Nobody’s perfect, especially in the world of sales.
Even if buyers love you, your sales team and you’re building rapport within mere seconds of getting on the phone. Even if you’re blowing your quota out of the water every month. And even if you’re the undisputed leader in your industry…
The fact remains, there’s always—always—room for improvement in sales performance.
But the first step towards getting better is understanding how well you’re doing in the first place. That’s where measuring your sales effectiveness comes in. And the more you factor your sales effectiveness into your processes, the better poised you’ll be to take home some fat commission checks.
So, what is sales effectiveness exactly? How do you measure it? And what steps can you take to improve yours?
We’ll answer these questions and more in this guide. We’ll also look at specific metrics to consider, the importance of alignment, sales effectiveness versus sales efficiency, and much more.
What Is Sales Effectiveness?
It can be tough to nail down a single, indisputable definition of sales effectiveness. Depending on your organization, it may be the amount of revenue a salesperson generates. For others, it could be leads generated in a new vertical.
But ultimately, sales effectiveness boils down to one thing:
“Sales effectiveness is the measurement of how well a salesperson achieves specific outcomes.”
If that comes off a bit general, that’s intentional. Different businesses have different measures of success, especially when it comes to building a growth strategy. And while one sales department may be tasked with bringing in as many new sales as possible, others may be focusing on promoting a new product.
It’s the overarching goals, then, that define sales effectiveness—not just revenue.
Let’s look at an example to clarify this point.
Understanding Goal Alignment: An Example
Let’s say your accounting software company is trying to expand its customer base. Right now, they’re pushing to target the shipping industry. Breaking into shipping will lead to the following results:
- Significantly greater revenue gains
- Higher customer satisfaction rates
- More diversified revenue streams
Making this shift is beneficial in the long run. As such, your sales department’s goal for this quarter is to increase product sales to businesses within the shipping industry.
Now let’s say a salesperson made an astonishing number of sales this quarter. They generated record-level revenue. But they only made sales in the current vertical and none in shipping. So despite pulling in some great numbers, this salesperson would have low sales effectiveness as a result.
It’s essential, then, to base your sales effectiveness on the specific departmental goals that have been given to you rather than just revenue. Otherwise, you may be undermining a well-constructed strategy built to ensure more tremendous success later.
A Few Stats About Sales Alignment
So, how important is sales alignment really? After all, isn’t the end goal of hiring salespeople to make more money? Why can’t we just shoot for more sales?
As it turns out, tightly aligned businesses tend to be far more successful than unaligned ones. Have a look.
- Organizations who measure sales effectiveness and have tightly aligned goals enjoy 36% higher customer retention rates, and 38% higher sales win rates (MarketingProfs).
- Better alignment can help your company become 67% better at closing deals (Marketo).
- B2B organizations with tightly aligned sales and marketing operations achieve 19% faster revenue growth and 15% higher profitability (Forrester).
So, while you may be tempted just to sell, sell, sell, a salesperson with high sales effectiveness meets goals, not just quotas.
Hitting goals means a stronger sales pipeline, more reliable customer acquisition and less time needed qualifying leads rather than converting them to potential customers.
Sales Force Effectiveness Metrics
How exactly does one measure sales effectiveness across a sales organization?
There are countless sales metrics you can use to measure your sales rep effectiveness. For example:
- Percentage of sales reps that reach their quota (or how often you reach your quota)
- Average new deal size
- Average sales cycle length
- Average annual on-target earnings
- Lead preparedness for sales
Sales effectiveness + Sales Efficiency = Sales Productivity
Sometimes, sales effectiveness is mistaken for sales efficiency. While the two terms are often used together, they’re pretty different.
- Sales effectiveness – is a measurement of what you achieved. Think of it as the output or the end product.
- Sales efficiency – is the cost of that achievement. Think of it as the input or the expense of that end product.
Despite being practically opposites of each other, you need to record both sales effectiveness and sales efficiency to get the complete picture of how well you’re performing and to improve sales efficiency.
