Want to improve sales productivity? Look at sales efficiency and sales effectiveness first.
We often evaluate sales performance based on a rep’s ability and sales productivity, but we should also be concerned about the sales rep’s availability— is the rep spending time on the right activities?
Peter Drucker once said, “Efficiency is doing things right; effectiveness is doing the right things.”
It’s true— we often evaluate performance based on a sales rep’s ability, but we should also be concerned about the sales rep’s availability— is the rep spending time on the right activities? (err…like selling?)
According to Forrester research, sales reps spend only about 23% of their time actually selling, while 27% of their day is spent doing internal, non-productive work. This means that unless sales organizations make adjustments to their internal processes, seller efficiency, effectiveness, and sales productivity are at risk— as well as the sales leader’s job.
Defining sales efficiency and sales effectiveness
The terms “efficiency” and “effectiveness” are used often in business environments, and while they’re often used interchangeably, they really aren’t.
Efficiency refers to how quickly or productively a business task is carried out.
Effectiveness refers to the quality of the completed task or process—did it meet expected goals or quality requirements? Did it have the intended result?
While the distinction between the terms may be subtle, they’re important, especially when measuring sales efforts.
Of course, it’s not just about defining these terms. It’s also about identifying the right metrics so that you can make adjustments where needed and improve your sales outcomes.
Measuring sales productivity
Sales performance, by nature, has built-in metrics— is a rep hitting their goal? How much revenue is a rep bringing in each month, quarter, and year?
Unlike other roles in an organization, sales roles are very visible, not to mention are the lifeblood of an organization. As such, we tend to evaluate based solely on the numbers— the productivity of a rep or how many deals they closed in a given period.
And closed/won is part of the equation, but sales leaders should be looking at more than just the bottom line number.
Sales productivity is an outcome of both sales efficiency and sales effectiveness. While it might seem like we’re splitting hairs here, there is a difference between the two terms. Think in terms of your team’s efficiency (how they’re using their time) and the effectiveness of their efforts. Or, as Salesforce puts it: “Efficiency is knocking on as many doors as possible. Effectiveness is what you do when the doors open.”
Measuring sales efficiency
Efficiency, by definition, is a measure of the quantity or volume of sales your reps can produce with minimal resources—time and money. For example, implementing processes for proposal production and content organization will save time, enabling a higher quantity of proposals that can be created.
The goal of sales efficiency is to minimize input and increase output. And there are specific, quantifiable ways that organizations calculate just how well their salespeople, and their sales teams, are doing.
For instance, HubSpot tells us that sales efficiency “is calculated by dividing the gross revenue a sales team generates by the costs the team incurs while generating it, such as salaries, benefits, office space, and training expenses.” Another way to look at this is that gross revenue divided by sales and marketing expenses will measure sales efficiency.
Doing these calculations regularly and comparing across teams or individuals can help you find areas of opportunity for improvement. Additionally, industry stats can help focus your attention on potential problem areas.
Unproductive use of sales time
- 50% of a sales rep’s time is wasted prospecting to unqualified leads.
- 54% of sales reps say it’s harder to get in front of prospects vs. five years ago.
- Sales reps who spend less time on sales-related activities also love their job less.
- 82% of top sales performers spend at least half their day selling.
Qwilr helps improve your team’s efficiency with sales collateral that streamlines production, captures the attention of buyers, and accelerates sales cycles. Schedule a demo to learn more.
Measuring sales effectiveness
Compared with sales efficiency, sales effectiveness is more about the process than outcomes. It’s a fluid process, according to HubSpot. Sales effectiveness measures how successfully salespeople can convert prospects into customers by guiding them through the sales process or sales funnel. “Sales effectiveness is evaluated using a variety of metrics, like conversion rate, close rate, and quota attainment,” HubSpot says.
Variables that impact your sales effectiveness include increasing complexities in the sales process and changing buyer preferences.
More complexity in the sales process
- It takes as many as 18 calls to connect with a buyer.
- Only 24% of sales emails are opened.
- On average, 11 stakeholders are involved in most B2B purchases
Changing buyer preferences
Research by Gartner also reveals:
- Millennials, the rising workforce, are digital natives and more skeptical of seller claims
- 80% of B2B sales interactions will occur in digital channels by 2025
- Customers reward rich virtual buying experiences
Sales effectiveness red flags
You should periodically evaluate your sales processes with the objective of up-leveling seller effectiveness. Obvious indicators of a sales effectiveness problem include your closed/won rates are suffering or declining. Other indicators include:
- Negative buyer feedback
- Longer response times and sales cycles
- Fewer proposals sent
- Fewer requests for pricing
Suppose your sales effectiveness isn’t what you’d like. In that case, sales tools like Gong and Chorus can help analyze the quality of conversations your reps have and identify specific areas for improvement. Additionally, proposal software tools like Qwilr can help improve your digital sales effectiveness by capturing buyer attention with standout collateral, creating personalized buyer experiences, and empowering buyers throughout the purchasing process. Ultimately, your goal is to reduce unproductive seller time and improve sales outcomes. (Want to see a demo? Book a time now.)
Optimizing your sales process
According to Salesforce, 49% of organizations have zero or limited means to measure sales productivity.
When we think about the sales process and how to measure it, we may also talk about “optimizing” the sales process— or the steps to improve sales efficiency, effectiveness, and sales productivity.
Ultimately, you’re looking for maximum success through minimal effort—that’s how you boost return on investment. But, of course, we’re not just talking about quantity here; you also need to consider the quality of your sales efforts.
Finding the right balance between sales efficiency and sales effectiveness measures can help you get a more realistic and meaningful perspective on sales productivity.
One of the best ways to optimize sales processes is through sales tools that can free up the precious time of your salespeople to focus on what they do best—sell. The more you can do to give your reps more selling time by improving their day-to-day efficiency and analyzing their individual sales effectiveness, the more you’ll impact your team’s overall sales productivity.
How can Qwilr sales proposals help your team save time, stand out, and win more business? In just 15 minutes, we’ll show you how. Schedule a personalized demo now.
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