What’s Sales Efficiency vs. Sales Effectiveness

Sales efficiency is defined as the capability of producing an economic surplus.

Wait, this isn’t a graduation speech. It’s actually more like the wake-up call that sales needs.

sales efficiency

There are all sorts of tools, like data and emails and sales efficiency ratio that make it easy to do our jobs. We buy these because they give us an advantage over the competition.

We call all of this “efficiency,” and we’ve become so efficient that it’s a wonder if the work is even necessary.

Sales efficiency formula is important, but we’ve forgotten how to be effective.

The average sales stack for an SDR or Inside Sales Rep is $564month, which equals to about 6800 dollars per year. Sales efficiency calculation states that 10 inside reps would cost around 68000 on the low end!

sales efficiency

If you’re angry, then good. It’s not their fault – it is our own.

These tools are cool, but sales efficiency metrics are not powerful enough to be the only thing you need for sales motivation.

That voice should have been saying, “This is great. We’ll get more meetings and increase the amount of deals going into our pipeline. What do we need to do in order for the reps to have amazing conversations with prospects? That way they can ensure that their velocity increases too.

I am telling my salespeople that they better not make any mistakes in these deals!

It was a disaster. The reps did not have great conversations, deals fell through after the deal and they got stuck in “Maybe-Land” which created what we like to call “The Plunger Effect.” It’s where you get so many shit deals that people don’t know what to do because it gets too full of them. We’re also scared about cleaning up this mess because if Roto-Rooter goes down there then our pipeline is going to be exposed for all its dirtiness.

I have found the sales efficiency ratio that in 75% of cases when reps are not meeting their expected timelines, it is because they missed a qualified timeline or access to authority.

I wish we had been more honest with each other. It’s not the vendor’s fault and it is never always the rep’s fault. The problem lies in sales leadership, who want to make better decisions but overlook effectiveness.

Now that I’ve defined the word, it’s time to find a dictionary for effectiveness and efficiency in sales

 

Efficiency is the ability to accomplish something with the least waste of time and effort. Effectiveness is what is adequate to accomplish a purpose, or producing the intended or expected result.


Is sales effectiveness a term that relates to what is necessary to accomplish a goal or produce the desired or anticipated impact?

What word is shared by the three definitions? ACCOMPLISH!

Unfortunately, a lot of companies don’t make money from securing efficiency for sale meetings.

Company’s make money from the results of that meeting.

You want to have more meetings that are effective and not so many ineffective ones.

No matter what stage you are at, if your meetings just aren’t working out then it’s time to find new ways of meeting.

The answer is actually quite simple: training and coaching. Nothing more, nothing less. Training and coaching can be overlooked or not even understood by executives who would rather buy a software tool to help them send emails on their phones.

Many executives and sales leaders have no idea what it’s like to be a salesman because they’ve never had training. This is really bad for them because their title provides them with leverage that can’t be copied by anyone else.

When sales training and CRM don’t connect, it becomes more difficult to justify their need. They only see is as an expense.

Many CEOs and VPs of Sales believe that sales is an essential skill, even if someone doesn’t have a background in business. They think it’s the reps fault when they fail.

The result of sales efficiency calculation is that companies don’t want to invest in training and coaching, because it’s hard to measure the ROI. They view it as a cost without an immediate return on investment.

In many cases, sales reps fail because management doesn’t understand what they need to succeed. They should be doing more training and coaching.

Prep work is training

For example, if you were planning to run a marathon, your trainer would help you focus on targeting the right muscle groups. They’d provide guidance for building up calves and thighs as well as strengthening core muscles.

Sales trainers focus on teaching specific philosophies and methodologies, using stories of wins and losses to illustrate points.

Coaching encapsulates all of the activities that take place on the practice field or during game time

While the trainer is good at strength conditioning, your coach will also help you with body and balance. He or she will talk about stride length and endurance as well as shoes, socks, and clothing.

A coach helps reps during live phone calls and provides guidance after the call. They also conduct a post-mortem to establish what went well, where they could have improved, and how their performance can be measured in the future.

The success of any organization that relies on salespeople comes down to one thing: more effective conversations. You can teach your reps how to ask better questions, or give them the opportunity to stand while they talk with prospects.

The power going out is a concern for many people. I suggest you train your team on how to make sales calls if the power goes out, or they won’t be able to do their job and reach the SaaS sales efficiency you desire. 


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Just to give you an idea. 😀  sales efficiency

Editors Note:

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Justin McGill
About Author: Justin McGill
Justin McGill is the Founder of LeadFuze - a lead generation platform that discovers new leads for you automatically. Get 25 leads free.