What is sales efficiency?

What is sales efficiency?

Before we dive into how to improve efficiency, it’s important to understand what the term means. Sales efficiency measures the speed of your sales team during a specific time period. It’s one of the most important sales operation metrics to track as it also helps leaders identify how much it costs to close a deal.

How to measure sales efficiency

Measuring your efficiency is simple if you follow the sales efficiency formula. First, you need to gather these numbers:

1. The gross revenue earned during the amount of time you want to track, such as a quarter or fiscal year
2. Sales and marketing expenses including salaries, training, and tools from the same time frame

Once you identify both figures, divide the gross revenue by expenses to calculate your overall sales efficiency metric. For example, if an organization generates $3 million in revenue and spends $1.5 million, the sales efficiency calculation is 2 or 200%. This is also easy to calculate for individual reps, a group of new hires, and entire sales forces. 

Sales efficiency vs. effectiveness

Sales effectiveness measures seller performance throughout the sales cycle. Organizations need to track a number of different sales metrics and KPIs in order to measure effectiveness. These include lead conversion rates, win-loss ratios, and quota attainment. So, the more effective a seller or team is, the more conversions and wins they’ll have at each stage of the pipeline. 

While sales efficiency and effectiveness aren’t the same thing, it doesn’t mean that organizations should focus on one over the other. Instead, sales leaders should leverage efficiency and effectiveness in order to reach business goals. 

Why sales efficiency matters

If an organization’s efficiency is stagnant or declines from one quarter to the next, it’s an indicator that there’s a problem with your existing sales process. As a result, sales leaders should investigate what’s working and where there’s room for improvements.

Additionally, sales efficiency directly correlates to an organization’s revenue. Efficient sellers have the resources they need to interact with buyers, answer questions, and close deals more quickly. As a result, organizations can expect to reach quotas and revenue goals. However, organizations with lower levels of efficiency have longer sales cycles and require sellers to put in more time and effort to close a deal. Therefore, they’ll likely experience lower profits and slower revenue growth over time.

How to improve sales efficiency

Given today’s economic uncertainty, leaders are tasked with identifying ways to maximize efficiency while minimizing costs. As a result, many organizations believe cost-cutting equates to operational efficiency. But all too often, reducing costs and investments in technology isn’t the answer.

Sales efficiency isn’t simply about decreasing spend. Instead, it’s about ensuring what you spend has a return on investment (ROI). It’s also worth noting that some technology will always remain mission critical to the success and efficiency of your organization.  According to McKinsey, CEOs believe that technology is a key component to business growth and should remain a priority even in the most turbulent times. We couldn’t agree more.

When it comes to non-negotiable investments, enablement technology should be at the top of the list for every GTM organization. Sales enablement technology includes tools that reduce the workload for sales and customer service teams. They also help GTM teams:

• Strategize and plan campaigns 
• Manage sales content 
• Deliver learning and coaching 

All of these tasks are key to driving and operationalizing efficiency at scale.

The value of enablement tools on sales efficiency

We recently surveyed more than 1,200 full-time sales, enablement, and customer service professionals to gain better insights on how enablement tools directly impact sales efficiency. In The 2023 Value of Enablement Report, 9 in 10 respondents report using enablement tools in their job, and 99% of them agree that it makes their jobs easier.

The survey also confirmed McKinsey’s findings on the importance of technology during turbulent times. 85% of organizations are retaining or increasing their investment in enablement technology this year. But why is this the case?

According to responses, 84% say that enablement is integral to operating more efficiently.

Let’s take a closer look at why respondents said that enablement technology is imperative to sales efficiency.

Saves time

A key component of efficiency is saving time. Unfortunately, sellers in organizations without enablement tools spend an average of 10 hours searching for and updating content they need to drive buyer engagement. However, respondents at organizations that use enablement tools save 13 hours, or nearly two business days, each week.

Increases productivity 

88% of respondents say that enablement technology allows them to be more productive in their roles. When sellers can quickly locate the right content at the right time, they can shift their focus to other high-priority and revenue-generating activities. However, productivity significantly decreases at organizations without enablement technology. 91% of respondents agree that not having access to the content they need makes them feel less productive. 

Improves effectiveness

The time it takes for sellers to access and revise content severely hinders their effectiveness. Additionally, the majority of respondents who use enablement technology at work believe they’re more confident. 97% of respondents say that quick access to information and content helps them speak to buyers from a more informed standpoint. Comparatively, 51% of respondents at organizations without enablement say that they have misspoken during a sales or customer call. 

The bottom line

GTM teams invest in enablement technology because they want to boost their bottom lines. And while the majority of respondents said they use enablement technology at work, 80% of them don’t believe they use their tools effectively. Instead of cutting an investment in enablement tools altogether, organizations need to identify how to leverage their tools to their fullest potential. As a result, they can optimize operations, enhance sales processes, and ultimately improve sales efficiency.

Operate efficiently with Seismic

Sales enablement is a key driver behind efficiency. That’s why the Seismic Enablement Cloud™ is purpose-built to help GTM organizations optimize their programs and leverage the resources they already have. Visit our Product Innovation Center to learn more about our latest features and capabilities. Or, if you’d like to learn how to achieve greater efficiency with Seismic, get a demo today.