According to a LinkedIn survey, salespeople spend only less than 30% of their time actually selling.
In simple words, you are spending 40 hours but getting sales done only for 12 hours by your sales reps. Isn't it?
If you are also facing a low productivity issue and want to understand better ways to deal with it, then this guide will be of great help.
What is Sales Productivity?
Simply put, sales productivity means increasing sales without adding more salesforce or sales hours.
It is nothing but a connection between sales efficiency and effectiveness. It measures how effective your sales team is in generating revenue based on their efficiency.
Sales Productivity = Efficiency x Effectiveness
Common Factors that Affect Sales Productivity
Sales include many tasks such as sending emails, cold calling, etc but sales productivity is always counted based on revenue generated through all the sales activities.
Even if your sales team is working 80 hours a week, but is not able to close an expected number of deals, it will be considered as low sales productivity.
Some of the common reasons that impact a sales team’s performance are:
- Time-taking administrative tasks
- Updating CRM system manually
- Inconsistency in sales process and strategies
- Irrelevant coaching sessions
- Saying no to new technology and automation tools
- Lack of mutual support within sales and marketing teams
- No proper sales and market research
For B2B sales professionals, longer sales closing cycles and the involvement of multiple decision-makers are additional reasons for low efficiency.
Importance of measuring sales productivity
Measuring sales productivity has many benefits but it can be overwhelming for sales leaders with so many insights and metrics to measure. Tracking sales productivity not only tells you about the loss of revenue but also shows you the reason behind it.
For example, you are getting a good number of leads but the win rate is less. The reason could be poor lead quality, poor prospecting, poor engagement, or insufficient product understanding.
Where poor lead quality means the marketing team needs to make changes in their strategy, insufficient product understanding demands better sales training to close the deals.
Based on the need, you can develop the solution and modify your sales strategy to improve your revenue. On the other hand, if your sales productivity is good or as expected, you get validation of your strategy. This gives confidence to businesses to invest more in the current strategy.
It also gives better job satisfaction to your employees when they see their efforts are helping the company to grow. It helps you retain your best sales reps and reduce employee turnover.
How to Measure Sales Productivity
Sales efficiency and effectiveness are two elements that help you understand the productivity of your team.
Sales efficiency helps you measure how many opportunities your sales rep converts.
Whereas sales effectiveness measures how a particular sales activity works in your favor to close the deal.
A survey says 61% of sales reps feel face-to-face meetings are the best way to close B2B deals in 2022.
Sales productivity is a subjective topic. So, first thing before you start measuring, you need to define what is sales productivity for your business and what are its KPIs.
There are two types of KPIs - Leading and Lagging.
Leading Key performance indicator (KPIs) helps you forecast sales based on the current sales activities. Whereas lagging KPIs focus on the past.
There are many sales productivity metrics that you can track. We will discuss some important metrics below:
In activity metrics, you count the number of calls made, email set, meetings and demos booked at a particular time. The most important part of this metric is you cannot get any meaningful result until you track the outcome of each of these activities.
- How many calls did your sales rep make?
- How many replies did he receive?
- How many get converted to prospects?
- How many meetings or demos get booked based on these calls?
- So, once you know these numbers, you can calculate sales productivity
Sales productivity = Number of meetings booked / number of sales activity (calls or emails sent) X 100
Lead response time and handling time
Lead response time helps you understand which rep is responding proactively. As per a study, reps who respond within 5 minutes get 8 times higher conversion rates than the ones who respond just after 6 minutes.
Average handling time is the time a sales rep takes to handle an interaction.
Average handling time = Total talk time + total time spent on follow-up / number of calls made.
Using these metrics, you can set clear expectations for your sales reps.
Selling time, as the name depicts tells about how much time sales reps spend selling vs time spent on other activities.
It helps you understand how your sales reps are spending their day and how you can improve it to boost sales productivity.
Opportunity lost is calculated based on the total number of opportunities generated and how many opportunities your sales reps fail to convert.
By minimizing lost opportunities, you can save time and improve productivity.
Opportunity lost rate: Number of lost opportunities / Total number of opportunities X 100
The Win rate is opposite to the opportunity lost. It is the total number of opportunities that get converted. It helps you understand your sales team's effectiveness.
If the win rate increases over time, it means your sales team is improving.
Win rate: Number of opportunities converted / Total number of opportunities X 100
Sales cycle length
It is the average time you spend from the prospecting stage to conversion. Faster you move through different sales stages and close the deal, the more revenue you generate.
Longer cycles also consume more time and resources which ultimately decrease profit.
But, yes you cannot rush your prospects. Maintaining quality and good relationships with prospects should be the first concern of sales reps.
Sales cycle length: Total time spent on closing a deal during a particular period / total number of closed deals
Average deal size
Average deal size helps you understand your sales performance. Sales managers calculate it monthly, quarterly and yearly to see overall growth.
You can calculate it with the below formula:
Average deal size = Sum of deals in a particular period / number of closed opportunities in the same duration.
Other productivity metrics tracked by a sales manager to understand a sales team's success are CRM usage, sales tools usage, follow-up of highly qualified leads, scheduled meetings, etc.
