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Between administrative tasks and non-selling responsibilities, sales reps are frequently weighed down by time-consuming and often unproductive duties. When sales organizations search for ways to increase their revenue potential, sales productivity is one of the first places they should look.
What is Sales Productivity?
Sales productivity measures how effectively a sales team utilizes its resources, including time, personnel, tools, strategies, and technology, to achieve its sales targets.
The goal of sales productivity is twofold:
- Find ways to increase the proportion of the sales team’s time spent focusing on activities that lead to closing deals
- Ensure selling time actually maximizes company efficiency (not all selling time is productive)
Sales productivity involves more than just sales reps’ efficiency. It also looks at how the entire process of selling—from lead generation to closing deals—can be improved.
Businesses need to understand their overall sales productivity because it directly impacts their bottom line.
When sales productivity is low, sales reps are spending a large portion of their time on activities that don’t produce the desired results. This ultimately means less revenue and fewer closed deals.
In the worst cases, this indicates the company isn’t generating enough revenue per sales rep to cover its costs.
- Sales efficiency: A measure of how much revenue is generated per hour of sales activity and sales dollar invested.
- Sales effectiveness: A benchmark of a company’s success in achieving its sales objectives.
- Sales performance: The success or failure of a sales team in meeting their goals, such as the number of high-quality leads generated and/or closed deals.
- Revenue generation: The overarching process of generating business income from sales activities.
Benefits of Increased Sales Productivity
On a macro level, sales productivity has decreased. LinkedIn’s Global State of Sales 2022 report found that in the age of digital sales transformation—sales teams leveraging digital technologies to engage customers and prospects—reps spend less than 30% of their time selling.
Increased sales productivity has several benefits for companies that can achieve it, including:
- Increased sales revenue
- Reduced operational costs
- More efficient use of resources
- Improved customer satisfaction and retention
- Reduced time to close deals
Aside from quantifiable factors, improving sales productivity boosts employee morale. When salespeople can spend more of their time selling (i.e., making money), they’re generally happier and more motivated.
Evaluating Sales Productivity Metrics
To track, evaluate, and optimize sales productivity, companies should monitor various metrics that offer insights into the sales process. This isn’t without its challenges, though.
- Buyers are more sophisticated and require more touchpoints to close deals.
- Uncertainty is practically unavoidable despite record investments in sales technology, data, and analytics.
- Online decision-making makes it harder to identify and measure the true impact of sales rep activities.
1. Determine KPIs
Determining the right sales KPIs to measure is the first step to effectively evaluating sales productivity. The most important metrics to track include the following:
Average Email Response Time
Average email response time is a good indication of how quickly sales reps respond to qualified leads. The faster they respond, the more likely they are to engage potential buyers and close more deals.
Reps should shoot for email responses within the hour—the expected response time for 88% of buyers. To stay ahead, within 15 minutes is best.
Conversions are the bread and butter of any sales process. The conversion rate captures how frequently sales reps convert leads into customers.
Tracking this metric indicates whether a company does well at qualifying and engaging buyers.
A low conversion rate means the sales team needs to refine their approach, while a high conversion rate can be indicative of an effective prospecting process.
Low conversion rates don’t always signify low sales productivity. For example:
- High-value contracts at profitable margins
- Existing customers that purchase multiple products and services
- Partnerships and long-term customer relationships
- Fast sales cycles and a consistent stream of new qualified sales leads
These all indicate company health despite a company’s inability to close a substantial volume of new customers.
Average Deal Size
Average deal size goes hand-in-hand with a company’s conversion rate—it focuses on the value of sales opportunities.
Sometimes referred to as the average order value (AOV), a measure of how much revenue is being generated per customer.
A higher average deal size could reflect the following:
- The company is targeting larger deals with higher potential returns.
- Sales reps have upsold customers on more-expensive plans and packages.
- The company has negotiated higher margins with larger customers.
A lower deal size can indicates:
- A high-volume approach to sales that prioritizes frequency over value.
- The need to focus on building relationships and creating more value for buyers.
- Too many smaller deals for lower ROI.
How many Closed Won opportunities are there as compared to how many were Lost? The win rate reveals the effectiveness of sales reps in closing deals.
The win rate is similar to the conversion rate in that it measures the success of sales opportunities.
But win rate measures the number of leads converted into customers, whereas conversion rate is a percentage of the total opportunities (from any or all sources) that resulted in a purchase or movement through the sales funnel.
Win rate is a better bottom-line measure. Conversions give companies insight into specific pricing, marketing, and sales strategies.
Monitoring this metric helps teams identify areas for improvement—i.e., where reps may need help or additional resources, such as better training and support.
Sales Cycle Length
The sales cycle describes the start-to-finish process of moving a sales opportunity through the pipeline.
