Can Sales Managers Use ROA-Return On Activity As A Performance Benchmark?

We hear a lot about ROI or return on investment. The blogisphere is rife with discussions on the topic. So why not use ROA as a measure of how effective a salesperson is or for that matter anyone inside a company-even the CEO. Maybe we should turn the marketplace upside down and start with CEO’s first. Are they really worth what they make? Better yet let’s apply the return on activity measurement to politicians! Talk about a static number!

I have seen salespeople execute sales activities, knowing exactly what their payoff will be in terms of sales and commissions. Why don’t more managers and companies focus on this? My guess is they either have not thought of it or don’t know how.

Due to the variety of industries, product complexities, the vagaries of the marketplace, sell cycle, quality of the salesperson, and other variables there can’t be hard and fast activities that will apply uniformly to all situations. A $1.5M piece of equipment may have a 12 month or longer sales cycle whereas  a relatively unsophisticated one-time use product may have a sell cycle of 2 weeks or less. I know marketers who travel to the orient 6 times per year. How do you measure their activity and the return on activity?

If you really want to get crazy try applying ROA to a consultant’s business/sales life! Creating a benchmark from ROA requires the following:

  1. Knowing where the business is
  2. Who are the decision makers
  3. Why do prospects buy the product
  4. Knowledge of the competition
  5. A tried and true sales process executed by professional salespeople
  6. Daily sales behaviors in sufficient numbers to generate business
  7. A service component to support the sales staff
  8. Significant performance incentives
  9. The ability to quantify activity or activities to a close

Needless to say you better have your sales team on board for this process because some salespeople may think that ROA is another way to describe micro-managing. It isn’t but the reps may need to understand why it isn’t.

Food for thought for all you sales managers out there. In a few weeks I’ll break this down into the above 9 components.

Are we having fun yet?

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