The Sales Audit: Measuring and Improving Sales Effectiveness

Financial audit? Standard operating procedure.

Quality audit? Standard operating procedure.

But what about sales? After all, it’s what drives the top-line… a very high C-Level priority. The reality is that not enough companies audit their sales operation in the way they do other major processes driving the company.

Sales is a process, and as a process it has to be set up for high performance. Unfortunately, even if it has been set up well, it can drift and inefficiencies can result.

The purpose of the audit is two-fold. It provides the information to determine sales operation performance. The audit is also the mechanism to drive improvements in sales performance. Sales audits are critical to any company’s overall operation and should be embraced at all levels, especially the C-Level.

The process of conducting a sales audit certainly depends on the particular sales model a company employs- direct sales, sales through distributors, online sales, etc. But there are a lot of common steps in the process regardless of the sales model.

Let’s take a look at a direct selling organization and examine what the audit process might be like…

The audit itself involves pulling together and quantifying a lot of material about the sales operation. It can be done methodically using the best information available. Where detailed information is not readily available, educated assumptions can be made and confirmed over the course of the audit process. Once information is collected and quantified, then management can go to work on making improvements.

Below is a list laying out the steps for a direct sales organization audit process. The order in which this information is assimilated may not follow the sequence below. What’s important is that the information is gathered and quantified to the greatest extent possible. Again, many of these steps will apply to a number of different sales models.

  1. Lead Generation Process
    Identify all inbound and outbound lead generating activity, as well as event-based marketing activity like trade shows. Determine the number of leads from each activity and how the leads were transferred to the sales activity.
  2. Map Out The Sales Cycle
    This step involves building a flow chart that identifies each step of the sales cycle. For example: qualification, needs analysis, product demonstration, proposal, etc.
  3. Dimension The Sales Cycle
    Every step in the sales cycle is dimensioned in relation to closing a deal. For example, on average how many companies do you have to submit proposals to until you get one deal? The sales cycle is also dimensioned in terms of the time it takes to pass from one stage to another (e.g. from demonstration to proposal). Finally, resources are dimensioned (how many man-hours are needed to prepare and conduct the demonstration?).
  4. Materials And Tools
    At each step of the sales cycle, identify the materials and/or tools needed to most effectively move the prospect through the various steps in the sales cycle. For example, tools might be demonstration software, technical support, webex conferences, white papers, proposal templates, presentation materials…
  5. Build The Sales Pipeline
    Now that the steps of the sales cycle are defined and dimensioned, quantify how many prospects are in each stage of the sales cycle. How many in the qualification stage, how many in the proposal stage, how many in the needs analysis stage.
  6. Determine Best Practices
    The effort of determining best practices may come directly out of the work in steps 1 to 5, or it may require looking outside the sales operation for answers. For example, if one sales unit is significantly outperforming others, then what are their best practices?

With this information collected, we’re now in a position to make improvements. To illustrate, let me just point out one area that I often find is an issue- prospect qualification. If our hit rate (or the number of prospects that we take from the proposal stage in the sales cycle to a successful close) is low it can be because the prospect was not qualified.

Armed with the information from the chart above, you can look back to see what criteria were being used to qualify an account and rectify the process. The issue here is that a lot of time and resources (money) are being wasted if unqualified accounts are being pushed through the sales cycle. A best practice is to determine the criteria for qualifying an account and make sure it’s being applied. It’s far better to know upfront if you have a truly qualified prospect than it is consume a lot of resources only to lose the deal in the end.

We’re really just scratching the surface on the sales audit process, but hopefully the point is clear. A high performing sales operation is a high C-Level priority and the sales audit is an effective first step towards both measuring and improving the sales operation.

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