Sales efficiency vs effectiveness?

2 minutes read

With the development of high-end CRM software bringing out plenty of data about the sales process, we can measure the efficiency of our sales process more than ever. Number of leads with their origin, number of qualified leads, opportunities, projects, quotes, deals, lost deals, etc., with all the conversion rates.

This level of granularity gives us to build all kinds of KPIs to track the efficiency of each salesperson.    However, those efficiency ratios do not tell us the whole story.  It is based on the funnel approach, and it only shows us how much our sales team is doing things right.

The problem with the funnel approach is that it focuses on the sales process, not on the customers’ buying process.  Even those claiming to be customer-centric presume that the customer’s buying process is linear and fits into the funnel approach.

According to Gartner, the buying process in B2B is much more complex.

When sales teams focus solely on their own sales process and their sales efficiency KPIs, those KPI’s become their primary target.  Meaning that they all focus on doing the things right in the sales funnel. 

On the other hand, when you look at the buying journey illustrated above, choosing the right timing to do the right thing becomes even more critical for the salespeople.  It means that salespeople should go the extra mile on top of following the standard sales process.  Making one additional call to ensure that they deeply understood the customer, with everything said and not said.  And it boils down to the effectiveness of the salesperson.

Most of the time, effectiveness is seen as an alternative to efficiency.  Like in the title of this post, I have seen many articles putting effectiveness as a rival of efficiency. The truth is it is not.

Efficiency is doing the things right, while effectiveness is doing the right things.  Efficiency becomes very important once we master effectiveness.

Imagine a salesperson who has 4m€ of sales target and 10m € of pipeline with a 30% win rate.  If you only focus on efficiency ratios, increasing the pipeline to 13m€ level would be the way to reach the sales target. That means you would ask this salesperson to do more prospection to reach his target.

If you focus on the effectiveness, on the other hand, you will wonder what is behind his actual win rate because you would like to make sure that the salesperson is doing the right thing with the customers.

Because many sales managers are not trained to do so, they go for the easy one, the first method.  It is easy because the data is coming from the CRM, and they can follow those ratios on a real-time basis through their dashboards.  So, to increase the outcome at the bottom end of the funnel, they simply try to feed the funnel with more leads.

For a sales manager, the second option is more complicated. It requires a deep dive into a salesperson’s operating rhythm with powerful questions.  It requires guidance and coaching to ensure that the win rate is at its best possible level.  Then they would look on the pipeline to see how much room is left for additional prospection. (12 m€ of pipeline with 35% of win rate would be more than enough to hit the target)

To sum up, it is not about effectiveness over efficiency. It is about looking for effectiveness to focus on efficiency improvement. 

To read more:

Efficiency is the enemy: https://fs.blog/slack/

Customer-focused sales process; Dave Brock  https://partnersinexcellenceblog.com/the-customer-focused-sales-process/