{"id":2553,"date":"2018-07-30T08:00:01","date_gmt":"2018-07-30T08:00:01","guid":{"rendered":"https:\/\/devbloglavaprotocols.nityo.in\/the-differences-between-sales-productivity-efficiency-and-effectiveness\/"},"modified":"2018-07-30T08:00:01","modified_gmt":"2018-07-30T08:00:01","slug":"the-differences-between-sales-productivity-efficiency-and-effectiveness","status":"publish","type":"post","link":"https:\/\/www.lavaprotocols.com\/the-cloud-blog\/the-differences-between-sales-productivity-efficiency-and-effectiveness\/","title":{"rendered":"The Differences between Sales Productivity, Efficiency, and Effectiveness"},"content":{"rendered":"
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By Jason Jordan, Partner at Vantage Point Performance (as part of the\u00a0Salesforce Contributor Network)\u00a0<\/b><\/i><\/em><\/strong><\/p>\n

<\/p>\n

Someday, somewhere, someone is going to write the Official Sales Dictionary. And it\u2019s going to be awesome. Salespeople, sales leaders, sales trainers, sales operations, sales consultants, and everyone else will know with\u00a0certainty<\/i>\u00a0what the other person is talking about.\u00a0 Communications will be streamlined, and directions will be clear.<\/p>\n

However, that day has not yet arrived.<\/p>\n

<\/h3>\n

Ambiguity Is a Problem<\/b><\/span><\/h2>\n

Heard of these ambiguous terminologies: \u201csales coaching\u201d, \u201csales process\u201d, and \u201csales enablement\u201d? Along with those, we find three terms that are used interchangeably in everyday conversations: \u201csales productivity\u201d, \u201csales efficiency\u201d, and \u201csales effectiveness\u201d.<\/p>\n

For those of us in the sales improvement business, these terms are quite satisfying to use because they imply some level of rigour, precision, and measurability. However, they are all three used rather loosely to describe almost any type of sales improvement. And that\u2019s where the problem begins.<\/p>\n

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Productivity, efficiency, and effectiveness are NOT the same things in a sales team, and knowing the difference is critical to managing each.<\/p>\n<\/blockquote>\n

I thought it might be useful to put some definition around the terms\u00a0because it has assuredly helped me in my career to think of them as distinct. It enables a much more thorough analysis of sales force issues and provides structure to sales improvement initiatives.<\/p>\n

The simplest way to express the differences between productivity, efficiency, and effectiveness is with a formula (because formulas make things, you know\u2026 rigorous, precise, and measurable):<\/p>\n

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[ \u00a0\u00a0\u00a0Productivity<\/b>\u00a0 =\u00a0\u00a0Efficiency<\/b>\u00a0 x\u00a0\u00a0Effectiveness\u00a0\u00a0 \u00a0]<\/b><\/h3>\n<\/blockquote>\n

\u00a0<\/p>\n

Sales Productivity<\/b><\/span><\/h3>\n

In my definition, sales productivity is the product of the other two factors: sales efficiency and sales effectiveness. Productivity is the ultimate goal of any sales improvement effort \u2014 when you improve the efficiency and effectiveness of your salespeople, their productivity unavoidably goes up.<\/p>\n

In a research that fueled our book\u00a0Cracking the Sales Management Code<\/a><\/i>, we found that companies were measuring sales productivity with metrics such as \u2018revenue per rep\u2019 or \u2018percentage of reps above quota\u2019.<\/p>\n

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In the most basic terms, productivity is the output of your sales team.<\/p>\n<\/blockquote>\n

\u00a0<\/p>\n

Sales Efficiency<\/b><\/span><\/h3>\n
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Sales efficiency is about the prudent allocation of sales resources.<\/p>\n<\/blockquote>\n

These resources could be anything from a financial budget to a computer network, but without question, the most precious resource in any sales team is time. <\/strong><\/p>\n

Time does not discriminate. Everyone has exactly the same number of hours in a day. So, achieving sales efficiency is principally the challenge of maximising the amount of productive time<\/a> that your sales team has in a day.<\/p>\n

Eliminate low-value activities, replace them with high-value activities, and your efficiency will be on the rise.<\/p>\n

Related<\/strong><\/span>:\u00a0Introducing the Supercharged Sales Cloud Einstein: Predictions, Insights, and Productivity<\/a><\/p>\n

