The Sales Per Hour Ratio
Once upon a time, sales managers and directors looked for a quick, easy way to determine the effectiveness of their reps and sales teams. Quota achievement is obviously the easiest measure, but even that number doesn't tell you how effective your team is, it only tells you the end result. Besides, if you're NOT achieving goal, then you have very little to go on when trying to determine how to develop your team.
Enter....the Sales Per Hour (SPH) Ratio.
SPH is a very simple measure of sales effectiveness that you can start using today. Here's how it works:
(Number of new admits or clients) / (Number of selling hours per week) = SPH
20 new admits this week / 32 actual selling hours = .625 SPH. For each hour of real selling activity* this rep generates .625 new admits (or clients). Simple, right?
So, what does this mean?
Well, in the first week it is simply a baseline measure. If this rep moves their SPH to .7 and then to .75 over the course of weeks or months, they are getting more effective at selling for every hour they spend selling. Nice huh?
Now, there are a few things to take into consideration:
1. Your reps must track their real selling hours (RSH) accurately. RSH are hours spent selling, traveling between accounts, following up, and doing other presentations and inservices. RSH are NOT hours spent in the office, in office meetings, going to networking events, or any other non sales related activities. When your reps start tracking RSH, I'll bet they are shocked at how few hours they actually spend selling. This is a great opportunity for you to help them adjust their plans get more key selling time.
2. You can track referrals or admissions but you must decide on one or the other. I tend to like tracking admits because that's the only time we get paid, but an argument could be made for tracking referrals since this is what your reps are selling for.
3. While you should track these ratios weekly, don't get too hung up over any one week. There are many peaks and valleys over the course of a sales year and a few weeks of below average SPH are generally not something to worry about. SPH is designed to be a long term trending number.
The beauty of SPH is that once you see it begin to rise, THEN you can work with your reps to maximize their selling time. Imagine a rep who sells 28 hours per week with a SPH of 1.2......then you help that rep organize their time and accounts to get 35 hours of selling per week. What do you think happens? They bring that SPH of 1.2 to MORE hours every week and begin to generate more business.
There are many layers to SPH, and how to use it to fine tune your team, coaching, training, and sales strategy, but this primer should get you started and help your sales grow.
Let me know if you have any questions by sending me an email.
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