Hustling is the mode of operation for sales teams, and nowhere is it truer than in sales management.
The term sales management implies that you’re actively managing your sales activities. From analyzing current sales reports to forecasting future sales, a sales manager is tasked with duties that ensure the team continues to grow and increase productivity, and therefore profitability.
All these actions contribute to the beating heart of any organization that depends on sales revenue to survive. An effective sales manager, therefore, keeps the company alive and thriving.
What is sales management, exactly?
In the simplest terms, sales management is the process of overseeing the sales operations within a business and applying strategies to increase the department’s revenue and improve the overall sales process.
A sales manager achieves the above by doing the following:
- Team Management: Recruiting and leading a team
- Sales Forecasting: Setting long-term plans and objectives
- Sales Reporting: Analyzing overall performance data
These three key areas define the primary duties of a sales manager. Without success in each of these areas, you’ll struggle to produce positive results for the company.
Let’s dive into the specifics of each area to examine what it entails.
The first step in building a successful sales operation is to recruit and train great salespeople. As simple as that sounds, we all know this can be the trickiest part for many sales managers, who see high average turnover rates up to 27%.
In such a fast-paced, metrics-driven setting, it’s all too easy for enthusiastic new recruits to quickly experience burnout. Sales managers need to remember that leading a driven, motivated sales team doesn’t depend on the number of reps alone, but on creating a well-defined sales process that allows the team to function under clear guidance and objectives.
This is arguably the most important part of a sales operation, since a sales team is only as good as its salespeople. Even the top salespeople can benefit from having a concrete template to follow. Plus, clear expectations will prevent individual reps scrambling to meet vague targets and chasing after meaningless numbers.
While this doesn’t mean reps can’t apply their own techniques and exercise flexibility in their approach, setting out definitive intentions and objectives is the best thing you can do to make sure your team is equipped with all the tools they need to reach their target.
How to find the right salespeople
A good sales manager knows how to identify the right salespeople for their team and inspire them to take action.
Since sales is a people-oriented job, those who have high emotional intelligence (EQ) are likely to be better at maintaining customer relationships. According to Daniel Goleman, the best-selling author of Emotional Intelligence, EQ is defined as a combination of five different factors:
- Social skills
A study conducted in 1997 by Hay/McBer Research and Innovation Group showed that salespeople with higher EQ had double the sales figures compared to their colleagues with lower EQ. The former group sold insurance premiums worth $114,000 on average while the latter sold policies at $54,000 on average.
Sales reps with greater emotional competency can adapt to any customer scenario, rather than simply sticking to the script. In turn, this kind of adaptive selling leads to higher closing ratios and improved overall team performance.
In an ever-changing market where customer relationships management has become a fundamental part of any sales team, a willingness to adapt and learn new techniques is the key indicator of positive performance in any new sales recruit.
Recruit the best.
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Defining the right key metrics
Once you’ve assembled a team, your role now is to guide your team through the sales process so that each step is optimized for maximum results. Defining the right KPIs can both motivate your team and improve overall efficiency.
Most sales teams tend to measure and focus on one thing over all else: closed deals. This is because closed deals are the most visible and definitive way to measure a sales team’s output. But as a sales manager, tracking closed deals only gives you one view of a much bigger picture.
For example, if a rep is struggling to close deals and failing to meet their monthly quota, simply telling them to try harder to meet the numbers won’t magically turn them into a sales guru. Rather, what’s needed is better management of the process that leads up to the failure to close deals.
When the payroll processing company Paycor examined their sales process, they realized that helping reps improve earlier in the sales funnel led to a 55% increase in new business meetings.
As a sales manager, you need to be aware of not just the sales process and strategies, but also your reps’ individual performances that contribute to the overall results for the team. Having a comprehensive view of the sales funnel, identifying areas for improvement, and tracking relevant KPIs will help improve your team’s performance long-term.
Using a CRM is one of the best ways to track this, particularly if you’re using one that shows sales performance by team member.
Sales forecasting is another metrics-driven category of responsibility for a sales manager. Basically, sales forecasting means predicting future sales. It’s important to have a sales forecasting plan in place so that you can plan for important changes such as recruiting more reps during high seasons or focusing on a seasonal product.
