This KPI class measures the performance around sales unit volume (number of pieces or units sold) achieved per sales channel instance (sales executive, sales manager, sales outlet….) period of time. Please go through ‘Sales Productivity page.

Some of the content is similar with 'Sales Value productivity KPI class'. However, there is a reason for separating value and volume productivity. One needs to look at both these KPIs to get the bigger picture. Combination of sales value and sales volume productivity gives “average ticket-size” productivity.

Business Objective behind this KPI-Class:

Optimize the sales unit volume productivity, as per the business objective

Explanation & Specification

Sales unit volume productivity KPI class is an important component in terms of how an organization manages it business effectiveness. Here is how this KPI ‘could be’ linked to the organization performance:

• A large sales volume means more customers, and greater visibility.
• A large sales volume along with lower sales, means that we are selling low-ticket items
• A large sales volume along with lower sales, means that we could be having low profitability, as every sales has a fixed (or semi-fixed) components like order processing, shipping etc.
• A low sales volume means that we are focusing on only high-end customers. This could lead to drying-up of your current target segment.

Therefore a lot depends on what is your strategy, and this defines your expectations out of the KPI

Definition

Sales unit volume productivity KPI class, is calculated as sales unit volume achieved for all the sales invoice raised to the customer (reflecting as the accounts receivable in the financial books) divided by the total sales force. As sales volume as a measure has different connotations, there can be multiple KPI’s within the KPI class.

Type of KPI

• What (tells on what is happening and not why is it happening)
• Lagging (Post-facto performance, cannot project performance)
• P&L or Period activity (tells the activity for a period and not the status at a time- like profit and loss account)

Examples of KPIs in the sales unit volume productivity KPI class

• Base Product sale volume (for example laptop base configuration value)
• Add-on product sales volume (for example sales value associated with additional RAM in a lap-top)
• Add-on services  sales volume (for example added 2-year warranty package)
• Sales unit volume productivity per day with or without holidays.
• Sales volume productivity with existing customers (up-sell and cross-sell)
• Sales volume productivity with new customers
• Sales volume productivity with existing contracts (renewal of warranty on a laptop). This is different from sales volume productivity from an existing customer (existing customer buying a new laptop)
• Sales volume productivity net of returns (when a customer returns the purchase and asks for the refund)
• Sales volume productivity considering only active sales force (every organization has its own definition of ‘active’ sales force.)

Inclusions

• Include the returns from the customer and asking for the refund
• Include the specific mention of the sales campaign.
• When you calculate total sales volume divided by the sales staff, you may include the total sales force including the sales management.

Exclusions

• Pipeline sales, for which the invoices have not been raised. This aspect is covered in a different KPI class. Using the word ‘sales productivity’ for an incomplete sale can be extremely misguiding and can introduce mal-practices.
• Be conscious of multiple units being sold to the same customer. Sometime the organizations give incentive on the ‘number of orders’, and sales staff manipulates the system. For example in the life insurance segment, agents can give ten USD 100000 policies to a single customer instead of issuing a single 1 million USD policy.
• While the system might have registered two different products, but if for customer it’s a single product (with no option of separating the two), one may like to count it as one product (or at least have a separate cut on product package). For example if your laptop has a built in one year on-site service contract, you would consider it as a single package.

Clarity is needed on:

Here are the areas, which will need clarity within the organization to ensure that we know what we are measuring:

• What constitute a customer return?
• Do we need to take into account the additional services being offered to get the sale? This increases the sales volume productivity but reduce the margin (sometime over the long term, by which the head of sales has got the promotion and moved on..)
• Do we need to take into account the sales volume productivity surge due to a sales campaign?

Success Factors of sales value productivity KPI Class

• The tenure of sales person.
• The quality of training
• Quality of leads.
• Operations support.
• Direct sales force vs indirect sales force (direct sales force may give higher ticket-size and thus lower volumes)
• Maximizing the seasonality or a campaign

Interpretation and root-cause analysis

There can be apart from looking at the success-drivers (as mentioned above and which will point to most of the root causes), one can also look at some other root causes

If the KPI performance is coming lower than expected,:

• Check on the pipeline status – If the pipeline status is higher than usual, it might be just a timing issue and you may catch-up next period)
• Lesser number of new recruits being hired. This will result in higher average tenure and higher bigger ticket sale. (assuming that a new sales person is more successful in small-ticket sale, and he moves to large ticket sales as he gains confidence)
• The customer profile in the target segment. A higher mix of HNI (higher net-worth Individuals)
• Any significant attrition of high quality sales force.
• Any sales campaign finishing in the previous period

If the KPI performance is higher than expected,:

• We could be focusing too much on HNI segment, thereby risking our longer term customer base (most of the new customers begin with smaller ticket size).
• We could be focusing too much on the existing customers.

Measures of sales productivity

• Number of Sales Units (with hierarchy of numbers, packets, batch, shipping crate..)
• Number of sales staff

Dimensions or attribute on which you can slice and dice the Sales Volume Productivity KPI class (same as sales value productivity)

• Location (sales value productivity for London Office)
• Product (you can have different level of productivity given the complexity/demand of a given product)
• Business Unit  (sales value productivity for OPD critical disease patients)
• Time (sales value productivity
• Tenure slab of sales staff
• Sales channel
• Sales Campaign
• Sales leads

Direction of improvement

Depends on business objectives. Typically the direction is to “optimize”

Industry Relevance

All

Functional Relevance

Sales & Distribution