Steps to Increase Sales Productivity of Your Sales Teams
Define your sales productivity metrics
Having a clear goal helps the sales department focus time and resources properly. So, outlining goal-oriented key performance indicators (KPIs) is important for enhancing your sales productivity.
Different metrics help you track different aspects of sales productivity.
To improve sales efficiency, you can track KPIs like time spent on creating content, research, and updating CRMs.
On the other hand, if you want to track sales effectiveness, you can count the number of sales calls made, emails sent, and social media integration begins.
To measure sales performance, you can track win rate, average deal size and monthly quota fulfilled.
You can use CRM, sales enablement, surveys, etc. to collect sales-relevant data from your sales team and process it to understand if you are moving in the right direction.
Analyze sales activities
Analyzing sales activities and their effectiveness in closing the deal helps you strengthen your sales strategy and increase sales.
Start with making a list of activities you follow. It can include:
- Sales calls
- Drafting and Sending emails
- Developing sales pitches and content
- Updating and managing CRM
- Analysis and reporting
- Lead generation
- Lead qualification
- Scheduling meetings
- Booking demos, etc.
Once you have a list, categorize it based on its effectiveness in moving prospects to the next step of the sales funnel and closer to deal closure.
For example, all the admin tasks can be low-impact activities whereas core activities will come under high-impact activities.
Further, you can divide tasks based on urgency.
- Urgent tasks are the ones that are directly driving sales.
- Non-urgent tasks are which are important but can be outsourced, for example, sales collateral.
Like this, you can categorize high-impact and low-impact activities based on their urgency to have better clear task priority.
Now, conduct surveys or use CRM to get information about the time spent on each sales activity.
This will help you have a final report about how your sales team is spending the time.
Plan sales activities
Once you have clear data about what tasks are important and how your sales team is spending time, you can realign the tasks to improve your sales team's performance.
- Prioritize the high-impact urgent tasks such as lead scoring, qualifying prospects.
- Outsource low impact non urgent tasks like content creation to the marketing team.
- Use sales automation tools low impact urgent activities such as updating CRM.
- Rethink the need of low impact non urgent activities such as weekly stand-up sales meeting.
Evaluate and repeat
Once you realign everything as per your new strategy, try to evaluate its effect on sales growth.
If the results are positive and it is increasing sales productivity, you can repeat the same flow of work.
Adding sales metrics analysis as a standard practice helps you reach your sales productivity goal in less time.
Except for this, you can follow below sales productivity tips for reaching your sales targets
Provide regular training to sales teams
Keep your sales team up to date. Providing continuous sales training helps your sales executives and helps them learn new skills to work more effectively. The training can be on time management, data management, acquiring new leads, automating repetitive tasks, using the right tools, handling internal communication properly to work in alignment, etc.
Offer good incentives
Yes, sometimes not providing good incentives can be demotivating for your sales reps. They are an important part of your company's success. They deserve proper appreciation and incentives for the effort they made to increase your annual revenue. Keep your sales team motivated by offering a good incentive.
Implement sales software
There are many types of sales tools available in the market. It helps you automate many activities to gather useful data for improving conversion rates.
Sales Productivity Tools your Sales Team must have
As we mentioned above, there are many sales productivity tools in the market that you can implement to improve your team’s efficiency.
Here are some of the popular sales productivity tools:
Customer relationship management tool (CRM)
CRMs are the most popular sales technology among sales organizations that help in boosting sales productivity tremendously.
Only 22% of sales leaders are leveraging CRM to their full capacity in 2022, a report by Hubspot.
A CRM helps you track different types of metrics that include:
- Sales performance metrics such as the number of leads, emails sent, deals closes, win rate, etc.
- Customer-related metrics such as order history, contact history, personality traits, address, etc. You can share it across departments to develop personalized messages for your existing customer.
- Usage metrics such as how your sales reps are using the CRM and collected data.
Sales automation tools
As per a report by Hubspot, 45% of sales teams use automation software. Sales automation tools are meant for automating repetitive tasks and letting the sales force spend more time in closing the deals.
Repetitive tasks consume a lot of time and reduce the sales team’s productivity. Sending emails, scheduling meetings, creating contracts, and crafting sales reports are some of these tasks.
Sales intelligence tools
Sales intelligence tools help sales managers gain sales insights to identify sales opportunities and develop sales prospect lists. It helps you educate your sales team on industry-specific points to make conversations with customers more engaging and increase the chance of conversions.
As per a LinkedIn survey, 62% of professionals feel sales intelligence tools help close deals.
You can use tools like Salesken for recording sales agents and customer calls and use the gathered insights in offering personalized training to sales reps and lead scoring.
Sales productivity is important to measure for business success. By keeping track of sales productivity, companies can evaluate and modify their sales process and strategies as per the need. It helps to increase the effectiveness of sales activities and increase revenue.
The right sales software and efficient use of resources are key to improving sales productivity.
Salesken is AI-based sales productivity software that helps you record, transcribe and analyze each conversation your sales reps have with customers. It gives real-time cues to sales reps to engage the customers and convert more deals.
To learn more about Salesken, book a demo now!