There are a lot of platitudes, clichés or sayings today – call them what you will – around getting more from less … or less is more. Something like that … most companies are trying to squeeze out more productivity from what they have. It could be assets, people, or customers.
How can I increase my return on assets? Improve sales productivity? Obtain more share of ‘wallet’ from my existing customers?
It’s a reasonable objective. Most of us love getting more from less. “Our sales went up 20% last year with the same number of sales people,” a VP of Sales told us. “We would have had to hire 20% more people if that didn’t happen.” Maybe. We also don’t know how the general market did and whether sales were rising with the tide or actually lagging the market. Anyway, most of us can agree that, in general, improving sales productivity is a good thing.
Sales productivity is essentially measured as output divided by input. Output could be revenue, wins, sales calls or any number of items. From a sales productivity standpoint, the denominator is usually the total number of sellers or one seller.
For example, if each seller over-achieved on their quota by 10% – assuming quotas were the same – then overall revenue would increase by 10%. Or maybe sellers are able to make two more sales calls a week without increasing the amount they are working. They are more efficient with their time, and if they are more effective on their sales calls, it’s likely to result in more wins and more revenue – at least that’s the working hypothesis.
A few considerations around analyzing sales productivity figures:
- I would first ask some key questions: Are sellers more productive because they are working more? Is higher productivity really a sign of impending burnout? At some point, people lose quality of life when they are working all the time – for some, it may be fifty hours, for others, eighty. Squeezing out more productivity should be individualized and monitored via coaching and cadence sessions – don’t assume more productivity is always good – your best people may be at risk of leaving due to burnout and distress.
- The quantity vs. quality distinction should be paramount when looking at productivity. If the goal is more meetings, you may improve your meeting count, but it may mean nothing. With one of our clients, the person with the least meetings had the highest quota attainment, year-after-year. Why? She spent most of her time deeply analyzing her target accounts, while crafting customized messages to the decision makers. She had fewer meetings, but they were often with senior executives who had budget and decision authority. Her meetings-per-win was extremely low, while her revenue per meeting was high.
- There is no universal definition of sales productivity. For some, it’s all about efficiency and time management. For others, it’s more about effectiveness – overall quota attainment, revenue per head, or wins per rep. Like a lot of things, it’s an “and”, not an “or”. You need to look at both efficiency and effectiveness – hopefully, more calls-per-rep equals more wins – not always, but that’s the typical premise. If you can get more “at-bats” and tell a compelling story to the right people, you should get more business.
Net-net, the U.S. economy has prospered over the long-term, in part, due to increases in productivity. The advent of technology, robotics, and advanced machinery has helped to increase the productivity of the general worker. The sales function is the revenue engine of most business-to-business companies, thus increasing the productivity of sales professionals is both important and valuable.
In a nutshell, you want to increase sales productivity in a sustainable manner, while tracking both efficiency and effectiveness metrics to gauge progress and uncover gaps. Like most things, I’m not sure there is a Silver Bullet to increasing productivity, but a holistic analysis of all the productivity drivers will help to identify the first areas to attack, whether it’s sales process training, incentive compensation, metrics, time management, or some combination thereof. This quote by Bruce Lee is a good takeaway on the topic:
“Adapt what is useful, reject what is useless, and add what is specifically your own.”