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The Difference Between Productivity, Efficiency and Effectiveness in Sales

October 11th, 2017

You would have often heard your sales leaders asking you to be “more” productive, “more” efficient and “more” effective in selling! But how many times have you heard sales leaders explaining what these terms actually mean. Or how can we quantify this “more” in the realm of sales and sales cycle. Or are these just the subjective terms? Is it like asking a graphic designer to be “more creative”?

Through this post we will let you know what your managers actually mean when they ask you to be “Productive”, “Efficient” and “Effective”. Intermixing the usage of these terms can be detrimental to performance of your sales team, especially in B2B landscape. We emphasize on B2B selling space because the sales teams here are under constant pressure to hit the target. Every single account won has a significant impact on the company’s revenue.

Hence, these terms are not mere jargons thrown at you to boost your confidence. Each of them can be measured and change the way your team functions.

What is Sales Productivity

Sales productivity gives you an idea of how your sales resources are getting utilized and if there is a possibility of increasing the revenue by shrinking the resources. For example, if in a month your net sales was worth $20,000 and your team comprised of 5 sales reps. So, each individual’s contribution on an average was $4,000 to the net sales but who was more productive. Based on this, you can justify if you need to increase or decrease the number of reps to be cost effective.

However, with the same number of resources you can try to increase the productivity by putting few things in order. This could be achieved through the following:

  • Align sales and marketing teams
  • Invest in training of sales reps
  • Automate redundant tasks
  • Keep refreshing the content
  • Invest in right CRM tools
  • Use data to get sales insights

What is Sales Effectiveness

Are you doing the right things to achieve your sales goal and targeted revenue? These right things, right tasks and right sales process fall under the sphere of sales effectiveness. If you adopted the account based selling model, it is important to sell effectively and smartly. Say, your sales reps are assigned with the task of sending N number of emails and making X number of calls and they are successfully able to meet this target. Does that mean they are effective? Unfortunately no. What matters is how many prospects during those touch points gave them appointment for demo. This is effectiveness and here are the checklists to help you improve your team’s effectiveness:

  1. Availability of right tailored content at the right time
  2. Consistently improving the sales process by setting different goals
  3. Feeding data insights into the process
  4. Providing training to strike effective conversation with stakeholders

What is Sales Efficiency

How much time and money were spent in achieving the set goals encopmasses sales efficiency. For example, how long  does it take for your sales rep to get the appointment for the first demo and how many demos does it take to make a conversion. Efficiency is to make optimal utilization of resources. Hence, it directly leads to being effective.

Relationship between sales productivity, effectiveness and efficiency

Even though these three are completely different and shouldn’t be used interchangeably, all three are the important elements of sales cycle.

So if your sales team can attain more (by being effective) but with less effort (by being efficient) then it’s a sure shot formula for  increasing productivity and getting better ROI.

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