In my last blog post, I talked about the intricacies in calculating sales productivity in a complex sales environment. I ended that post with this statement, “Despite being nuanced, creating a good sales productivity metric is worth the effort.”
Calculating sales productivity is indeed beneficial and allows sales leaders to improve decision making and assess decisions made. Importantly, sales productivity needs to be plotted longitudinally and can be enhanced with the addition of complementary metrics.
Sales productivity over time
Sales productivity is improved through a variety of investments from enablement programs, sales design changes, technology enhancements, etc. Savvy sales leaders track sales productivity over time to assess the relative return on investments. The key is to recognize the time delay between the initial event and the point of impact.
The event (i.e., program completion, reorganization, platform launch, etc.) is pretty straightforward. When did the productivity enhancement materialize? To be conservative, use the date that signifies the completion of communications, rollout and training.
The point of impact can be a little more tricky — most investments do not provide an immediate uplift to sales productivity. As a starting point, use the average sales cycle duration to establish the time delay. This is a reasonable approach since it gives sellers time to see benefits in newly created opportunities.
Sales productivity with other metrics
Plotting sales productivity with complementary metrics also helps to unlock the value of productivity analysis. Examine the following example: productivity declines as sales headcount is increased.
Unfortunately, in this scenario, there is a diminishing return on productivity as the sales leader added more sellers — ideally, productivity would be flat or increasing with headcount investments. Decreasing productivity could be a symptom of the sales force being close to full capacity or an indication of other challenges. Certainly, identifying the root cause is important. However, sales productivity can erode slowly. Detecting the problem is the critical first step.
Many successful sales leaders are using productivity metrics to do a variety of things:
- Improve business reviews
- Prioritize investments
- Assess past decisions or investments
- Quantify sales performance management
Sales productivity is a powerful metric. It might require some preemptive thought and collaboration on how to calculate (often by role and/or by business unit) but as mentioned… it is worth the effort.
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