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Sales Confidence Index Found Continued Optimism, but Discounting Trend Continues
RENO, NV -
February 14, 2006 -
Miller Heiman today announced results of the Q1 2006 Sales Confidence Index, formerly the Sales Performance Index. The Index is 105.8 for the quarter. This reflects a modest improvement compared to last quarter's 104.7, and indicates increased optimism in the marketplace that the sales force will achieve quota in the first quarter of the year. Buyer-Seller Disconnect Miller Heiman's Sales Confidence Index is a unique and unprecedented market indicator that measures the confidence companies have in effectively selling products and services in current market conditions. It is the first nationally published Index of its kind. The Index reflects the expectations of a select group of sales leaders (CEO, COO, President, Vice President Sales, or Director of Sales) for the current quarter's sales performance.
Research Methodology
The Index is comprised of responses by a balanced group of sales leaders representing small, medium and large companies in various industries throughout North America. Each quarter, respondents are asked questions relating to their confidence in the overall market and toward specific performance-related metrics. Questions range from the sales leader's ability to achieve quota in the current quarter to lead quality, sales cycles, discounting pressures, and growth or decline in average billing per customer. These questions are identical quarter over quarter.
The study analyzes the attitudes and preferences of sales leaders regarding their perception of the selling environment. The scores were calibrated to establish a baseline of 100 for the fourth quarter of 2004, with comparative data available for subsequent quarters.
According to the Q1 Index findings, sales leaders are a little less bullish than they were a year ago, but feeling better than the end of last year. There was a significant decline in the number of respondents that believe they will sell more products or services in the next 90-days compared to the previous three month time period.
While sales leaders appear confident, this outlook is not aligned with their counterparts in purchasing departments. While the Sales Confidence Index is trending upward, it lags behind the Purchasing Managers' Index (PMI) from the Institute for Supply Management. The PMI is a composite index comprised of replies to questions asked of purchasing and supply executives, indicating purchasing activity trends.
"There are some really strong indicators that salespeople are working on more opportunities and ones that are larger in size than last quarter. Whether this is due to the efforts of the sales organization or simply a function of the time of year when budgets are released remains to be seen," said Sam Reese, president and CEO, Miller Heiman. "It is safe to say that all companies should be focused on expanding their pipelines and their prospect base in order to maintain growth throughout the year."
The respondents also indicated that the number of leads is down and expressed concern that the quality of leads coming to them has not improved. Discounting continues to be high; nearly 90% of organizations cut prices to win business. According to the Index findings, approximately one-third said they are discounting between 10 - 20 percent, with almost half discounting up to 10 percent.
"Although it is always somewhat positive to see the Sales Confidence Index trending upwards, it is of some concern that salespeople do not feel that there has been any improvement in the last quarter in terms of the quantity or the quality of the leads," said Reese. "When this is coupled with the fact that there is less confidence among the sales force that they will improve their sales in the next 90 days, it brings into question how confident they are in sustaining momentum throughout the year."About the Sales Confidence Index
About Miller Heiman: The Sales Performance Company
Miller Heiman is a global leader in sales performance solutions with more than 30 years of documented results. The company works with leading organizations to improve sales effectiveness through issue-based consulting and training. Headquartered in Reno, Nev., Miller Heiman has additional corporate offices in the United Kingdom and Australia and representation in more than 30 countries. For more information, contact 877.506.2973 or visit www.millerheiman.com.
