The highlight of any sales operation is the act of closing a deal.
Revenue is generated, high fives are given, bonuses are awarded. It’s truly a glamorous production.
But what about the not-so flashy side of things? Like the people who hired the rep that made the sale, or the team members that created the strategy that made it all possible, or the sales analysis that proved the value to higher ups. All of that, and more, falls into the realm of sales management.
What is sales management?
Sales management refers to the process of creating, running, and advancing a sales team. This includes hiring a well-trained team, establishing strategies and processes, and analyzing outcomes to identify ways to improve.
A sales team includes a ton of moving parts, and the sales management department is there to ensure every strategy, action, and result is serving the customer and working toward the greater mission of the company.
Sales and sales management must work closely together to ensure both teams are successful. While they both have different goals, sales to close deals and management to support that, alignment is going to be key in that relationship.
Why is sales management important?
It might seem as if a sales management strategy is a nice-to-have. However, if your sales organization’s functions stop at closing deals with customers, it’s inevitable that other important aspects will be overlooked.
First off, sales management can help gain insight into your own sales force, which requires more deliberate action than it may seem. When done correctly, your sales management strategy will help answer the hard hitting questions, for example:
Is our sales team well-equipped to close deals and reach their goals?
Are our strategies effectively working to support the overall mission of the company?
After analyzing the outcomes of our sales efforts, is there any way we can optimize our processes to improve?
After diving into your sales organization to answer those questions, sales management can identify any issues early on and determine methods to fix them beforehand.
Secondly, sales management can effectively keep a finger on the pulse of your industry. Whether it sees growth, new regulations, or threatening competitors, external factors can and should affect your sales team’s strategy, techniques, and goals. Without a team dedicated to managing that, important details might be overlooked.
Essentially, if your business generates revenue, a sales management strategy is a must-have.
Factors of sales management
There are three key factors of sales management that make up the entire system: sales operations, sales strategy, and sales analysis. Your business might call them something different, but overall, those terms describe the main purposes of having a sales plan and management strategy.
First comes sales operations, which includes a lot of the preliminary work in managing your sales team. This strategy, or perhaps even the entire department, works to do everything in their power to help the sales team sell to customers as efficiently and successfully as possible.
Here are the elements that might be included in a sales enablement strategy:
Recruitment, onboarding, and sales training: finding the right talent, acquainting them with the business, and training them on specific methods used to sell your product or service
Account allocation: determine the best sales rep for each account, based on their experience, quota, and knowledge of the buyer
Territory management: creating, managing, and setting sales targets for each territory based on available opportunities and the reps assigned to it
Sales forecasting: analyzing data, past performance, and trends to predict future sales and prepare for that time period as effectively as possible
Contract management: organizes contract stages for the customers, including initiation, execution, and renewal or expiry
Sales data management: managing the data of the sales team, tracking progress towards sales objectives, and analyzing sales metrics
Sales process optimization: identifying the best way to align your business’ sales process with the customer’s buying journey
Lead generation: acquiring enough promising leads so sales professionals have enough to work with
Sales metric selection: choosing the best sales metrics that accurately represent the success or failure of a sales venture
Compensation plan creation: crafting compensation and incentive plans for the sales team in a way that will boost performance
Sales operations effectiveness becomes apparent by how well the above actions help make the lives of sales reps easier. Metrics like new hire ramp-up time, quota achievement rate, conversion rate, average deal size, sales cycle length, weighted pipeline value, and forecast accuracy can all be used to measure their efforts.
Overall, the sales operations team takes care of all of the behind the scenes work so the salespeople can focus on building relationships with the customers.
With your sales operations strategy underway, you can start moving forward with defining how your business is going to sell its product or service.
This is going to fall into the hands of the sales strategy, which will focus on action items like establishing your solution’s value, identifying potential customers, and initiating conversations with them in the hopes of closing a deal.
One key element of your strategy is your sales funnel, also referred to as a sales pipeline. Your sales funnel is a visual outline of the potential, and probable, journey that your buyers will take, from being a prospect to a paying customer. It offers an overview of deal progress and helps reps stay organized.
All customers start as leads, officially entering them into the sales funnel. If they are qualified enough to become a prospect and show the buying signals of an opportunity, they will move further down the funnel until they eventually become a customer.
When establishing your sales funnel, it’s necessary that it matches the buyer journey. If it doesn’t, you are at risk of not being on the same page with your customers in terms of readiness to buy. Consider the three stages of the customer journey (awareness, considerations, decision-making), and match your sales funnel stages accordingly.
Then you need to establish a sales process with steps that effectively move prospects down the sales funnel and convert them into customers. Your sales cycle will be unique to your company, buyers, and product, but here are the steps that are typically included:
Prospecting: identifying potential buyers who would be interested in your solution
Connecting and qualifying: determining whether or not the prospect is worth pursuing and identifying any pain points they might be experiencing
Demonstrating value: presenting the benefits of your solution to qualified prospects
Handling objections: addressing their questions and concerns
Closing: negotiating pricing and executing contracts
Nurturing: managing the relationship you have with the customer
You can go through the motions with customers if you want, but businesses with a formal sales process see a 28% improvement on revenue compared to those without an established cycle. Something to think about.
