Productive sales departments are the lifeblood of every company. You need them to perform well in order to keep everything else running. And even if you are meeting all of your targets, doing better couldn’t hurt. Boosting sales while lowering expenses is always the ideal way to go, so it pays to understand the essential concepts of sales productivity.
What Is Sales Productivity?
In a previous article on sales productivity metrics, we examined the basic dictionary definition of business productivity, which goes something like this: “Productivity is the efficiency of a process calculated by comparing income to resources invested.” In other words: sales productivity looks at how many resources are put into the sales department in order to receive a certain amount of income.
“Income” is a crucial term. Revenue is how much money is generated by sales. But to get income, you need to subtract all expenses from revenue. When looking at sales productivity, expenses include the sales team’s salaries, the tools they use, and the cost of the office space that they occupy. If you keep revenue the same but lower expenses, then productivity has just gone up.
Why Is Productivity Important in Sales?
No pressure, but – a company’s success ultimately boils down to sales. You can have great R&D, amazing advertising, and a celebrity CEO. You might even have a super fun company culture (like Google’s Dooglers). But if the sales staff can’t generate the revenue needed to run the company, then the rest doesn’t matter.
And there’s even more to it. In the short term–let’s say while learning how to scale sales– a sales team might bring in a lot of revenue. But if they are not productive (i.e. their expenses are too high relative to the amount of revenue they make) their operation becomes a drain on the finances of the entire company. Nobody wants that, so a wise sales manager will try to grow sales and shrink expenses.
How to Increase Sales Productivity
Get some Dooglers in your office! Just kidding. But it’s true that there are many ways sales can win at the productivity game. There are dozens (if not hundreds, or even thousands) of tips and tricks sales staff use to close more deals, and managers might adopt some of them as standard procedures. But in general, there are three types of efforts that managers should invest in to give their staff what they need to truly excel:
1. Coaching
Salespeople have different levels of experience and talent. Some will want guidance in the form of a “sales bible” and frequent feedback. Others desire independence and to use strategies that have worked for them in the past.
A manager’s role is to coach each member of the team to find their optimal style. It might all be a matter of controlled experimentation. If a salesperson is struggling, find out exactly why. Did they have a poor response rate to emails? Do they close more after face-to-face meetings than while on the phone? Looking at small details across a variety of sales techniques is the start of resolving problems.
Even if a team member has a great closing rate, managers should encourage them to try out other methods. If you believe in the 80-20 rule, then motivate everybody on the team to use a new method each day, but only spend 20% of their time on it.
After all, that’s why we have sales metrics– to track the performance of salespeople and teams to determine what works and what doesn’t.
2. Enablement
Sales enablement is a process that delivers the training, tools, and mentoring to allow reps to close more deals. Good enablement is a combination of technology, collateral, advising, strategy, and support. Simply put, there are four basic parts of an enablement program:
Understanding – What problems are your team having? Finding the barriers to productivity is the first step in dealing with them.
Content – Few people can sell using charm alone. Having up-to-date case studies, product guides, demos, and reviews (to name just a few) in a central database will help teams prove and explain value much more easily.
Tools – There are countless sales enablement tools to pick from, which can handle everything from analysis to email automation. Sales teams will be particularly interested in SDR tools that support prospecting, follow-up, lead qualification, and data capture, among other activities.
Leadership – Nobody said that being a manager is relaxing. It’s up to team leaders to ensure that sales staff have everything they need for success. But being in charge is easier if the organization offers the necessary resources. Managers should also receive recognition for their efforts and know how to deliver effective feedback to their team.
3. Expense Reduction
“A penny saved is a penny earned.” This saying might not earn a lot of commissions, but for the manager, cutting costs is another approach to improving productivity.
Even seemingly minor tweaks to the sales process can add up to decent savings. For instance:
- Teams can shift to an inside sales model so that initial meetings are held by phone
- Junior salespeople can handle functions like presentations and scheduling, leaving high-level negotiations to more senior reps
- Changes can be made to lead generation and intent data analysis to improve the quality of leads and eliminate the expense of chasing dead ends. For example, let’s say it’s a policy for a salesperson to call leads after a webinar and make a pitch, but this tactic isn’t working as well as an email. The manager can change the data insight accordingly.
Finally, let’s get back to the Sales 101 concept that selling to existing customers is much cheaper than finding new ones. According to Forbes, it costs five times more to attract a new customer than to retain a current one. Using opportunities to cross-sell and upsell are almost free opportunities to increase customer lifetime value without increasing sales team costs. There are also many ways to improve client retention, for example:
Sending out client satisfaction surveys and following up on problematic accounts
Using intent data to identify potential candidates for churn
Providing special offers, discounts, and rewards
Key Takeaways
Sales productivity looks at the efficiency of a sales operation and is critical to ensure that sales efforts generate maximum revenue while having a profitable cost structure.
To increase sales, managers can use coaching and enablement strategies.
Costs can also be cut by adjusting team resources according to account value (not volume); cutting back the use of expensive personnel; improving the quality of leads; and focusing on retention instead of new clients.
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