Your sales team is the driving force behind your revenue generation. You’ve made the effort to create a great product or service, now you need to get pitching it to prospects. You could argue that if you start generating revenue then your sales team is doing a good job, but what if you want to get more granular than that?
Calculating the ROI of Your Sales Representative
Return on investment (ROI) is one of many sales performance metrics that can easily be calculated with a simple formula. All you need is to take your gains associated with the sales representative, subtract the costs, take the total and multiply by 100, which results in a percentage.
You can download many calculators or templates to calculate ROI, but realistically, these calculators are far too simplistic. They don’t consider your understanding of the teams and individuals involved in the sales process. Only you can genuinely calculate whether they are genuinely providing value.
Factors to Consider When Measuring the ROI of Your Sales Team
So we know that calculators and formulas alone are too blunt to calculate the ROI of your sales team. Instead, there are several other factors to take into account.
Your Salesperson’s Tenure
The associated costs of a salesperson and your team also need to consider the expenses related to their initial employment. That includes advertising for the position, the hiring process, training, setup costs, and anything else that goes into bringing a new staff member into the team.
These costs often stack up, and if you regularly have to hire new salespeople, they’ll quickly eat into your ROI. The best option and one of the simplest ways to increase ROI is to reduce employee churn. The longer the tenure of your salespeople, the more significant your ROI.
Your Company Sales Cycle
The sales cycle hugely impacts ROI and is variable from company to company. Some businesses will have relatively short sales cycles, sometimes with only one instance of contact, while others will have a longer sales cycle. Sometimes these sales cycles can be multiple years, which influences ROI data if taken annually. If a salesperson is spending months nurturing an account that, after a long period convert,s, is the ROI for their services worth less?
It’s another factor that is individual to your business and needs to be considered.
Training Period
Salespeople come with various levels of experience. Some will require little to no training; their expertise means you can send them out immediately once they understand your offering. Others will be fresh and need more handholding and shadowing. It stands to reason that the former will show a positive ROI sooner, but nurturing your salesperson from scratch can significantly benefit your organization in the long run.
Tips for Improving the ROI of Your Sales Team
Sometimes in your organization’s life, your sales team isn’t performing as well as you would hope. Leveraging the following tips will help you to boost the ROI of your sales team.
Hire Reps That Align With Company Culture and Values
The salespeople that join your business need to align with your company values and fit into your company culture. On paper, a salesperson might have impressive experience and stats, but if they don’t gel well with the rest of the team, create tension and, potentially, create more work for you, their ROI will be lower than you’d like.
The best solution is to hire right from the start. By ensuring that you’re hiring someone who will slot into your team without significant issues, you can maximize their
Offer Suitable Packages and Incentives
Incentivizing your salesforce is a surefire way of getting results. Most salespeople are hired on an incentive basis, where hitting x sales will lead to an incentive being earned. This could be financial or any other incentive.
It’s also essential to get their base salary right. Incentivizing salespeople does drive ROI, but they need to know that their standard salary is enough to keep them in your employ. Without it, many will have their heads turned by other companies. Consider the base salary as a measure of their happiness; the higher it is, the more likely they’ll stay. The incentivization should be seen as a bonus for impressive performance that acts as a motivator.
Reduce Lead Response Time
It might seem simple, but the faster your salespeople respond to prospects, the more likely they convert them, increasing their ROI. Should a lead come into their inbox, if a salesperson can respond within 5 minutes, their conversion rate is significantly higher than if they were to wait even 1 hour? If they remain even one day, they are far less likely to convert that prospect.
Ensuring your salespeople respond as quickly as possible will increase their ROI.
Provide Training and Coaching
Offering continued professional development opportunities for your sales team will always have a positive outcome. People like to feel that they are progressing individually and as a business. There are a vast number of training opportunities out there for salespeople, but you can often look within your organization for support. Coaching and mentorship from experienced team members can have just as significant an
Key Takeaways
It is important to remember that boiling down your sales team’s ROI using a simple formula is far too much of blunt and simplistic a way to measure it. Instead, consider the internal workings of your business and how your salespeople are affected by it.
