A question we frequently hear at Vantage Point is: How do I know if my sales management team is effective in its role? Sales executives know their managers are the lynchpin of sales team performance, but few have any meaningful criteria for understanding whether their managers are having a positive impact. In nearly every company we encounter, the only benchmark for determining sales manager effectiveness is whether a manager’s team makes quota. Quota attainment implies a good manager; failure to attain quota implies an ineffective manager. This is a risky approach as the quota-attainment yardstick is both incomplete and misleading.
The way we see it, making the team goal consistently is a baseline expectation that, while important, doesn’t provide a complete picture of whether a sales manager is a good one exerting a positive impact on his or her team. For that, you need more consequential metrics that provide a fuller view of performance. After years of research and work with hundreds of companies, we have found there are three additional benchmarks that provide meaningful insight into whether a sales manager is an effective one.
If only a small percentage of reps are successfully making goal, then any way you look at it, the manager is not performing. In research Vantage Point conducted last year in cooperation with the Sales Management Association, we discovered that the top 25% of sales managers lead an average 65% of their reps to quota. The other 75% of managers pull fewer than half their reps across the goal line. Stated another way: in three-quarters of sales teams, more than half the reps are failing. That’s a huge lost opportunity – and in most cases, a poor reflection on those managers.
Why is the “percentage of reps making goal” metric so important? It’s mostly about reducing risk. If a manager’s team as a whole is making quota consistently but fewer than half his reps are hitting the mark, it means there are a few superstars making the rest of the team look good. Should one or two of those stars have a bad year or leave the company, team performance will plummet. By bringing higher numbers of reps across the goal line, top managers spread risk over more sellers so that if one has a bad year, the dip won’t be as pronounced. More reps making goal also lowers turnover risk since successful reps tend to be more engaged in their work and therefore less likely to leave, leading to higher retention and all its associated benefits.
Objectives are different than results. Results are the quota; objectives are the pathway that leads to those results. In other words, how is the manager hitting her quota? This, too, is an important measure of whether a manager is doing a good job.
For instance, say a manager is charged with increasing share-of-wallet in a certain vertical market, or perhaps there is a certain product mix a company wants to achieve. These kinds of sales objectives are meant to both advance a company’s strategic goals and provide the best pathway to success. Therefore, the manager must not only drive a majority of her reps to quota, she should be doing it via the pathways established by the C-suite in support of the company’s strategic objectives. Otherwise, sellers will simply take the path of least resistance. If Product D is easiest to sell and a rep is most familiar with it, guess what that rep is going to sell? A manager whose reps aren’t focused on her company’s strategic selling objectives will ultimately have a negative impact on the company.
Benchmark #3: Percentage of reps promoted to positions of increased responsibility
This final metric assesses whether a sales manager is developing reps and helping prepare them to be even more valuable to the organization. This ‘promotion’ yardstick isn’t necessarily the number of reps who move into sales manager positions – not every successful rep is cut out to be a manager. It also encompasses reps who move up to serve as a mentor or trainer, those who take on a higher-level sales role, or even those who take on significant non-sales roles in a different area of the company. Reps who see a career path ahead and are being actively developed for it tend to stick around, reducing turnover rates and ultimately enabling a company to reap greater long-term value from its investment in employees.
What does ‘good’ look like here? You might compare a manager’s rep promotion rate to the rate of all other sales managers or even other managers in all departments of the organization. Or you might establish a target promotion percentage, then evaluate how your sales managers stack up against it. This may take some trial and error, but it’s worth taking the time to evaluate. Sales managers who have their reps’ best interests in mind – who develop and grow those reps to prepare them for long-term success – ultimately create loyal employees and the most return on investment to the company.
How do you know if your sales management team is any good? Consider these additional benchmarks to better understand the answer to that important question. Every company will be different. Delve deep into your company’s own data and you will find a rich mine waiting for exploitation and refinement.