Finally comes reporting with sales analysis, which evaluates performance, determines outcomes, and helps you understand how your efforts have impacted the organization as a whole. This data also reveals valuable insights into how you can optimize your sales processes.
Effective reporting requires the use of sales key performance indicators, or KPIs. These are quantifiable signals that can tell you how each aspect of your organization is performing and whether or not you are on track to hit your sales goals.
Here are some examples of sales KPIs that most businesses will rely on:
Total revenue: income generated from sales activities
Profit margin: profits after sales expenses are taken into account
Sales growth: increase or decrease in revenue from two different time periods
Sales closing ratio: the rate at which prospects are being converted into customers
Sales cycle length: the average amount of time it takes to convert a customer
Revenue per account: the average revenue generated per deal closed
Customer acquisition cost: the money it takes to acquire a new customer
Customer lifetime value: the potential value that a customer can offer throughout their relationship with your business
Churn rate: the rate at which you are losing customers
Net promoter score: the likelihood that a current customer will recommend your solution to other buyers
Those KPIs listed above can reveal whether or not your current sales, marketing, and customer success efforts are providing the desired sales results. If they indicate that you need to reevaluate, you can use sales metrics to get a bit more specific and pick out issues on a smaller scale.
Who benefits from sales management?
An effective sales management strategy has the potential to have a positive impact on your entire organization. A more supported sales team means more revenue, which means growth for the business. However, sales management will have a more direct impact on the day to day of the following people:
Sales managers: Because sales managers are responsible for directing the entire department, optimized processes and valuable insights will help them ideate methods for hitting goals and pushing the sales team forward.
Salespeople: Proper sales management enables reps to follow, and eventually master, effective sales processes. It also allows for automation of mundane tasks, allowing them to focus more time on the customer.
Customers: With sales managers and reps equipped with the best way to approach selling their product, customers are given a positive buying experience.
Responsibilities of a sales manager
As a sales manager, there is a wide range of responsibilities on your plate. Below are a few basic functions that a sales manager will have a hand in.
While recruiting typically falls into the hands of the human resources department, it’s important that sales managers are involved in the process as well. The people you decide to hire for your team can and will determine the success of your sales org.
You need to ensure that recruiters know exactly the kind of talent you’re looking for. Be on the lookout for any potential hires within your own network as well. Keep the candidate pipeline full and strong, and maintain a pulse on the progress of potential hires.
It’s not likely you’ll be put into a sales manager role without once holding the role of sales rep. As you move up the corporate ladder, put your past experience to good use by coaching new and even well-trained salespeople.
Analyze each rep’s performance and figure out where they need to improve. Always be thinking about new skills that could make them a more efficient seller and move their career forward.
You can rely on your observations and analyses, but make it a conversation, too. Ask each rep where they’re struggling and create a plan for combating the issue at hand. Make a point to work with your team on becoming better salespeople and contributors to the organization as a whole.
No company can be successful without proper alignment, especially when it comes to supporting the sales team. After all, they are the revenue generators of the business.
Sales managers are responsible for aligning with all other departments that might have a hand in any sales strategy. This will require regular meetups, constant communication, and planning. Alignment with departments like marketing, product, and customer success is going to be absolutely crucial.
Sales managers will also have to align with executives and higher ups within the business to make sure they know what to expect in terms of performance, growth, and impact on revenue.
Similar to aligning with higher ups is reporting the performance of the sales org. Sales managers are required to analyze data regarding performance and report on it to the team, their colleagues, and leadership. This will also be relevant to finding areas of the sales strategy that need to be improved. Managers will dive into analytics for the team and individual reps as well.
An effective sales management process requires the human touch, but there are also plenty of areas that can benefit from the use of technology. Automated processes and the lack of need to complete mundane tasks is a plus for any department, but for sales, it means more time to connect with customers.
Here are some examples of software tools that will give your sales management strategy a leg up:
Including the right tech stack within your sales management organization will help ensure all processes are optimized, maximizing profits and increasing your impact on the overall business.
There are going to be some software options that are better suited for your company’s particular needs. When selecting, ask yourself the following questions:
Is this software easy to implement, use, and incorporate into our processes?
Can I customize it to fit the needs of my team and business?
Can I integrate my current software stack with this tool?
What do other users like and dislike about it?
Whatever you choose, it’s important to make sure the software will work for each department involved. Some people might use CRM or sales performance management software more than others, but it’s important that your tech stack is optimized for all roles.
Manage with grit
Sales management is a crucial function of any business wanting to place a heavy emphasis on revenue. Your sales team might be working efficiently and producing results, but it takes a deeper dive into the department through sales management to answer the tough questions.
What are we doing well? What could we be doing better? How can we optimize these processes?
Implement a sales management plan to find out.
A good indicator of sales success is speed. Learn how to quantify that with sales velocity.
Mary Clare Novak is a Content Marketing Specialist at G2 based in Burlington, Vermont, where she is currently exploring topics related to sales and customer relationship management. In her free time, you can find her doing a crossword puzzle, listening to cover bands, or eating fish tacos. (she/her/hers)
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