It goes without saying that sales is the backbone of nearly every organization. Sales can include business-to-business interactions as well as sales to the general public. And while almost every industry has a sales aspect, the companies that succeed are those who prioritize and optimize sales performance.
A working sales performance definition is necessary before deciding what constitutes “good” sales numbers for your company. Depending on the type of sales and costs of what you’re selling, different performance rates may be considered “average.”
Across all industries, the average closing rate is 2.4%–3.2%.And while that sounds pretty dismal, remember that it’s just an overall average. The average for your particular realm can, and probably should be, much higher.
So, before conducting a sales performance review, compare your current sales rate to the industry’s average. If you’re near the norm, there’s no need to panic, but there are still ways to bring up your rates. If you’re well below the industry average, you have at least one problem that you’ll need to address. If you’re struggling to find benchmarks to compare your performance against, here are some average sales rates across various industries according to MarketingSherpa:
- E-commerce: 5% or lower
- Electronics: 22% or more
- Business services: 20%
- Art & Collectibles: 15%
Fireclick Index also reports that other industries typically convert at much lower rates. But, you can see from this data that specialty stores score higher conversion rates than generic sells-everything places. That’s because people looking for something in particular, instead of simply browsing, are more likely to go somewhere known to sell that item. The other reason is related to expertise.
Consumers like to know that whoever they contact in their buying journey is knowledgeable about what the business sells. So, what does this mean for your company? Sales reps who exhibit confidence about what they’re selling and how they’re selling it have a better chance of closing the deal.
How To Evaluate Sales Performance
Now that you know how to set sales performance goals, you need a framework for evaluating your reps’ sales performance. To create a sales productivity formula that works for your company, you need to look at multiple success metrics.
Different sales reps will have differing strengths, so using multiple metrics will give you a more detailed view of their strengths and weaknesses. Here are some sales performance examples that will get you off to a good start and enable you to run a sales performance analysis.
Average order value (AOV)
A sales rep with one sale worth $5,000 earned you more money than a rep with 20 sales of $100 each. That said, if your employees make roughly the same number of closed sales, AOV will begin to set them apart. The way to get sales up across the board might include offering upsells and add-ons, and making sure each rep mentions these options without being pushy.
Some reps might excel at bringing new customers aboard. Maybe they have the perfect mix of genuine excitement that convinces someone to try a product. Whatever the formula for success, bringing new customers into the fold is a valuable skill. Given that gaining a new customer costs up to five times as much as keeping one you already have, this is a valuable skill to nurture in your sales team.
This is another valuable metric that you should include in your sales performance review template. If your company increases customer retention by a mere 5%, you can see a 25% to 95% increase in profit. There’s a 60-70% close rate when selling to an existing customer versus a 5% to 20% close rate for a new customer.
Number of sales
If your company has more lower-value items than big-ticket products, your sales goals might revolve around total units sold. This would also stay true for products or categories that are of the same value per unit. So it might make perfect sense for a company that only manufactures one type of hardware to measure nothing but total units sold per employee.
For most companies, though, a good sales productivity formula will take all of the above metrics into account. Once you evaluate your salespeople by these standards, you’ll see your primary areas of weakness, as well as which reps stand out from the rest.