What does sales productivity actually mean? Sales productivity is the rate at which a salesperson acquires revenue on behalf of the company.
How Do You Measure Sales Productivity?
The simplest method is to divide the total sales revenue for each month by the total number of employees in that month.
For example, if your team of 10 sales reps closed revenue totalling £100k in one month, your sales productivity would be £10K per sales head.
Another, slightly more involved, way to measure the sales productivity of your team is to add up all costs, including salaries, benefits, commissions and perks. Then calculate the revenue brought in by that sales team. Divide the revenue by the sales costs to get a ratio of revenue to cost.
The outcome of both methods is to create a metric that shows revenue achievement as a ratio of sales (using either sales heads or sales cost).
How Do We Increase Sales Productivity?
Rather than pushing salespeople to work harder, an increase in sales productivity is usually concerned with getting salespeople to use their time more effectively.
Or put another way, how can we make sure our reps achieve more of the ‘high-value’ sales behaviours and less of the distractions? And this is where we turn to the old adage:
You can’t manage what you don’t measure.
1. Modern sales leaders manage using ‘leading’ sales metrics:
While metrics are important in every aspect of business, they’re especially critical in sales.
Sales leaders can’t use their intuition to guide their decisions. Not only are they dealing with a huge amount of information, the risk of failure is simply too high.
That’s why successful sales leaders obsessively measure everything about their sales strategy and the salespeople executing it.
In fact, modern sales leaders use sales metrics to track progress towards the end revenue goal, award incentives and bonuses and spot problems before they get out of hand.
Known as ‘leading’ metrics, they are “manageable”, meaning sales managers can directly influence them.
For example, imagine one of your reps isn’t hitting their quota. By digging into their metrics, you could discover they simply aren’t making enough sales calls to generate the number of meetings needed.
You may not be able to control how much this salesperson sells but you can tell them to increase their daily call rate.
2. Increase sales productivity based on high-value sales behaviours, not sales activity:
The modern sales manager is data savvy. They seek to build a ‘sales behaviour’ audit trail over time by modelling and subsequently monitoring for high-value sales behaviours.
These high-value sales behaviours are often complex in their nature. It’s no longer enough to promote simple ‘sales activity’. Let’s look a simple example:
- Sales Activity: I log a sales call.
- High Value Sales Behaviour:I log a sales call, it lasted more than 20 mins, it was to a decision maker who is attached to an opportunity that is due to close this quarter.
It’s easy to see why the latter is far more likely to drive successful sales outcomes.
The modern-day sales manager tracks both positive and careless sales behaviours. For example, where the close date for a late stage deal, that is on our forecast, has been allowed to lapse into the past numerous times.
This data is then used to motivate reps to spend more time on high-value, winning sales behaviours. It’s also used to pinpoint the areas where individual reps require additional focused coaching.
Driving more ‘high-value sales behaviours’ and not just ‘sales activity’ is the fastest way to move the needle on your team’s sales productivity.
Here is a real-life customer example of the power of motivating the achievement of high-value sales behaviours. In this case the customer (a global telco) focused on 7 of their key sales behaviours.
The graph shows the before and after effect. To the left of the blue line shows the before picture. At this point SuMo was deployed to track the desired behaviours. The graph to the right of the blue line shows the effect when SuMo was used to track AND motivate the same behaviours. The result? A 225% increase in the behaviours that this customer knew would lead to successful sales outcomes. And who wouldn’t want that?
Why not download our ultimate guide to the sales metrics you should be tracking?