The purpose of measuring salesperson effectiveness is to provide insights into how a salesperson or a team of salespeople are performing. One of the main jobs of a salesperson is to take leads and follow a defined sales process set out by the organization. With a lead, there can be three ultimate outcomes: lead is not qualified, lead becomes a won opportunity, or lead becomes a lost opportunity.

Typically, it’s not the job of the salesperson to generate leads. They are the ones who follow the defined sales process to successfully close that lead, but organizations have to be able to identify and understand the difference between a salesperson who is not productive versus a salesperson who has limited or no pipeline to start with.

The objective is to look beyond “Closed Won” and really gain insight into the process. The payback is immediate. Getting opportunities to salespeople with the capability to close, better ROI in CRM investment through more accurate data in the system, which leads to better data to target activities such as sales training.

Sales Stages

The sales process is defined by a set of stages, typically four to eight stages, and these are implemented in the CRM system. The stages are used to identify how far through the sales process each opportunity has progressed. At each stage, there will be leading and lagging indicators. Understanding of these indicators leads to insight into the effectiveness of salespeople. Some of these indicators can be hard to deliver, especially at scale.

This blog outlines several leading and lagging indicators that organizations can use to accurately measure salesperson productivity and effectiveness.

Leading Indicators

Leading indicators are actions and activities that can be tracked during the sales process. Leading indicators represent a sales person’s effectiveness at “priming the pump” and the objective is to measure how effective the salesperson is at taking raw leads and turning them into customer interactions.

There are a number of important metrics for organizations to track to determine team and individual sales effectiveness. Leading indicators to track for sales person effectiveness include:

Number of Leads: The number of entry stage opportunities that existed at the start of the period plus those created during the period.

Number of Contact Interactions: Contact interactions during the period. These can include the number of meetings, phone calls, or emails.

Days to Qualify: The average number of days it takes to get to the stage that denotes “Qualified”.

Total Days in Sales Cycle: The average number of days from when the opportunity is created to the close date. This measures the overall velocity of the selling process.

Number of Leads Qualified: The total number of opportunities that have been qualified during the period.

Number of Evaluations/Demos: The total number of opportunities that have delivered a significant customer event such as an evaluation, demonstration, or trial.

Leading indicators can be difficult to track if there isn’t a proper system set up to monitor sales activity. If measured properly, leading indicators are incredibly useful in pinpointing specific issues in the sales process, and also to create and assess coaching strategies. The goal is to enable the sales teams to focus and execute leading activities to improve overall sales effectiveness and performance.

Lagging Indicators

Lagging indicators provide insight into a salesperson’s ability to close opportunities. Once an opportunity has been qualified and reached the stage that represents “proposal,” then the sales process becomes more about agreeing to terms and price. Lagging indicators reveal insights into the ability of a salesperson to close opportunities within the selling period, and they can reveal issues beyond pure selling such as price competitiveness.

To track how successful a salesperson is at closing deals, there are a number of metrics organizations can monitor to understand effectiveness:

Proposal to Won Ratio: The ratio of the number of opportunities that have been won to the number of proposals generated.

Average Deal Size: This is the Won Revenue divided by Count Won.

Percentage of Quota: The sales representative’s percentage of quota achieved.

Total Sales Count: Count of Closed-Won.

New Versus Repeat Business: One of the most important indicators of success is if a customer is prepared to buy again – successful sales representatives repeat business.

Lagging indicators give organizations a different perspective and monitor salesperson effectiveness in a unique way. Lagging indicators ultimately tell organizations which leading activities are paving the way to successfully closing deals.

Combining and Measuring Both Lagging and Leading Indicators

Monitoring both leading and lagging indicators is the key to success because organizations are able to analyze and understand the bigger picture, not just individual metrics here and there. A salesperson can seem effective if only leading indicators are monitored, but that might not actually be the case. They could make a great number of calls a day (which seems productive), but if none of those calls turn into qualified leads or closed opportunities, then lagging indicators will highlight this. The effectiveness of the salesperson is lower when both types of indicators are tracked.

Combining lagging and leading indicators presents a more accurate picture of everyone’s performance throughout the entire sales process. Both bring value to understand and gain new insight into salesperson effectiveness, and lets organizations measure the true value of their sales teams. However, accessing the right data and organizing it in the right way can be difficult. Making it a process that can be integrated into a sales leader’s day using the most up-to-date data is a real challenge. This is where software can help.

Vortini has an extensive library of metrics for your organization to choose from. We have both lagging and leading indicators, and also add metrics based on the unique needs of your organization. Metrics are easily modified and customized for your organization and information that isn’t useful or relevant can be removed.

Take a moment to sign up for a no-obligation demo, and get the discussion started to use Vortini on a free trial basis.

David Griffin

David is the CEO of Vortini and is an experienced executive with extensive software and startup experience. He has over 30 years’ experience in various roles all in the enterprise software industry. Now his focus is sales forecasting and analytics.