Striking a balance in activity measures and performance indicators.

• Author: Buck, Ron
• Position: SALES DEVELOPMENT

GREAT SALES MANAGERS find the balance between activity measures and performance indicators. Activity measures track the number of times someone does an activity. Performance indicators are quantitative and measure how effective, efficient or productive the activity was--usually expressed in a ratio or percentage. Performance indicators are more closely connected to how well an activity is done (more closely aligned with behaviors) rather than how many times it was done.

Our firm researched how sales efforts were measured at two groups of banks. The first group (labeled "busy banks") focused only on activities. The second group (labeled "performance banks") included only the top performers who focused on a balance of activities and performance indicators (efficiency, effectiveness or productivity). The busy banks supported their decision to only measure activities by saying that their organization could not measure performance indicators--it was too difficult to measure performance indicators or their sales cultures were not ready for performance indicators.

Performance indicators measure sales efficiency and effectiveness.

Performance indicators Performance banks, on the other hand, used metrics that were a balance between activity and performance indicators. Here are examples of some of the things they measured: branch sales velocity (the number of new accounts divided by the number of full-time employees per month); success ratio (either the number of new accounts divided by the number of face-to-face conversations or the win/loss ratio multiplied by the cross-sell ratio); and sales efficiency ratio (compensation per employee per month divided by revenue per employee per month).

Sales productivity was measured by new face-to-face conversations per employee per month; new accounts per employee per month; and new revenue per employee per month.

Sales effectiveness was measured by cross-sell ratio; win/loss ratio; service to sales conversation ratio (the percentage of service-related conversations that result in a new account opened); lead (or referral) conversion ratio; and percentage of walk-over referrals.

Performance bank metrics may also include teller...