The sales department is considered the most important department in almost all organizations, as the revenue and profit of every business depends on sales. It is very important for a business to closely monitor both the sales figures and the sales team, so that changes can be made in the sales strategy and team composition at the right time
In most organizations, the performance of the employees is reviewed once a year and, in some cases, the performance appraisal is held twice a year. In case of the sales team, this frequency will not work as by the time the top management becomes aware that the sales have not reached the target at the end of the year, it may be too late to take corrective action and it could affect the organization.
Hence it is highly recommended for the sales management to ensure that there are more frequent performance reviews of the sales team. This will ensure that any deviations from the target are noted and corrective action can be taken well in time to achieve the sales targets.
The business is likely to face problems if the sales team is unable to meet their targets. Every business has many fixed expenses, and a projected profit, and if the sales are less than the target set, it will adversely affect the finances of the business. The business may have to reduce their expenses, employee count and may have to arrange for funds from other sources. Businesses will adopt different strategies to deal with reduced sales of their product or services. Sometimes the company may reduce the prices of their products, hoping to attract more customers but that has a negative impact on profitability.
Factors to be considered
There are many factors which determine how often the review of the sales performance should be held. The nature of business, type of product/service sold, business conditions (market situation, competition),the size of the organization etc. are a few important factors which determine the frequency of the reviews.Larger organizations have a large salesforce, and the salespersons may be posted in different cities. Hence it may be time consuming for the salespersons to meet their sales manager and review their performance often. In this case performance review can be carried out online or using other methods of communication.
What to review
This may vary from company to company. However, the aspects that are usually reviewed include the following:
Achievement with respect to target
Reasons for the variance – both positive and negative
Action plan before the next review
Lost business analysis
Competition & strategy
The review of the sales performance also depends on the kind of product or service which is being sold. For low value consumable items like food products, the focus is on marketing the product, ensuring that it is available at many retailers. For high value items, like expensive equipment, orders may be finalized after many months or years, so the criteria for evaluating the sales performance is different, in this case, the number of leadsgenerated with guaranteed conversion ratecould be a criterion for evaluation of the salesperson.
How to conduct reviews
It is important to be honest and transparent while analyzing the factors affecting the sales performance, whether the salespersons are trained or motivated, or is there a problem with pricing and quality of the product or service being sold.Since salespersons are directly in touch with the customers, they can give the most appropriate feedback that can help in making improvements.
It is hence important to be open for feedback and be in a “listening” mode rather than a “teaching” mode. Based on the data and observations, a constructive feedback should also be given to the sales team to help them improve their performance.
It may also be worthwhile to invest in tools like a CRM (Customer Relationship Management) software that makes the job of the salesperson and reviewer easy. Salespersons are not required to send long emails with excel attachments and the management can get all necessary reports instantly at the click of a few buttons. This saves lot of valuable time and speeds up decision making which is crucial in today’s highly competitive business environment.
Frequency of reviews
Depending on the size of the organization the review can be carried out once a month or once a fortnight. Many companies have a weekly review system which is highly effective in a dynamic market situation. It is however recommended to have a CRM system in place for a weekly review.
In conclusion, we can say that an effective review system is one which has a clear agenda, frequency and timeliness. It becomes a routine for the company and its employees. The management gets regular updates and the sales team gets direction. All this helps the company move forward and grow its business in a planned way.