Measuring the average length of time it takes for reps to convert qualified leads into customers shows businesses where in the process, they can shave off additional time to increase sales productivity.
High-value contracts (i.e., enterprise sales) take considerably longer while SMB or transactional sales move faster.
Average Revenue Per Customer
Average revenue per customer can be measured on a monthly or annual basis, depending on whether sales leaders want to track short-term performance (e.g., new sales productivity strategies) or long-term data for revenue forecasts.
ARPC helps paint a picture of how customers use a company’s products, what they’re using them for, and what types of customers generate the highest lifetime revenue. It also helps them identify upselling and cross-selling opportunities.
In other words, ARPC helps sales reps identify and prioritize further actions to increase overall sales productivity.
Every organization needs to know how many customers end up renewing their contracts at the end of each term, which is why the customer retention rate is almost always seen on company sales reports.
Retention rate is also a valuable metric for understanding customer loyalty and satisfaction. It’s not enough to just get customers—they need to stay onboard after the initial purchase.
High retention rates indicate that customers are likely happy with their purchases and suggest potential opportunities for increasing average deal size.
A low retention rate doesn’t necessarily indicate dissatisfied customers or low sales productivity, though. If, for instance, customers are buying products or services that they only need once, they may not return regardless of their satisfaction with the product.
In the case of B2B sales, low retention rates usually mean a lack of predictable revenue and long-term unsustainability.
2. Establish Goals
Each company will have its own sales productivity strategy, but most have similar bottom-line goals.
Companies should choose sales productivity goals that are both realistic, quantifiable, and ambitious (i.e., they provide a stretch for the organization).
- Increasing win rate by 5% over the quarter
- Shortening the sales cycle length by 10 days
- Growing ARPC by 15%
- Improving retention rate from 80% to 85% over 12 months
These goals can then be further broken down into smaller, actionable steps that:
- Reps can take to reach them
- Sales managers can monitor via their CRM software
- Leaders can track against company sales targets
- Organizations can use to make periodic changes to overarching strategies
3. Track Performance
When it comes to sales productivity, performance tracking needs to involve more than just the traditional CRM metrics.
It’s also important to pay attention to customer feedback, surveys, and other data that can reveal how well reps are doing in terms of closing deals quickly and efficiently.
A few tips for sales performance tracking:
- Utilize data visualization tools to provide a clear, real-time overview of individual and team performance, making it easier to identify trends and areas for improvement.
- Implement weekly or bi-weekly check-ins with sales reps to discuss progress, challenges, and opportunities, fostering open communication and motivation.
- Work individually with sales reps to set personal goals and track their progress, fostering a sense of ownership and accountability.
- Monitor the time spent on different sales activities to identify inefficiencies and help reps prioritize high-impact tasks.
- Leverage sales automation to track and analyze email open rates, response rates, and follow-up patterns, providing insights into buyer engagement.
- Compare individual rep performance against team averages and industry benchmarks to identify top performers and areas where additional training or coaching may be needed.
- Foster a culture of continuous learning by offering regular training sessions, workshops, or seminars, and track the impact of these initiatives on sales performance.
Strategies to Increase Sales Productivity
Beyond tracking sales performance, sales managers need to take action to make sure reps reach their sales goals.
Here are a few strategies companies can use to increase sales productivity:
Align Sales and Marketing Goals
Sales and marketing teams are often misaligned in their goals and overall communication due to a lack of understanding of each other’s roles and responsibilities, different priorities, and separate performance metrics.
This misalignment can lead to wasted resources, missed opportunities, and reduced overall efficiency in both departments.
According to SugarCRM research, 45% of sales and marketing leaders face issues related to inadequate communication between their teams. And 72% encounter this issue when incentivizing teams with different goals.
To bridge the gap and increase sales productivity, organizations should consider the following steps to align sales and marketing goals:
- Establish a shared vision between sales and marketing teams.
- Create a unified revenue pipeline by tracking leads with the same processes for both.
- Develop shared performance metrics to reflect collective goals.
- Schedule regular cross-functional meetings to encourage open communication.
- Implement lead scoring and qualification to prioritize high-value leads.
- Encourage sharing of insights and feedback between departments.
- Collaborate on content creation to support the sales process.
Streamline the Sales Process
The sales process has numerous elements that can be automated, including:
- Lead qualification and segmentation
- Meeting scheduling
- Follow-up emails
- Customer onboarding
- Document generation
A huge part of sales productivity (or lack thereof) is the amount of time reps spend on manual, repetitive tasks. By streamlining these processes with automation, companies can free up their reps’ time and allow them to focus on more meaningful and higher-impact activities that bring in revenue.
