Why measuring sales productivity is important and how to do it effectively

Why measuring sales productivity is important and how to do it effectively

Huthwaite International’s David Freedman asks if sales productivity is getting the attention it deserves.

Efficiency improvement creates an output with a progressively smaller amount of effort or diminishing expenditure of resource. That efficiency is a necessary but not sufficient condition for productivity: productivity itself is only improved if output increases too. In manufacturing widgets, that’s an easy concept to exemplify. But what about other outputs? What about, for example, sales?

Few areas of business improvement have attracted more investment in the past decade than the quest for efficiency in sales – expressed through wondrous faith in the fashionable deity of CRM systems. Around the world, companies have spent $150 billion on the stuff since 2010, and I’ve yet to meet a client who thinks they’re using it well or fully. So, is anybody thinking about the contribution it could make to sales productivity?

Accurately measuring sales productivity

Those of us who are charged with developing new business or with managing those people, especially if we are doing so with the help of a CRM system, ascribe a likelihood represented as a percentage to the chance of winning each opportunity. Each incremental rise in the likelihood of that sale towards an eventual 100% is an output – a product, if you like – of the sales process. The tricky part is deciding when, whether and by how much to increase the percentage.

Setting clear objectives

That depends on having clear objectives and being clearly objective. Anyone can come back from a new business meeting where they’ve enjoyed the coffee, swapped opinions about the game at Twickenham on Saturday, chatted about the business environment and agreed to write a proposal, under the mistaken impression that this constitutes progress. And on the back of that illusory progress, they’ll update their CRM sales forecast probability.

But what, actually, has changed? Who has taken responsibility to do the next piece of work – the seller exclusively or the buyer? What resources of time or money has the buyer committed to the process? How easy is it for the buyer to use deflection or misdirection to give the seller some homework to do – which for the unscrupulous can take the form of free consultancy?

Learn how to improve your sales performance.

Examples of effective sales objectives

This is the difference between an Advance and a Continuation – and the failure by those in business development roles to draw that distinction is one of the biggest barriers to sales productivity improvement.A hard measure of productivity is the achievement of a pre-agreed milestone towards the achievement of an objectified Advance. That confers on the seller the permission they need publicly to declare a quantifiable increase in the likelihood of the sale. An advance is when the prospect agrees to co-fund a feasibility study or proof of concept; or when they fix a date to bring their Chief Digital Officer to a reference site visit; or when instead of just asking for a proposal, they book a meeting room or video conference suite and undertake to fill it with expensive decision-makers for you to come back and talk them through it step by persuasive step. It could be a commitment as small as writing a short email to a peer level colleague to help collect evidence of the need for, and value of, the solution you are proposing – with you in copy of course. The important point is that they are making a commitment. The size of that commitment will determine the permissible degree of increase in the percentage probability that then populates the CRM – and you will have agreed that with yourself or your manager beforehand. The ultimate Advance of course, is the signed contract. Do pass Go. Do collect 100% on the CRM.

Sales productivity measures flow from this more rigorous approach to the inputs and the outputs. Increased velocity through the customer’s Buying Cycle compared to historical trends; higher value of deal compared to the mean over a period; fewer staff hours consumed by the opportunity in desk, travel and face-to-face activities.

If those probabilities are rising in return for the same amount of effort, or ideally for less, then we have enhanced sales productivity. If they’re repeated tens, or hundreds, or thousands of times across the organisation, then we have a sales productivity step-change.

SPIN® Selling is a proven sales process with a rigorous approach to sales productivity.

Learn how you can you improve the outcomes of your sales opportunities.

About the Author
David Freedman

Written by David Freedman

David is Huthwaite's Director of Sales. He is a Fellow of both the Institute of Sales Management and of the Association of Professional Sales, sits on the Management Consultancies’ Association Council and is former Chairman of the Chartered Institute of Public Relations MarComs group. He speaks all over the world, from conferences and exhibitions including World of Learning, SAMA, APMP and many international business organisations. He has also been on the judging panels for the National Sales Awards and the National Business Awards.