What is Sales Productivity?

Sales productivity is a measure of your sales team’s ability to efficiently generate sales revenue. There is a direct relationship between a company’s revenue growth and sales productivity. It is well known that an increase in sales productivity also significantly improves your company’s profitability.

Measuring Sales Productivity

There are many different ways of measuring sales productivity. It depends on the nature of your business, the markets you operate in, and the goals you set for your company.

Here are some examples of how sales productivity is measured –

sales revenue achieved by your sales repshow effectively your team is able to convert prospects or leads into paying customers, also referred to as deal win-rate or conversion-ratetime difference between the time of lead generation and winning the deal, also called the sales cyclecompare the sales revenue against the total investment made to generate that revenue, sometimes referred to as the return on investmentsales revenue generated per unit of time or effortcomparison between total deals won and deals lost

Sales Velocity

Sales velocity is possibly the most powerful way to measure and improve sales productivity. This single metric considers the most important factors required to run an efficient sales motion. These factors are the following –

Total number of opportunitiesAverage deal valueDeal conversion rate or win rateSales cycle length

You could go through this detailed article on sales velocity to know more about this metric.

Sales Productivity vs Sales Efficiency

These two terms are many a time used interchangeably. But they are different in a way.

Sales productivity is generally focused on the quantum of sales revenue generated. However, sales efficiency measures how effectively your sales reps leverage all the resources available to them to generate revenue.

Comparing the two metrics can provide interesting insights into your team’s strengths as well as the weaknesses that require improvement. It will help you identify all the critical aspects required to consistently drive sales performance and growth.

A razor-sharp focus on these metrics will help you grow revenue while optimizing your cost of sales. As a result, you can expect a positive impact on your bottom line too.

Most Common Reasons for Poor Sales Productivity

In any organization, there are many factors that hinder sales productivity. These factors could be attributed to either the sales team’s performance or organizational reasons or a combination of both.

Some of the most common factors that come in the way of improving sales productivity include –

Poor market coverageInadequate sales trainingLack of sales tools like Sales CRM appInconsistent sales strategiesInefficient sales reviewsPoor quality and quantity of leadsLack of communication and collaboration between sales leaders and repsNegative sales culture leading to low morale among the teamsLack of coaching and mentoring by best sales crm software and experience sales mangersLeakage of sales leadsUnrealistic sales targetsComplex organization structure that does not support agility and decision makingPoor empowerment among sales teamsInadequate presales supportSales incentive structure is not compelling enough or it is difficult to understand by the repsHigh pricing of products and services making it difficult to win dealsPoor product or solution fitment

You can easily add more to this partial list. There are innumerable such challenges that make sales productivity not reach its potential.

The key is to recognize these and put in a plan to rectify them at the earliest before it is too late.

Original Source: How To Measure Sales Productivity?