Measuring the effectiveness of your sales staff
By Harry J. Friedman

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Imagine for a moment that you're the head coach of your favorite football team. Your team is vying for a spot in the playoffs. You must decide which of your two quarterbacks will start in this very important game. How are you going to make that decision?

INDUSTRY PULSE

Do you measure the conversion rates of your sales staff?
  • 1. Yes
  • 2. No

The answer should be obvious even if you're not a football fan. You need to analyze the effectiveness of each quarterback. Naturally, you want to start the one who has done the best job for you thus far. Fortunately, you have plenty of statistics available to help you make such a decision. To judge the effectiveness of each quarterback, you'll need to look at statistics such as of the total number of passes they threw, how many were caught by the intended receiver, how many were intercepted by the other team and how many resulted in a score.

Now, let's get back to reality. You're responsible for the effectiveness of your sales staff. A decision has been made to remodel one of your stores. During the remodeling, which is expected to last at least six months, the store will remain open but will not require as many salespeople as you currently have. Who do you keep, and who do you let go?

Do you have the information you need to measure the effectiveness of your salespeople? Tracking the conversion rate of your sales staff is a valuable technique that you can implement immediately. On the ground level, tracking each salesperson's conversion rate will enable you to measure the effectiveness of each customer contact. In other words, out of every 10 presentations, how many resulted in sales for each salesperson?

CONVERSION RATE CARD

Salesperson _____________________

Week Ending _____________________

MON

TUES

WED

THUR

FRI

SAT

SUN

Wins

llll

Total: 4

llll l

Total: 6

lll

Total: 3

llll l

Total: 6

llll

Total: 4

llll llll llll ll

Total: 17

ll

Total: 2

Walks

llll llll llll l

Total: 16

llll

Total: 4

llll llll

Total: 9

llll llll llll

Total:14

llll ll

Total: 7

llll llll llll

Total: 15

llll ll

Total: 7

Total

20

10

12

20

11

32

9

Conv. Rate

%

4/20

20%

6/10

60%

3/12

25%

6/20

30%

4/11

36.4%

17/32

53.1%

2/9

22.2%


Implementing a system for tracking conversion rates is relatively simple. Each salesperson should have his or her own conversion rate card. To track effectiveness, every presentation gets recorded as either a walk or a win. The above chart shows that on Monday "Joe Pro" made a total of 20 presentations, four of which resulted in a sale.

To calculate his conversion rate, divide the total number of sales (4) by the total number of presentations (20). Joe's conversion rate for Monday comes out to be .20. Depending on your preference you can express .20 as either 20 percent or 2 sales out of every 10 presentations.

Keep in mind that the actual number of customers you see has no relationship to your conversion rate. If Joe had made 1 sale out of 5 presentations, his conversion rate would still be 20 percent.

Implementing the Conversion Rate System

It is very important that you have a clear definition of what constitutes a presentation. Some managers count any customer who walks through the door as an opportunity to make a sale. Others prefer to only count the customers to whom salespeople are actually able to get to the demonstration.

Before starting to track conversion rate, be certain to set the rules. Is it possible that one salesperson could fail to get into the demonstration to a customer where another salesperson may have succeeded? Think about which method will work best in your stores. The criterion you choose is not that critical. What is critical, is being consistent and using the same criteria all the time. Remember, you can only get accurate information if you keep accurate records.

To implement the tracking of conversion rates, you can easily make up a supply of conversion rate cards by copying the format shown in the chart above onto index cards. Your volume of business will dictate how frequently you should figure your conversion rate. For most stores, it's best to work it out daily. If you see relatively few customers each day, you can keep it on a weekly basis. The salespeople must be trusted to keep true records of their own conversion rates.

Using the Statistics

One of the greatest things about using numbers, is they allow no room for opinion. On the surface, judging your sales staff by their conversion rate may appear to be relatively straight forward. In reality, conversion rates will tell you much more than just how many people out of 10 your salespeople are selling.

Using our salespeople, Lou and Lee, look at the chart below and let's analyze their conversion rate figures:


Both Lou and Lee had $5,000 in gross sales for the week. On this basis, it may seem they are comparable salespeople. In reality, they are really quite different and each must take different steps to improve their performance.

Based on Lou's low daily conversion rates you may conclude that he either sells more items per sale than Lee, or he sells higher ticket items. In this case, the way for Lou to increase his gross sales is to sell to more people. Once Lou establishes a relationship with a customer, the customer is likely to spend quite a bit of money. You could conclude that for Lou to get into more conversations with customers, he needs to work on his communication skills along with his opening and probing techniques.

Lee's high conversion rate tells us that he is already selling something nearly every time he makes a presentation. Advising him to approach more customers would be useless. What Lee needs to do is to sell more to each customer. To accomplish this, Lou should be encouraged to demonstrate higher ticket items, as well as attempting more accessory and add-on sales. Very different advice for two salespeople selling the same weekly volume, isn't it?

Neither Lou nor Lee should be considered poor salespeople. But, if you had to model your staff after one of them, you'd be far better off with Lee-clones than Lou-clones. Why? Lee has a much larger customer base than Lou. Generally, repeat customers buy more than new ones and can bring in more referral business. This makes Lee's potential for making more sales greater. The rule to remember here is: first sell everyone something, then sell them more.

As you can see, besides knowing how many customers your salespeople are selling to, conversion rates also tell you how they are selling. So, if you had to make a decision on who to keep and who to let go in your store, conversion rates give you a quantitative number on which to base your decision.

Who are your salespeople most like, Lou or Lee? Don't guess — you might be in for a big surprise. Take responsibility, and track their conversion rates for a month. It will make your job as the head coach of your sales staff much easier.

Harry J. Friedman is an internationally acclaimed retail consultant, trainer, author and speaker, and founder/CEO of The Friedman Group. He has been featured on CBS News, FOX News, the Wall St. Journal and has worked with many of retail's iconic brands. Since 1980, his retail sales and management techniques have been used by nearly 1 million retailers worldwide. For information on upcoming retail seminars, training programs, on-site training, and eLearning, call 800-351-8040, email info@TheFriedmanGroup.com or visit www.TheFriedmanGroup.com.