Everyone agrees that sales management is a critical ingredient for revenue growth. Many do not know how to go about executing it, but even those who are effective wonder what objective measurements a good sales manager should use.
Sales management without metrics is like a basketball game without scores. We need to track behaviors, which are the leading indicators of success, and then financial results, which are the lagging indicators and tell us whether the goals have been achieved.
What are the right metrics for effective sales managers? It depends on one's strategy.
Some banks go for volume and one-off, or pure unit, sales. Others look for relationship selling, and therefore the number and value of products sold do not tell enough about achieving the stated goal. Excess is building share of wallet and relationship fulfillment, and therefore relationship measurement becomes an important component as well.
There are three major metrics that must be tracked daily in the area of needs-based selling:
Profit per banker, or the profitability of sales executed by each salesperson. This is the profit productivity indicator of the sales staff, and ultimately aligns its activities and interests with those of the shareholders.
Sales per banker. Banker productivity is not limited only to profit, because there are certain markets where profit is easy to achieve, but units are hard to come by. In other words, the salespeople are shooting elephants all day. Beverly Hills and Scarsdale, N.Y., are such markets. On the other hand, there are places where units are easy to come by, since customers flock in the door, but the value/profit part of the equation is difficult to reach. This shows why both indicators are important to assess sales.
True selling means going beyond the order-taking phase and achieving more than what the market will automatically give you. It is controlling your own traffic and destiny by managing both the sales numbers and the sales profitability. Bankers who have good results on both have elevated themselves beyond the order-taking stage and created their own consistent pipeline, which is the only way to be successful on both counts.
Cross sales. Cross-selling has been the beacon of relationship-deepening measurement for years. Yet it has been maligned as consultants have demonstrated that not all institutions have been able to equate cross-sales with additional profits. We all know now that cross-selling an unprofitable product to an unprofitable customer does not provide revenue growth. We also know that cross-selling a profitable product to an unprofitable customer can convert them into a revenue generator.
Cross-selling is important, not as a blind and standalone indicator, but as part of the triad I am proposing here. Each of these indicators, standing alone, can create aberrational behavior that is not in the best interest of at least one or more of our constituents: shareholders, customers, and employees.
But together, the three legs of this stool create the kinds of behavior that relationship-oriented institutions seek: banker attention to shareholder interest (profit per banker per day), their own productivity (sales per banker per day), and the customer relationship (cross-selling).
There are other sales metrics that I have seen used effectively: net deposit growth, net loan growth, and referrals to areas such as trust, mortgages, investments, or brokerage. It is extremely important to measure net performance, because by so doing the banker's attention is focused not only on bringing people in the front door, but also on retention and preventing customer outflows.
Gross sales alone do not benefit shareholders -- this requires net growth. Therefore, by measuring bankers' performance on net results, you align the interest of the bankers with the shareholders. And bringing retention into the equation is critical, and sorely neglected by many of us.
As always, the right measures depend on a bank's individual circumstances and strategic direction, but the triangular approach to metrics can always apply. Whichever set may be used, it is the metrics that will motivate and direct a team's behavior, hold it accountable, and determine when rewards are warranted. Metrics are a key not only to clarifying expectations, but also to helping you succeed as a coach in a very important role: catching people doing something right and celebrating their successes and (even small) victories.