Sales professionals should spend their time focusing on the human element of sales: building relationships with customers, understanding their needs, and crafting tailored solutions.
A well-designed sales stack is the single most critical element of any sales organization’s success (more on this below).
With the right technology, companies can enable their reps to manage their sales process better, maximizing efficiency.
In pertaining to sales productivity, common technologies include:
- Customer relationship management (CRM) software to track customer data, sales activities and performance.
- Proposal management tools for personalized quoting.
- Data visualization to report on metrics and KPIs.
- Email marketing automation for outbound campaigns.
- Social media monitoring tools for online relationship building.
- Analytics dashboards to measure sales performance.
- Machine learning algorithms to optimize the sales process (most useful for complex sales).
Automate Sales Workflows
Automation technology isn’t enough—companies need to implement the right workflows to get the most out of using it.
This starts with creating sales workflows in the first place. For example:
- Lead qualification workflow: When a lead comes into the system, it should be quickly evaluated based on a set of criteria to determine if they’re a good fit for your product or service.
- Lead nurturing workflow: This involves sending automated emails and messages to leads over time in order to keep them engaged with your product and build trust.
- Sales process workflow: Defines the steps reps take to close deals. This includes customer research, creating proposals and contracts, and following up with leads post-sales.
Before automating, businesses should clearly understand their sales process and how different tasks need to be executed.
Implement Sales Training and Coaching
Sales onboarding can make or break a company’s employee retention rate, comfortability on sales calls, and overall productivity in sales activities.
Proper training and coaching give reps the skills, knowledge, and confidence they need to succeed.
To ensure a successful onboarding process, organizations should:
- Develop clear goals and objectives for each step of the sales process.
- Provide comprehensive sales training resources (books, videos, webinars) that are easily accessible by reps.
- Teach new hires how to use CRM and other sales software.
- Set up one-on-one coaching sessions with experienced company reps and AEs.
- Provide ongoing feedback and guidance to reps on performance.
Sales Productivity Software
For the most part, a sales productivity tool always entails sales automation in some way. Below are the most valuable sales tools for boosting overall productivity.
Customer relationship management (CRM) is the backbone of any sales organization. It’s used to store customer data, manage sales activities, track performance metrics, and more.
Enterprise CRM systems even include analytics engines and predictive algorithms that can forecast future sales.
- Document generation
- Proposal management
- Billing and invoicing
- Discounting and promotions
- Contract management
- Digital sales room (e.g., DealRoom)
It also supports product customization and pricing rules, allowing customers to quickly configure solutions that meet their unique needs.
Especially if an organization has drawn-out, confusing, or quote-based product configurations, CPQ makes a massive difference in boosting sales efficiency.
Sales enablement describes the practice of equipping sales teams with the resources needed to succeed.
- Content libraries for sales collateral and documents.
- Marketing automation tools to personalize emails, messages, and campaigns across channels.
- Sales analytics dashboards to measure KPIs and performance metrics.
- Sales coaching platforms (e.g., Chorus) that provide real-time feedback and guidance.
- Social media listening
- AI-enabled sales call plugins
Sales enablement tools come in all shapes and sizes.
For instance, artificial intelligence (AI) technology surfaces customer insights and buyer triggers during sales calls, but it also goes beyond that by mapping conversations and detecting sentiment in real-time.
Sales intelligence tools extract data from multiple sources in order to provide insights about customers and prospects.
This insight can be used to develop targeted strategies for sales outreach, uncover buying patterns among certain customer segments, and create overall sales pipeline visibility to understand where prospects are dropping out of the process.
CRM, CPQ, and sales enablement tools all have some sales intelligence capabilities built into them. But for more in-depth analysis, dedicated sales intelligence software is required to centralize and analyze it.
People Also Ask
What is the formula for sales productivity?
Since “sales productivity” is an ambiguous term, its calculation varies based on the factors a specific organization wants to emphasize.
The general calculation for sales productivity is as follows:
Sales Productivity = Number of Meetings Booked (a.k.a. Sales Effectiveness) / Number of Calls and Emails Sent (a.k.a. Sales Efficiency)
What are the key pillars of sales productivity?
Sales productivity is defined by four key pillars:
Strategy: Define target markets, develop sales tactics, and create the necessary infrastructure.
Operations: Establish standard processes for prospecting, onboarding, upselling, tracking leads, etc.
Technology: Utilize technology (e.g., CRM) to automate repetitive tasks and maximize efficiency
Performance: Track KPIs that gauge the performance of sales reps and leadership.
What is an example of sales productivity?
An example of sales productivity: An organization automates lead responses, reducing lead response time to under 15 minutes. Without the need to manually respond to every new lead, sales reps can now make 100 calls per day on average instead of 80.