Sales Productivity vs Effectiveness vs Efficiency - Is there a Difference?
There are three things that define strong sales performance: sales productivity, sales effectiveness, and sales efficiency. While sales reps and even newly-promoted managers often consider these three things the same, understanding the difference is critical to managing each. Getting the basics and knowing what’s the best way to measure them is crucial.
Let’s dive deep to understand each of them in brief.
Sales Efficiency
Sales efficiency is prudent allocation of sales resources. The resources may include anything from a financial sales budget to a computer network. However, the primary resource that matters the most is time.
Everyone has the same number of hours in a day. Sales efficiency is the ability to maximizing productive time that your sales team has in a day. You can achieve this by eliminating the time spent on low-value activities like administrative work, entering data into a CRM, et cetera.
For example, the number of sales calls in a day.
Sales Effectiveness
While sales efficiency is about the allocation of resources, sale effectiveness is about how you utilize them to achieve your goals. If you can find a way to add 20 additional calls per week, then you have achieved sales efficiency. The extent to which your reps can convert these calls into engagement will ultimately decide your effectiveness. A productive salesperson might convert 10 opportunities from the additional 20 calls while a less productive sales rep might create 5 opportunities. A good example of sales effectiveness metrics might be ‘lead-to-conversion rate’ or ‘prospect-to-lead rate’.
Sales Productivity
The B2B selling space is becoming increasingly focused on improving productivity to exceed sales quotas. Efficiency and effectiveness are connected to productivity. Sales productivity is the end result of sales efficiency and effectiveness. If you are able to improve efficiency and sales effectiveness, productivity unavoidably goes up. The metrics of measuring the productivity of your team or an individual sales rep can be ‘revenue per rep’ or ‘percentage of reps above quota.’
When all is said and done, efficiency is about calling as many prospects as possible, whereas effectiveness is about converting those calls into qualified leads. The simplest way to express the differences between productivity, efficiency, and effectiveness is with this formula:
[ Productivity = Efficiency x Effectiveness ]
The important thing is to understand that there are two different forces at work that influence the productivity of your sales team.
How to Measure Sales Productivity?
While every business is focused on sales productivity, different managers and VPs measure productivity in different ways. Since sales leaders might miss crucial metrics for measuring productivity, it is good to use AI and automate the things to make it simpler for busy managers and VPs.
Prodoscore provides you one pane of glass to see your entire sales organization’s productivity levels. Every activity gets counted, from time spent sending emails, scheduling meetings or calendar events, creating proposals on the doc, interacting on hangout, making calls, sending texts, or updating your CRM is measured. All our measurements are transformed into a single Productivity Score™.
