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How To Set Your Sales Reps' Activity Expectations From Performance Goals
Managing a sales rep or a team of sales reps can be a very different animal than managing almost any other employee. After all a sales rep’s position by its very nature is fluid and ever changing. Having said that it is important to provide a certain level of structure for your sales reps that will enable them to be much more likely to achieve the goals you have for them. How do you determine how much your sales reps should be accomplishing in terms of leads and project quotes though is always the question?
The good news is though that the building product industry is filled with data that can be used to help you answer this question. Before we get into the specifics though it should be noted that setting daily activity goals is perhaps not the best method. Weekly or monthly goals are a much better option when you consider the fact that day to day a sales rep’s routine may vary greatly.
Let’s get down to business though, for the sake of this example we are going to assume your sales rep sells vinyl windows and doors. This is a common building product and it is easily tracked. So last year your rep sold $1.5 million in windows and doors. You have determined that you want to see a 15% increase in sales from this rep this year.
$1,500,000 x 15% increase = $1,725,000 so, you are expecting them to generate $225,000 in new sales this year.
The first thing you need to determine is how may quotes and orders your salesman produced to achieve the $1.5 million in sales. Let’s say they did 400 quotes and that they closed 100 of them (or 25%) for nice easy numbers.
So $1,500,000/100 (sales) = $15,000 per window and door package. So, we know now that your sales rep closes 25% of their job quotes, and each sale is an average of $15,000.00, with this information we can determine how many quotes your sales rep needs to produce in the coming year.
$1,725,000/$15,000 (average sale) = 115 sales. So, we know how many sales your sales rep needs to close. Now assuming that they are going to continue closing at a 25% rate we can use this number to determine how many quotes they need to produce (with an average of $15,000) in order to achieve this goal.
115 x 4 (25%) = 460 quotes this year. So, your sales rep needs to generate 60 more quotes than they did last year. If we divide the total quotes by 49 weeks (allowing for 3 weeks’ vacation) in a year we get, 460 (quotes) / 49 (weeks) = 9.38 (lets round to 10). So, we now know that to achieve your 15% sales increase for the coming year your sales rep needs to quote on average 10 window and door packages per week.
This is just one example of how you can use established data to provide activity targets for your sales reps. The same types of calculation could be used to determine any of a wide variety of activities needed, such as phone calls or meetings needed to produce this number of quotes and subsequent sales. Remember though that to produce the data needed to do these types of calculations you need to have an accurate tracking system. Remember also that it is important to always be transparent with your sales teams about the goals you have set for them and what you feel they need to do to achieve those goals.
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