The Sales Scorecard - An Effective Tool.
By Dr. Rick Johnson
Wednesday, 10th June 2009
A primary source of performance measurement is the sales scorecard, so, if you don't have one, create one: a scorecard is nothing more than a summary of actual performance against identified targets and the objectives set for those targets.

A territory discussion with individual sales representatives is the foundation to make scorecard utilization successful. These discussions should generally begin with a quick look at each measurement, along with the trends the numbers indicate.

The Scorecard

The scorecard should provide a checklist for territory progress and a review of action plans for each target account. If action plan tasks are being completed but the corresponding growth of the account is subpar the sales manager and territory manager should discuss the reasons and consider changes to the plan and/or account goals. If the territory manager is consistently failing to complete action items on time, a discussion about time management may be warranted.

The territory manager and sales manager should also verify that the specific commitments made at prior territory review sessions have been fulfilled. It is critical that both the territory manager and the sales manager have a clear, shared understanding of territory performance.

The Format

A basic sales scorecard may include but not be limited to the following:
  • Sales revenue growth goals
  • Margin growth goals
  • New account development
  • Individual target growth account goals (TGA's)
  • Individual product or vendor goals
  • Penetration goals
Scorecard Sample

Target Accounts

The Territory Manager needs to submit a predetermined number of target accounts that have a high potential for growth with a high probability for success. These accounts are approved by the Sales Manager and become the focus of the Territory Manager and the Sales Manager.

This account selection should include a number of prospects that are currently doing very little or no business with the company. This will keep the account pipeline full. Every salesperson loses accounts. Without the development of prospects, eventually the pipeline will run dry and the territory will shrink and lose market share. Individual sales goals are established for each of these accounts and agreed upon by the Territory Manager and the Sales Manager.

These objectives become the basis for the scorecard. Selecting Target Growth Accounts (TGA's) is the first step in establishing accountability with the sales process. This requires careful thought and substantial effort. Annual sales, margin and goals are established, and detailed action plans must be created for each of these accounts.

Action Plans

An account action plan ensures that the Territory Manager is proactively pursuing sales growth and that there is a solid basis for expecting account goals to be met. By monitoring these action plans, both the Sales Manager and Territory Manager can manage activities rather than wait for results.

The Territory Review ---Coach, Mentor and Support

The bulk of the time spent reviewing the scorecard should be spent on reviewing territory goals and activities. The sales manager should generally approach the review of the scorecard by listening to the territory manager. Where is he or she having problems? What resources does he or she need? Where are his or her key skill and knowledge gaps? How is his or her attitude? Does he or she understand the targeting process and other sales effectiveness concepts? The sales manager needs to be skilled at coaching.

Items to consider include:
  • Improving the territory manager's time management
  • Improving the territory manager's use of team-based selling
  • Modifying target account goals and action plans\Providing key resources such as training
  • Establishing what you, as the sales manager, could do better or differently to support the territory manager
  • Understanding the reasons behind a bad attitude or lack of enthusiasm
(If you would like to request a territory opportunity action-planning discussion checklist, please email me at rick@ceostrategist.com.)

Agree on New Commitments

When you have finished your territory review, the territory manager and sales manager should write down commitments made to each other. Recording them will ensure they're explicit rather than assumed and that both are in full agreement. Verify any change in the action plans, and reassure the territory manager of management support.

The territory review discussion based on the sales scorecard can be the cornerstone of sales effectiveness to maximize revenue, improve profitability and increase market share for your company. So, even though some may think that scorecards are obtrusive; it may be the first step to maximizing sales success in your organization.

In short, the Sales Scorecard provides:
  • Focus
  • Process
  • Best Practice Discipline
  • Accountability

Creating a scorecard supports accountability and alignment throughout the sales organization and the company. It is a diagnostic tool and a motivator that includes planning sales growth, executing account strategies and using objective feedback to continuously improve performance and drive accountability.

The key to success in determining exactly what measurement systems are included on the scorecard is buy-in by the individual sales representative.

Consequently, the sales representatives should be the driving force in the design of these territory scorecards. Keep in mind the principle that scorecards are not to be used for disciplinary purposes. They are used as tools to help the sales person grow market share.

Rick Johnson, expert speaker, wholesale distribution's "Leadership Strategist", founder of CEO Strategist, LLC a firm that helps clients create and maintain competitive advantage. Need a speaker for your next event, E-mail rick@ceostrategist.com. Don't forget to check out the Lead Wolf Series that can help you put more profit into your business.

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