If you manage sales at your company and you are asked what the Sales Productivity is, how would you answer? What do you think goes into such a metric? In this article, we’re covering exactly that. Let’s try to understand what Sales Productivity essentially entails. (You can also choose to watch the video instead!)
To understand the essence of Sales Productivity, we refer to Frank Cespedes’s book “Aligning Strategy and Sales: The Choices, Systems, and Behaviors that Drive Effective Selling”. A professor, at Harvard Business School, the author is a notable writer on B2B sales. We find his work especially relevant for sales at growth businesses.
Frank says 3 levers go into Sales Productivity:
And those are your key metrics for Sales Productivity. Let’s unpack each of these 3.
First up, Sales Capacity refers to the sheer number of selling hours. If you have a sales team, how focused are they on selling vs other activities – administration or reporting? Or pure sales vs having to double up in another role like say Customer Success. If you are a founder salesperson, how many hours are going into actual selling vs other responsibilities that you have?
One way to increase Sales Capacity is to hire more salespeople. But then, you may not be able to, and besides, it increases your costs. You have to work on ensuring that salespeople’s key tasks and activities are the ones that are truly impactful for selling.
This is also where the people management and how you motivate your sales staff comes in – incentives you give them, how motivated they are.
Close rates refer to the percentage of prospects that the sales team ends up selling to. To optimize this metric, you first need to ensure that your sales team is working on the right deals. Secondly, by doing a better job at lead generation, you can also more qualified leads to work from in the pipeline. Lastly, it all boils down to the ability of sales staff to move deals through the funnel and close them.
The key elements that affect the profitability
To optimize this metric, you must check:
How are you incentivizing the customer to buy more?
How can you lower the selling costs?
Hope these strategies help you boost your sales productivity!