What is it?
A 4-component index that shows the effectiveness of a company’s sales communication. The Sales Effectiveness Index (SEI) visually demonstrates how efficiently a company’s customer base is utilized. SEI shows the combined impact of 4 important factors on the final result. It can also be said that the final result indicates how efective the employees are. Particularly if they are expected to do sales work in retail store.
Who created it?
The Sales Effectiveness Index (or this particular recipe) was developed by Trendline Analytics. Trendline Analytics is a training and consulting firm that started its operations in 2002.
Why is the effectiveness index necessary?
SEI does not show the final sales result. That is indicated by the “cash register Excel”. Instead, it provides a specific number to understand the contribution or effort to the company’s sales turnover. Thanks to SEI, companies can focus on developing the most critical points in the service process. SEI helps to understand how effectively communication with customers is handled. The real sales result can be achieved both through customer’s purchasing behavior and through the salesperson’s sales activity. SEI shows the effectiveness of salespeople. It helps to reward and value employees and teams that make a diligent effort.
Measuring SEI helps in deciding which development activities should be planned for whom and in what order. It also helps to save significantly on marketing costs by focusing on effectively serving the existing customer, rather than acquiring new ones. And if this is done only then, if needed, it is reasonable to bring in new ones (using marketing measures). This allows employees to receive realistic feedback when they complain about the small number of customers and request more active advertising campaigns. Unlikely of Net Promoter Score (NPS) and other metrics SEI result is intended for internal use. To be used within the company and not for comparing different companies.
How is the SEI result obtained?
Trendline’s created Sales Effectiveness Index (SEI) is obtained from the joint analysis of 4 specific sales communication factors. Using mystery shopping, it measures (1) the activity of contacting customers, (2) identifying the specific needs of the customer, (3) argumenting the product, and (4) asking for the closing decision. These 4 values are input into the Trendline SEI calculation process (simulation). There are certainly many other important nuances in the service and sales process, but these 4 factors provide a clear and understandable realistic picture of sales process effectiveness.
1. How many customers are contacted?
We measure what percentage of entering customers your sales personnel get in touch with. For example, if 60% of the entering customers are contacted by your sales team, then 40% of the customer mass has been lost, and they are no longer effectively communicated with by the sales team. In real life the customers may initiate the contact with the salesperson on their own. But SEI measures the sales staff, not the customers. Of course in the service process also other factors are measured in the beginning of the contact. Such as a smile and wording of the greeting, etc. Trendline SEI formula focuses on this particular point.
Placing this point in the first place is important because if no contact is made with the customers, then everything else is left to chance. In this case all the initiative is on the customers side and all depend on the customers.
2. How well the customers’ specific needs are identified?
Sales work cannot be successful or efficient if the salesperson does not clarify exactly what the customer wants. Otherwise, the right thing cannot be offered and presented effectively. It may lead to haphazard offers or presenting too broad a range of products, which confuses the customer. For example, if we continue with the previous example and if half of the customers with whom contact was made (60% of the entrants) have their needs thoroughly clarified, then 30% of the customer mass remains (60% divided by 2 is 30%).
3. How effectively are sales arguments presented when introducing the product/service?
Next, it is objectively measured what is done with those customers from whom exactly what they want and need was effectively obtained. Now, it is the most important stage of sales communication – persuading and presenting arguments. Based on this information, the customer decides whether to buy or not. Let’s assume that for all customers whose needs were thoroughly identified (point 2), the product is introduced in a 100% effective and persuasive way. Then, this stage is fully completed in the Trendline SEI simulation, and those 30% of the initial customers with whom stage 3 is reached, all remain.
4. How many customers were asked for the closing decision?
In the last part of the simulation, it is measured how many customers (with whom contact was made, and whose needs were thoroughly identified, and who were effectively introduced to the product) are asked for the purchase decision. For example, if by the end of the previous stage, only half of those remaining (from 30%) are asked for the purchase decision, then the final result is 15% (30% divided by 2 is 15%). This final result is the value of SEI. In this sample case, it is 15%.
In the black scenario, the salesperson-customer service representative would say after effectively presenting the products: “Take your time and if you need anything, ask for more!”. And would step back and leave the customer alone at the most critical moment.
How to Improve the Sales Effectiveness Index result?
The 4-step SEI simulation provides clear directions on which factors to focus on first. Prioritize the most important things! There is no point in putting effort into training, for example, closing skills, if there are very few customers who reach that stage, etc.
Why is a conscious approach to sales and customer service development necessary?
Based on our 20 years of experience, in developing sales and service companies, we understand that effective sales communication and customer service do not happen by themselves. Achieving them requires specific substantive and objective measures. Of course, other factors are also very important in shaping the customer’s attitudes and emotions. But SEI calculates and objectively shows how efectively empoyees are communicating with customers. And more important, it shows in what order to fix the sales communication.
Eero Palm
Trendline Analytics, CEO
