Measuring sales performance is an important part of annual planning. Evaluating performance and trends in sales areas can ensure that improvement and profit growth continue. There are different indicators that can be assessed but the primary areas are captured sales versus missed opportunities, profit margins earned and growth. If these indicators are trending in the right direction business is succeeding. Following are methods of evaluating sales performance:
- Measure the Quote Capture Rate – Quote capture rate is the ratio of quotes given to the number of quotes that were turned into sales. It’s not practical to measure this indicator based on when a particular quote actually became an order. So the simplest way to measure this is to take the number of quotes issued during a period versus the number of quotes turned into repair orders.
- Evaluate Recommended Sales Performance – The result of inspection and diagnosis situations are recommended services. The measure of effectiveness in this area is the ratio of services recommended versus those sold.
- Assess the Labor Profit Margin – The gross labor profit margin allows evaluation of effectiveness in labor sales. Comparing this to previous period or industry average margins will indicate sales performance on labor.
- Assess the Parts Profit Margin – The gross part sales profit margin allows evaluation of effectiveness in part sales. Comparing this to previous period or industry average margins will indicate sales performance on parts.
- Calculate the Labor Hours Growth Rate – Labor hours are the most reliable measurement of business growth or decline. Other indicators can be affected by pricing and other factors. If labor hours are growing then business is growing. Measuring labor hours month over month over the period of a year can indicate growth trends. Also measuring one year of trending over the previous year can indicate year over year growth.
- Evaluate Trends and Develop Improvement Strategies – Calculating performance measurements in sales areas allows identification of trending patterns. If trends are moving in the right direction – current sales practices are working. If not adjustments may be needed.