The founder and President of Data Quality Solution, Thomas C Redman aka 'Data Doc' said
Where there's data smoke, there's business fire.
His quotes thrust the relevance of data in the current business environment and its inevitability in the future.
One of the main reasons for the increased popularity of data is due to the positive results it brings to sales management and company operations.
Documenting the sales process and evaluating it to understand the areas of strengths and weaknesses will help companies boost their growth.
In this article, we will read about sales history, the steps to collecting data for analysis, the benefits of sales history, and the sales metrics that will help track your sales process.
So scroll down for more
What is Sales History?
Sales history refers to the database of the entire sales-related details for a particular time period. This includes the number of sales made, the revenue generated for the period, the time of the year most sales were made, etc.
Documenting every detail of the sales helps in backtracking to understand the market trends and sale patterns, gain insights from these data, and better plan and prepare for the coming year.
Steps to Collect Comprehensive Sales Data
Organizations are increasingly relying on data in their everyday operations. Hence it's important that companies build a system of collecting data and analyzing it for future plans.
Here is a sales history example to follow while building your sales history
- Determine the Sales Metrics
Companies must be clear on why they are collecting sales data and creating sales history. Understanding the objective of the process will help narrow down and determine the metrics they wish to keep track of. Incorporating a systematic approach such as Management by Objectives (MBO) into this determination enhances the clarity and alignment of sales data collection with overall organizational goals.
- Choose an Ideal Sales Analysis Tool
Automation tools have made the everyday routine work seamless and streamlined. It is easy to document data without error and to ensure accurate and valuable insights. For this, the ideal sales analysis tool that suits your organizational structure, budget, and requirements must be chosen.
- Evaluate for Insights
The primary purpose of maintaining a sales history is to evaluate the collected data and gain insights. The gathered data helps in analyzing the sales process, determining its effectiveness, and bringing in changes to boost sales performance and productivity. This approach is in line with sales as a service (SaaS) examples, highlighting the utilization of historical data to inform strategic decisions, enhance customer interactions, and continually improve overall sales processes.
Bringing in a systematic approach to your operations will help boost the entire organizational operations thereby leading to growth and success.
The Benefits of Sales History
Building a sales history opens a wide range of opportunities and benefits to business operations. Some of these include:
- Tracking the previous year’s sales history helps make a sales analysis to understand the sales pattern, the efforts that contributed to the revenue, and areas that need improvement.
- Backtracking the trends and patterns of the past year will help in sales forecasting. Sales forecast based on historical data helps predict how the coming financial year will be and better prepare for its demands.
- Sales history documents the revenue and expenditure of the past year. Analyzing this financial data helps in accurate budget allocation to meet the monetary requirements for the coming financial year.
- Sales history clearly defines the market trends when there was a surge in sales and when it was low. Understanding these patterns will help companies to be better prepared for in-depth sales data analysis. With a sales history, companies can predict what will be the demand for their product during each season. This helps in stocking their product without the issue of overstocking or understocking.
- With a sales history companies can predict what will be the demand for their product during each season. This helps in stocking their product without the issue of overstocking or understocking.
- Analyzing the sales history gives insights as to when the market is slow and determines the causes for poor performance. This valuable information can be used to strategize plans to rectify the mistakes and incorporate changes to improve performance.
Sales history equips organizations to make informed, data-driven decisions. This ensures the accuracy of their plans in achieving the goals and objectives as well as boosting sales growth and performance.
In an era of data-driven business operations, organizations must incorporate tools and techniques that help boost their performance and improve their growth rate.
For further reading, check A Guide to Optimising Sales Performance for the Sales Process.
What are the Sales Metrics to Analyze
To build an efficient sales history template, companies must determine the sales metrics they will keep track of. Some of these sales metrics include:
- Lead Conversion Rate
Lead conversion rate refers to the percentage of leads who got converted as customers. For example, if a sales rep had 50 leads and 10 of them closed deals then the lead conversion rate will be
Lead Conversion Rate= (10/50) x 100= 20%
The higher the lead conversion rate the better the sales performance.
- Lead Response Time
Lead response time refers to the average time it takes for the sales team to respond to a lead who has contacted through calling, emailing, or booking a demo. In such situations, salesforce must grab the opportunity as the faster you respond to a prospect the higher the chance of closing the sales.
- Average Conversion Time
Average conversion time measures the time taken by a qualified lead to convert to a potential customer. The shorter the conversion rate, the higher the efficiency of the salesforce in conversion and driving sales.
- Average Deal Size
Average deal size is calculated as the total revenue achieved by the sales rep in a particular time period divided by the number of closed deals. For example, a sales rep has closed 5 deals each with a revenue of $10,000, $5000, $2000, $2000, and $1000.
Average deal size = ($10,000+ $5000+ $2000+ $2000 + $1000)/5= $4000
- Win Rate
Win rate measures the success of a sales team. It is calculated as the percentage of total number of sales made divided by the total number of sales opportunities a company had. For example, a company closed 10 deals out of the 20 opportunities they had. Their win rate is calculated as
Win rate = (total number of sales/number of sales opportunities) x 100
(10/20)x 100= 50% win rate.
The company has a 50 percent win rate during the time period.
- Customer Lifetime Value (CLV)
The customer lifetime value refers to the total revenue the company will generate from the subscription of a client in their entire journey with the, The higher the CLV the higher the worth of the sales and the bigger the benefit for the organization.
- Quota Attainment
A decisive factor when evaluating the performance of the salesforce is their quota attainment. It refers to the percentage of quota attained by the salesperson. The higher the sales quota attainment, the higher the incentive compensation and other benefits of the salesforce.
What is the importance of a sales history?
Sales history gives a holistic view of your past sales within a time period. Having a document that can track all your sales details gives a lot of insights that can equip you to face the challenges and make informed decisions, contributing to sales performance optimization.
A data-driven sales operation ensures optimal results compared to decision-making based on intuition. It is the most important and relevant advantage automation tools have contributed to optimizing everyday business operations.
Especially in sales where the industry and job are competitive, it is inevitable to not incorporate such digital tools into your system. Hence, organizations must take that extra step to enhance their operations by incorporating automation solutions in all aspects of their company management, including sales enablement vs sales effectiveness.
Kennect builds, runs, and automates your incentive compensation plans and sales performance management to create transparency and achieve operational efficiency. For more information Book A Demo Today.