Sample metrics of efficiency might be \u2018number of sales calls per rep\u2019 or \u2018frequency of customer contact.\u2019<\/p>\n

\u00a0<\/p>\n

Sales Effectiveness<\/b><\/span><\/h3>\n

Sales effectiveness is not about how you allocate your sales force\u2019s resources.<\/p>\n

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It\u2019s about how potently you utilise them to achieve your goals.<\/p>\n<\/blockquote>\n

If you can find a way to squeeze in 20 additional prospecting phone calls for your reps each week, then you\u2019ve accomplished the aforementioned feat of improved\u00a0efficiency<\/i>.<\/p>\n

How skilled your reps are at executing those phone calls is a sure measure of their\u00a0effectiveness<\/i>. A more effective salesperson might produce ten qualified opportunities from those 20 calls, while a less effective seller might only create five.<\/p>\n

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More effective salespeople will yield a higher output from the same level of effort because they just do the task better.<\/p>\n<\/blockquote>\n

Sample metrics of effectiveness might be \u2018deal win rate\u2019 or \u2018percentage of successful sales calls.\u2019<\/p>\n

Someone once described the distinction between efficiency and effectiveness in this way: Efficiency is about knocking on as many doors as possible; Effectiveness is about what you do when the doors open. You could call it a dichotomy of \u2018Will versus Skill\u2019 or \u2018Braun versus Brain,\u2019 but the important thing is to understand that there are two different forces at work that influence the productivity of your sales team.<\/p>\n

\u00a0<\/p>\n

Two Paths to Improvement<\/b><\/span><\/h2>\n

Of course, improving both efficiency and effectiveness is the ultimate objective of good sales management, but you should approach these two factors in decidedly different ways.<\/p>\n

Improving efficiency is often the easier of the two tasks, since it can be accomplished by simply shuffling tasks on the calendar to make room for more productive effort. Truly, efficiency can be improved today with just a little thought and discipline.<\/p>\n

Effectiveness requires a lot more effort to improve because it involves the development of additional capability on the part of your sales team. Whether that incremental capability comes through training, coaching, or the implementation of new sales tools, there\u2019s almost always a period of learning and adoption that must be endured to reach higher levels of sales effectiveness. Regardless, you always want to be trudging forward on both fronts.<\/p>\n

Sometimes you can use the formula above to literally calculate sales productivity.\u00a0 For instance, if your team makes 1,000 sales calls each week (a measure of efficiency), and each call yields $50 (a measure of effectiveness), then productivity for the week will be $50,000.<\/p>\n

However, the value in distinguishing the terms is really in knowing where your sales improvement efforts are exerting force.\u00a0The software you buy to improve the efficiency of your sales might not have any impact on its effectiveness, and vice versa. Knowing the difference is critical to good planning.<\/p>\n

The differences between sales productivity, efficiency, and effectiveness are subtle but important:<\/p>\n

    \n
  1. Sales productivity is boosted by improving the efficiency and effectiveness.<\/li>\n
  2. Efficiency is comparatively simple to improve because it is often just a re-allocation of a salesperson\u2019s effort.<\/li>\n
  3. Effectiveness can be much more challenging because it requires improved capability in the salesperson.<\/li>\n<\/ol>\n

    To date, no one has written that Official Sales Dictionary, and it sure will be useful when it comes. Perhaps these terms will be the first three entries.<\/p>\n

    Jason Jordan<\/b>\u00a0is a founding partner of\u00a0Vantage Point Performance<\/a>, a global sales management training and development firm, and co-author of\u00a0Cracking the Sales Management Code<\/a>.\u00a0Jason is a recognised thought leader in the domain of business-to-business sales and teaches sales and sales management at the University of Virginia\u2019s Darden Graduate School of Business.<\/i><\/p>\n

    Article<\/a> first appeared on the Salesforce Blog.<\/p>\n

    \u00a0<\/p>\n

    Lava is an<\/span><\/i> authorised Salesforce Partner<\/span><\/i><\/a> in Malaysia and has more than a decade of experience in cloud solutions which includes marketing automation, CRM implementation, change management, and consultation. We pride ourselves in not just being a CRM partner but in also understanding the needs of our customers and taking their business to the next level.<\/span><\/i><\/p>\n