Managing the Sales Process

Making and implementing decisions that cause sales productivity to increase.

by Bill Hodgdon

The word “manage” — stripped of all negativity — means to decide. If no decision needs to be made, then no management is required. Managing the sales process means making and implementing decisions that will cause sales productivity to increase.

What is sales productivity?
Sales productivity is an effect. It can be measured by revenue or gross margin produced, but an effect cannot be managed. Only causes can be managed. Thus, we have to focus on the causes of sales productivity. 

There are only two causes of productivity – sales activity and sales skill. Sales activity is usually defined as making sales calls. Sales skill is defined as how the salesperson performs when talking to prospective customers. So, while businesses want to improve sales productivity, they cannot do it by focusing on sales, they can only do it by managing the causes that produce those sales. 

In order to manage causes, they must first be measured. So, the important question is, “How should sales activity and sales skill be measured so they can be managed to produce sales growth?” Two questions must be answered:
1) Are my salespeople generating enough sales activity?
2) Are they using the right sales skills to cause wins fast?

Measuring sales activity
Sales activity is normally measured by the number of calls or the number of proposals. These are not good measures because the best salespeople don’t make the most calls nor do they submit the most proposals. Making sales calls is a cause but we need a better measure in order to manage sales activity.

Salespeople make calls to identify and win sales. A sales goal is something specific that you want to sell to an account that the account is not buying today. 

Let’s say you expect a salesperson to produce $1.8 million in sales this year. How much business should he be pursuing? You need to know the win ratio, which is sales won divided by total sales quoted (say 33 percent), and the average cycle-time-to-win (say three months). This salesperson needs to actively pursue at least $1.35 million worth of specific sales goals at all times during the year. The calculation is the monthly revenue goal of $150,000 divided by the win ratio of .33 and multiplied by the average cycle-time-to-win of three months. 

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