Sales effectiveness overview
According to CSO Insights’ 2016 Sales Performance Optimization Study, increasing sales effectiveness was the second highest priority for sales executives. But what does sales effectiveness actually mean?
Sales effectiveness refers to the average performance and output of each sales rep. Depending on your organization’s overall strategy and goals, output can refer to revenue or lead generation, or sales of a specific product. Selling effectiveness also impacts other goals, such as win rates across the team and customer satisfaction.
As part of our “Sales Enablement Defined” series, we discuss the importance of sales effectiveness within your business and where to focus your energy in order to optimize and measure sales effectiveness.
Measuring sales effectiveness
How can you determine the output and effectiveness of every sales representative? First consider the goals of your company and the sales team as a whole. Even if a seller is producing fantastic numbers, they aren’t being effective if their work isn’t impacting the larger goal.
Let’s look at an example. Your company has introduced a new product, Product Z. The Q1 goal for the company is selling a certain monetary value of Product Z. One of your salespeople is closing multiple deals a month selling Product Y. While technically he is selling successfully, he is not effectively selling since he isn’t selling any of Product Z. On the other hand, if your company’s objective is simply to generate more overall revenue, the salesperson does have high sales effectiveness.
Depending on your organizational goals, potential metrics for sales effectiveness include:
- Quota achievement
- Average deal size
- Average on-target earnings
- Average length of sales cycle
- Sales preparedness
Based on these KPIs, you can get a sense of sales effectiveness on a variety of levels, such as:
- Per product
- Newer reps vs. more experienced reps
- For buyers are different stages
- Individual vs. group average
Viewing where effectiveness lags and excels reveals which initiatives sales leaders and managers should direct their attention and energy.
How to improve sales effectiveness
The most impactful way to boost effectiveness is by enhancing your sales processes. It might seem like your processes are working just fine, but by making assumptions and not working to make things better, you are limiting yourself and your sales representatives. Assess your current process and determine which of the following categories you fall into:
- Random: sales reps are using their own processes and methodologies; no collaboration
- Informal: established process but not all sales reps are following it; no basis for knowledge sharing
- Formal: sales reps integrate established process into their own activities; best practices are recognized and shared across the team
- Dynamic: sales reps rely on an established process for activities and performance benchmarks; CRM for alignment across teams
Determining where your sales team falls will help in discovering what you need to do to achieve a dynamic process. Leveraging technology, establishing consistency, and including collaboration as a built-in element of your sales enablement strategy will increase effectiveness across salespeople.
Sales effectiveness is dependent on processes you set for every member of your team, as well as ongoing measurement of performance on a group and individual level. The approach upon which you decide to move forward should take these performance metrics into account, as well as collaboration amongst the team and sharing of best practices for better sales enablement.
Want to gauge your sales team’s effectiveness? Download our Sales Transformation Maturity Model eBook.