MANAGEMENT


Are You Measuring the Right Sales Metrics? GEOFFREY JAMES


One of the big advantages of Sales 3.0 is that it allows you to create a culture of measurement. The point of examining each step of the sales cycle is to make sure the company experiences lower sales costs along with higher close rates.


In other words, metrics are all about profitability. With that in mind, here are the key elements to measure:


GROSS MARGIN PER INDIVIDUAL SALE Work with your corporate accountant to set up a reporting system that al-


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lows you to calculate how much actual gross profit was generated by any given sale.


If your company sells products that


decrease in value while inventoried, such as personal computers, be sure the gross margin per sale is based on the depreciated cost rather than


the actual cost; otherwise, you could find yourself with a warehouse full of products nobody is willing to sell.


ACTUAL COST PER INDIVIDUAL SALE Work with your accountant on the details of the yearly selling, general, and administrative expenses (SGA). Seek to remove – for the purposes of your internal cost-of-sales account- ing – overhead that has nothing to do with sales.


Once you’ve got that number, divide it by the number of sales reps, and then divide that number by 1,920, which is roughly the number of hours a sales rep works each year. The result


ROMAN SAMBORSKYI / SHUTTERSTOCK.COM


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