Of course, the greatest difficulty with sales forecasting lies in inaccuracies. Ideally, a sales manager will be able to pull up accurate projections for future sales, correctly estimating expected revenue and sales trends. Doing this is important for a variety of reasons, not the least of which is adjusting quotas and strategies based on these predictions.
For companies that rely on seasonal sales such as Christmas, taking drastic dips and rises in sales into account is vital, as it will have significant implications for inventory management and sales recruiting.
In fact, a report on sales forecasting by the Aberdeen Group showed that accurate sales forecasts lead to better year-over-year performance.
Get to know these three sales forecasting models
While there are many ways to improve your sales forecasting, it’s important to start with the basics. On a fundamental level, accurate sales projections will rely on both quantitative and qualitative data.
A sales manager can look at current and historical data to identify trends, as well as form expert opinions on certain aspects of the sales funnel based on harder-to-measure areas like customer relations.
Choosing a sales forecasting model depends on the product, market, and sales cycle. One model isn’t better than the other, and different models can be applied at different stages of the sales funnel.
Here are three popular sales forecasting models you should become familiar with:
Qualitative techniques: Qualitative techniques don’t rely on quantitative data like the other models and are most useful for new products that have no prior data. Some ways to implement this method include market research and professional expertise.
Times series analysis and projection: By contrast, statistical models like time series analysis rely on historical data to identify trends and trajectories based on patterns and average rates of growth. To use this model, a product needs to have been in the market for some time so that long-term projections are possible with a fair degree of accuracy.
Causal models: Causal models differ from either and are the most complex because it considers a wide range of causes that contribute to the sales pattern. These models take a more comprehensive view by including not just data on the product itself, but also external correlated factors like the state of the economy.
Sales managers can utilize all three models to forecasting sales and adjust as the needs and goals of the company change. Resource allocation is another factor that will influence your sales forecasting techniques, since some models contain a wider scope than others.
Last but not least, accurate and consistent sales reporting will determine both your team’s overall performance and future strategies. This is the most influential part of a sales management process because it involves learning about your current results to make improvements.
Without understanding what you’re doing now, it’s impossible to improve and change the process. A sales manager can help the team along by identifying which metrics to focus on, including:
- Win rate
- Selling time
- Deal size
- Lead response time
Traditionally, sales reporting required a lot of manual data entry to track all this data. Today, CRM software can dramatically reduce how much time a sales team spends on data entry, as well as produce accurate, customizable sales reports in no time.
In a study sponsored by Google, we surveyed 2,500 businesses and found that 45% of small businesses spend more than 20 hours a week on G Suite, leaving this data outside of CRMs. Not capturing this data negatively impacts accuracy in sales reporting.
Keeping up-to-date with various sales performance metrics through reports is a crucial part of sales management. So let’s look at some different types of sales reports you might want to keep an eye on.
Types of Sales Reports
Win/loss reports: Tracking your sales team’s wins and losses allows you to determine your closing ratio and whether or not you’re meeting your targets. A thorough win/loss report can give you a good idea of where the losses occur in the sales pipeline so you can come up with a strategy to convert them into more wins.
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Sales activity reports: These reports measure KPIs like average call time, deal closing time, and even time spent on manual tasks. When you can gauge how much time your team spends chasing a lead or performing data entry, you’ll have a much better idea of where to focus your efforts to reduce that time as much as possible.
Revenue reports: Numbers are vital in sales, and revenue can be broken down into different areas. Daily, monthly, and yearly revenue reports are all valuable tools for sales managers. So is more detailed revenue analysis that tracks your average deal size, seasonal changes, and revenue-per-product or per-rep.
Use these tips to become a great sales manager
A sales manager has multiple responsibilities that may seem overwhelming at first, particularly for those who are just transitioning from a rep role. Suddenly you’re not just responsible for your own sales performance, but the entire team’s and by extension, the company’s.
To sum it up, the traits that make for a great sales manager include:
- High emotional intelligence and people skills
- Ability to adapt to changing markets and customers
- Great understanding of core metrics and objectives
Developing and nurturing this trifecta will lead you to a successful career in sales management by equipping you with the ability to lead and inspire a motivated sales team, excel at customer relationships, and create data-driven strategies.