing these activities, these leading metrics are good indicators of how productive the sales team is under his or her leadership. The sales manager must hold the team accountable and therefore should be measured on how well it is doing.
Our most recent sales culture research revealed that the best sales organizations view sales management disciplines as a weekly activity, whereas average sales organizations see them as a monthly activity. Specifically, 60 percent of the best sales organizations have managers who hold weekly sales team meetings and weekly one-on-ones with their salespeople. Additionally, 50 percent of the best sales organizations have managers who accompany their salespeople on client calls on a weekly basis.
Strong coaching and feedback is critical to developing salespeople and helping sales teams achieve their activity goals.
2. Pipeline Metrics
When looking at pipeline metrics, it’s important to measure the number and volume of opportunities as well as the accuracy of the pipeline itself. How well is the pipeline predicting your future? Do you have a healthy pipeline that is a good indicator of results to come? Do you have a “false hope” pipeline that constantly says you’re going to have a great month or quarter, but then you don’t? Accuracy of pipeline is a priority metric that is important in measuring sales manager performance, because the manager’s role is to coach, guide and support pipeline input to ensure strong forecasting.
Which type of pipeline do you have?
3. Results Metrics
Results metrics, such as revenue, profit and won opportunities, are important lagging indicators, as they clarify your performance to plan and goals. One of the metrics to pay particular attention to is participation rate: the percentage of your salespeople who are at or above plan.
Great sales managers have high participation rates that lead them to over-plan performance. Average sales managers have a lower participation rate and must push a few of their salespeople to help them make their sales plans. Ineffective sales managers don’t hit plan, because they don’t have a strong participation rate.
Soft Metrics that Help Determine if a Sales Manager Is Adding Value
Leading and lagging indicators are important to measure sales manager performance. Soft metrics can be just as telling in terms of how well a sales manager is adding value.
4. Sales Promotions
A very important metric that is often missed is how well the sales manager is fueling promotions within the business. Are your salespeople being promoted? For example, are your line salespeople moving to national accounts or major accounts? Are your sales managers helping people succeed in the organization, moving people from sales to marketing or helping great salespeople become effective sales managers?
Great sales managers not only achieve their plan, but they are also a source of recruitment in bringing talent into the organization. They also don’t try to hog that talent; they are focused on coaching and developing their people and are happy to help them advance.
5. Sales Turnover
On the other hand, great sales managers have low turnover rates. How successful are your sales managers at recruiting, onboarding and retaining high-performing salespeople? Do you have a sales manager with churn, burn and lots of turnover on his or her team?
6. Time to Productivity
Another important soft metric is around onboarding. Great sales managers bring people into the organization who are productive fast. Ineffective sales managers, however, may develop a salesperson, but it may take a long time for him or her to be productive, creating a high cost for the organization.
Sales managers play a key role in onboarding, taking a robust and systemic approach to helping their people get up to speed. They are responsible for creating a relevant and positive experience for the new hire and providing them with the tools, information and knowledge they need to become high performers.
By looking at leading and lagging indicators as well as soft metrics to measure your sales manager performance, you’ll be able to capture a full picture of their success (or failure) in your organization.
Want to learn more? Our Midwinter Month of Measurement is leading up to our next virtual conference, TICE Virtual Conference: Metrics Matter, a Focus on Strategic Planning, Analytics and Alignment. Learn more and register for the free event here.