That seems odd. One of the primary responsibilities of a sales leader is to empower their reps for success. As Jason Jordan explains in “Cracking the Sales Management Code,” sales leaders are like war room generals handing down marching orders to foot soldiers (sales reps).
“Company executives don’t want their managers to simply scream ‘Charge!’ and then push their salespeople to work harder. They expect them to skillfully direct the action on the battlefield. They expect them to be proactive sales managers,” he writes.
Intuitively, sales leaders know that coaching is effective. But just how much ROI can you get from the exercise? We created four simple steps to calculate the value of sales coaching.
How to calculate the ROI of sales coaching
Track activity metrics.
To understand the effect of sales coaching, you must measure the sales activities that matter to your process. Don’t measure activity for the sake of measuring activity. Use activity-based selling to identify the key actions that move opportunities through the sales funnel.
Be specific. For an inside sales team, those key metrics might be meetings, ROI discussions, proposals and deals. But a field sales team might be better off measuring face-to-face meetings, VP-level conversations, new opportunities and deals.
Here’s what the average monthly activity for a sales rep might look like:
- 40 Meetings
- 20 ROI Discussions
- 5 Proposals
- 1 Deal
These activity metrics should be very specific to your sales team and process. (Need a little help selecting key performance indicators (KPIs)? Grab one of our complete KPI guides.)
Calculate conversion rates.
Use your activity data to calculate the conversion rate between each step of your sales funnel.
Let’s use our example of the inside sales team. For every two meetings, the rep is able to schedule an ROI discussion.
( 20 ROI Discussions / 40 Meetings ) x 100 = 50%
And one in every four ROI discussions moves to the proposal stage.
( 5 Proposals / 20 ROI Discussions ) x 100 = 25%
Finally, your reps close one deal for every five proposals sent.
( 1 Deal / 5 Proposals ) x 100 = 20%
Use this data to determine which activities to coach your reps around. If you can improve the skills of your sales team, these conversion rates will go up.
Generate strategic coaching model.
Build a coaching plan around the specific sales activity you want to improve. Don’t try to work on everything at once. Every sales leader sees 80 things they could possibly coach a rep on, but that approach prevents focus on any single task.
Following are some critical questions to consider when coaching around specific sales activities. Use them to determine what specifically needs improvement.
Meetings / ROI Discussions
- Are they identifying the key players in the buying process?
- Are they confirming alignment between the prospect’s objectives and your company’s offering? • Do they focus on features and functionality or problems and solutions?
Proposals / Deals Closed
- Are they sending relevant thought leadership content throughout the process?
- Do they review each proposal with sales managers before sending them to opportunities?
- Are they creating a timeline of success for prospects when they become customers?
Hold consistent one-on-one coaching sessions with salespeople, and be sure to give them next steps after each one. At the next meeting, assess if and how performance has changed since the previous session.
Determine potential ROI.
Imagine if you focused 4 or 5 really strong sales coaching sessions around the proposal activity. You provide reps with new document automation software to generate uniform proposals. Your marketing team helps edit, refine and polish the language. You coach your rep on presenting the proposal to key buyers and driving urgency around its completion.
It’s not unlikely that your conversion rate from proposal to close will increase. If reps start closing 40 percent of the deals in proposal stage, they’d double the number of deals closing each month.
( 2 Deal / 5 Proposals ) x 100 = 40%
For a 100-person sales team, that means 200 more deals closed a month. That’s 2,400 more wins in just a year! Imagine what you could achieve by coaching other activities, too.
You’ve already made investments in hiring salespeople, and sales coaching helps you increase your ROI from them. Use this same exercise to create your own data-driven sales coaching process.