Our marketing campaign: Essential Analytics

Today, I just finished updating our first white paper for Bimotics’ Essential Analytics campaign. From concept to fruition, this milestone took much more time and effort than I expected- nearly a year. Much time was spent understanding what my potential customers, the small and medium sized business really need to know about analytics.  

After wading through topics about why metrics do not work for small business such as not having the know-how to set up metrics let alone time to look at metrics and having low data quality with the applications.  (Problems our software also solves but makes us sound like IT folks.)  I was wanted to focus on bringing value to those that were already open to metrics and analytics, but needed more practical advice on how to apply it. The response from potential customers that stood out and fit with my goal was: There is not enough context on when it is appropriate to use one metric or KPI.

As a practicing business analyst, gaining insight from the data and measurements comes more naturally.  But observation has shown that many small and medium sized businesses do not have a seasoned business analyst to “read the tea leaves”. Even our early adopters, can struggle with making sense of the numbers. Once an organization has the ability to measure their business operations and performance. Questions immediately arise:

• Does this metric make sense for my business model?
• Does this metric make sense for my industry?
• Which of these metrics are more important?
• What does the analytics even mean to my business?
• Do these metrics even align with my current strategy?

From this research, I worked on the design for my for essential analytics marketing campaign. The white paper series will showcase one key business metric that one can get out of our first data sources: Quickbooks and Freshbooks. Then, we use business cases to describe how other managers and business owners use the metric to get solutions to everyday business problems. Our readers can get both more context around metrics and how they can be used, as well as, come up with ideas on how to use analysis to answer their own questions.

Sales Representative KPIs

In setting up a performance based sales organization, managers and small business owners can create KPIs for their sales representatives.  KPIs stand for key performance indicators which are measurements a business takes to monitor performance.   According to the KPI Mega Library, there are a few related to the sales representatives:

• Day-to-day sales activities:
• # of average appointments per sales representatives
• Time to answer a request by customer
• # of customers per sales employee
• Sales revenue measurements:
• Average sales revenue per sales person
• Total costs to gain a new customer
• Sales team performance:
• Average sales turnover per sales staff
• % of sales representative that met or are above quota
• % of sales representatives that have met sales target
• Total sales of sales staff / Total customers of each sales staff

It takes continuous measurements of these KPI to understand how well your sales team can performance as well as how much they can improve.  Trending over time, is the easiest way to analyze the performance and changes.

A continuing look into profitability of your salesforce

Continuing with concepts related to salesforce profitability and how the analysis can lead to key decisions for small business owners.  Trending salesperson profitability over time whether it is monthly or quarterly can also enable key decisions.  

Seasonality is something that most business naturally observe, but through the lense of salesperson profitability a business owner can identify discounting rules or plan strategic time off.  For example, if there is a time when sales rep profitability dips and inventories are becoming low, then it may be a good time to conduct training or switch the sales focus to other higher margin products and services.  

Blending a salesperson’s tenure with your profitability analysis can also uncover insight.  Say you have two sales reps one that has been with you for 10 years and another that has just signed on this year.  The former sales rep is an expert in the industry and know just the discount a customer will pay for a product.  The newer sales rep on the other hand, may be taking a different approach while learning the market. Overtime, you will probably observe that salesperson profitability for you seasoned rep consistent and predictable.  


On the other hand, you may be looking for the profitability of the new rep to grow over time.  But what if the profitability of your new salesperson is outpacing that of your seasoned representative?  You may want to see if your seasoned representative has grown complacent and is used to providing deeper discounts than necessary.  Or if the new market discovered by your other representative is a sign of changing overall market conditions. The analysis then pays off.

A look into profitability of your salesforce

As the owner of a small business, deciding to hire a salesperson can be huge.  Adding personnel is not only a significant expense but also added responsibility to you to support them to get the most sales out of the investment.  Paying for salespeople is investing in increasing revenue; but it is important to know that how your sales is costing your business.

When implementing a sales team or sales program, measuring and tracking sales rep profitability can be key to learning what works and what doesn’t.  For startups, understanding customer acquisition costs (CAC) is essential.  Salesforce profitability analysis will help justify increasing the overall CAC and help you assess the health of that overall CAC.

What you will need for to do the analysis:

• Sales person
• Sales person monthly salary
• Monthly cost of the sales person including benefits, commissions, travel expenses and other overhead.
• Monthly revenue
• Monthly profit

The following targets will allow you to round out your return on investment analysis:

• Target profit on products sold by the sales person
• Target month where you expect: monthly revenue will equal the sales person’s salary
• Target month where you expect: monthly revenue will equal the total cost of business (breakeven)

This analysis can give you more insight than simply answering questions such as what is  the total sales for each sales person? And, which sales did each sales person make?

In that it goes beyond getting the numbers, and helps you understand if your return on investment is working as you believed.  And if you sales cost structures need to be tweaked.