Sales quantity and quality both matter if you are to have a fair sales contest, and a sustainable business. Sometimes, the two Qs are referred to as the two Vs, volume and value. Whether you use Qs or Vs, ignoring quantity or value, is a recipe for disaster.
Is quantity more important than quality?
Evaluating sales performance is not as clear cut as it may appear. For instance, if you are selling loans, it is easy to award the seller with the most loans disbursed (lent) as the ‘winner’. This however, would be looking at one parameter, quantity or volume. And it would be misleading. This is because the life time period of the loan could turn out to be a loss (and result in egg in the face) to the awarding institution. Imagine calling the Chief Executive Officer to present the ‘winner’ with the award of Best Sales Person.
And then, three months in, it turns out the customer has not repaid a single cent and in fact cannot be reached; or, can be reached but is indifferent about the repayment. Or worse, he had conspired with the ‘winning’ seller to defraud the institution! Evaluating sales quantity and quality therefore puts the seller’s performance into clearer perspective.
What KPIs would be used to evaluate sales performance?
To appreciate the importance of sales contests think of the Olympics medal table. Look at it critically. If quantity was the only key performance index, then the country with the most medals would win, and on the surface that seems fair. But scratch the surface and a whole new world appears. The world of how it actually works. And how it works is that if one country had 23 bronze medals, and another, only one silver, then, the latter wins. Yet quantity wise it had only one medal, but quality wise the game changes. The same applies if one country has 23 silver medals; the country with the one gold trumps. How do you balance quality and quantity?
The Olympics medal table is a perfect metaphor of how to evaluate performance based on sales quantity and quality. For instance, for one selling wines, brands with higher profit margins would fall under quality and those thin margins, quantity. So, for wines with higher margins the sales quantity target would be much lower but the commission higher; the opposite would apply for brands with lower margins.
Sales quantity and quality sustain business
Volume and value are not mere yardsticks for evaluating sales performance or forming a basis for sales contests. No. Sales quantity and quality affect the entire business. Businesses face two risks, reputational and financial. Either can bring down a business. The Wells Fargo scandal is an example of reputational risk. And a significant entry point to these risks lies in the sales made. A sale that is fraudulent ends up costing the reputation of the business and affecting its projections. Small wonder, then, why insurance companies, claw back all commissions paid out on sales that turn out to be fraudulent. And they are not clawed back in piece meal but all at once. The errant sales agent can be fired or put on notice. So as a business, sales quality and quantity is a benchmark you want to keep in your sights at all times, if you seek a sustainable business and ethical sales people.
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