This full-picture view is often called sales productivity. High sales productivity means efficiently achieving the right goals, while low sales productivity means inefficiently achieving the wrong goals. In between is low effectiveness at high efficiency and vice versa.
You can see the outcome of different sales productivity variations using the sales productivity matrix from Highspot below.
Sales Efficiency Metrics
Just like sales effectiveness, there are so many different ways to measure sales efficiency. Any expense used by the salesperson that contributes to a win can be used. Most metrics for this category will measure either time or the costs of tools.
Below are some of the most common sales efficiency metrics.
- Percentage of time selling
- Percentage of time on data entry
- Percentage of time in content creation
- Percentage of marketing collateral used by sales reps
- Number of sales tools used
5 Sales Best Practices for Boosting Sales Effectiveness
Now that you have a better understanding of sales effectiveness let’s look at how to increase yours.
1) Record Everything
What doesn’t get recorded doesn’t get analyzed. That’s why first and foremost, you need to start recording as many sales metrics as you can.
If you’re a sales leader this shouldn’t be a shock for you. Sales and marketing teams that don’t track data and have a consistent sales process are measuring the wrong key performance indicators.
How often are you reaching your quota? How much revenue are you bringing in with each new deal? How prepared are leads for a sales conversation when marketing sends them your way?
The more information you have to work with, the better able you’ll be to identify weak points in your processes and make improvements.
And don’t forget to record efficiency metrics like time and tool expenses too. Otherwise, you won’t be able to calculate your actual sales productivity.
2) Align Your Goals
We have already discussed the importance of goal alignment above. However, it can’t be overstated how important this step is.
Be sure to communicate with team leaders and coordinate with other departments to define a cohesive strategy. Should you be focusing on customer retention? Which products should get priority? How do your goals impact the company strategy as a whole?
Understanding the answer to these questions will help you pick out which metrics you should be concentrating on when selling into the marketplace.
3) Find the Right Content
It turns out that 76% of content marketers don’t create content for salespeople. Why is this problematic for sales teams? A whopping 79% of buyers said the winning vendor’s content significantly impacted their buying decision.
You depend on having informative content to educate your prospective buyers and move them through their buyer’s journey. What’s more, having the right content for the right stage of that journey is critical.
That’s why it’s so essential your marketing department (or whoever handles content) provides you with the right type of content. You may need to work closely with your marketing team to create more catered content that moves sales leads forward. Or failing that, become more vocal about your management team’s need for great buyer-focused content.
4) Standardize & Enforce Your Processes
Once you’ve identified the metrics you should be targeting and have the right content to share with your buyers, it’s time to standardize your sales processes.
Using a industry leading sales methodology like the Simple Selling Method is critical for improving overall sales performance.
This process of standardizing your sales strategy can be a challenging step for sales salespeople. Some companies have standard procedures defined, but few sales reps follow them. Some may even let reps follow their processes entirely.
The key here is to eliminate variables. Instead, create your sales process and stick to it. That way, you can figure out what’s working and what isn’t.
It’s worth noting that companies with defined, standard workflows generate more revenue than those without them.
5) Optimize & Iterate
After putting your new metric-focused processes in place, it’s time to reevaluate and optimize across your sales analytics.
How are you performing a week, month, or a quarter later? Have you seen improvements in the metric you’re targeting?
If not, you’ll need to go back and test another approach. Try out new best practices. Experiment with other sales tools. Seek out specialized coaching or training. Join the Selling Made Simple Academy.
If you have seen improvements in your sales results, be sure to keep optimizing for even more significant gains. Don’t forget—no one is perfect. And the more you work at optimizing your sales processes for greater sales effectiveness; the better your metrics will look over time and the more chance you have of crushing your sales quota.
Improving Sales Effectiveness Is a Process
If you’ve just started to improve your sales effectiveness, it’s important to remember that doing so is a process. Recording metrics, standardizing your processes, aligning your goals, optimizing—it all takes time. But with enough dedication and the right strategy, you’ll start to see the value.
And for you, that means achieving more company objectives and, ultimately, becoming a better sales professional.