Every business owner wants to keep their pipeline full.
To keep sales flowing in, there’s a near constant push for better marketing, better salespeople, and better business processes. This is the momentum that all businesses need for consistent growth.
But generating more sales is only part of the equation.
While sales effectiveness does well to improve conversions, there’s another component that business owners often leave by the wayside: sales efficiency.
Sales efficiency is the key to not only generating more sales for your business but also streamlining your sales process so that you get more sales, faster.
In this guide, we’re covering what sales efficiency is, why it’s essential to your business, and 11 ways to make your sales process more efficient than ever.
What is Sales Efficiency?
So, what is “sales efficiency”? How is it different from “sales effectiveness”?
Let’s dive into the definitions.
Sales Efficiency vs. Sales Effectiveness
Sales Effectiveness refers to your sales team’s ability to convert prospects into leads, and eventually paying customers or clients, at each stage of your sales funnel. If your sales process is effective, you will experience more “wins” than losses every step of the way.
Sales Efficiency, on the other hand, refers to the speed of your sales operations. That is, how quickly you are able to convert users into leads/sales and while still generating the highest return on your investment. It is the revenue generated by your sales team relative to the cost.
A sales process that is both efficient and effective will be able to close sales in a reasonable time frame, at a sustainable cost, and on the right terms.
The Sales Efficiency Ratio
Sales efficiency is the “Magic Number” that’s calculated by “taking current quarter new revenue annualized, divided by prior quarter sales & marketing expenses” (Source):
Sales efficiency = (revenue / sales cost) x 100
For instance, if you spend $4 on sales in Q2 and generate $4 in revenue in Q3, your ratio would be 1. But if you spent $4 on sales in Q2 and instead only generated $2 in revenue in Q3, your sales efficiency ratio would be .5.
Your sales process is considered sufficient if you have a ratio of .5-1, indicating that your company is essentially breaking even. However, this is not sustainable for the long term.
With a sales efficiency ratio of 1 or greater, you can be confident that your business has strong sales efficiency. Just note that if your ratio is significantly higher than 1, it could mean that you are under-investing in marketing or sales.
Why Sales Efficiency & Effectiveness Should Be Your #1 Priority
Sales inefficiency is a huge issue that many businesses are facing, but few take the time to run the numbers on before it is too late. Your sales team closing the majority of new prospects isn’t always an indication of success.
The reality is that sales quotas have risen by over 33% since 2007, but the percentage of sales reps actually hitting their quota has fallen by 25%. Sales inefficiency is such a pervasive issue that 65% of B2B businesses listed it as their #1 business challenge.
Calculating your sales efficiency ratio is the best way to determine whether your business is on track.
If there’s room for improvement – a major comeback – you will need both sales efficiency and sales effectiveness in order to move the needle.
11 Ways to Improve Sales Efficiency
If your business is struggling with sales efficiency, just know that you are not alone. Many business owners are making sales efficiency their #1 priority, and you can too.
Here are 11 ways to improve sales efficiency in your business.
1. Specify Business Goals and KPIs
The first step in laying out your sales efficiency game plan is to get super clear about what your goals are and how you will measure success.
Are your sales reps expected to close a set # of sales per month? A certain amount per sale? Make sure those expectations are set from the beginning.
We highly recommend using the SMART goals method to set goals that are measurable and realistic.
For example, the Measurable acronym could be: increase sales by 17% by the end of the next quarter.
Once you are clear on what your goals are, and what key performance indicators (KPIs) will be used to measure success, make sure you track sales activity closely. Identify any bottlenecks and fix problems in a timely manner to avoid further inefficiency.
2. Identify Your Ideal Customer
50% of sales time is wasted on unproductive prospecting.
Creating a profile of your ideal customer will improve your close rate significantly. That’s because the best way to move a prospect to buy is by addressing every one of their needs and wants.
You can use sales intelligence tools like Lead Machine to create robust customer profiles using a range of data points, essentially creating a persona of someone who is ready and excited to buy your product.
Building your ideal customer avatar consists of three main components:
1. WHO they are (demographics)
2. WHERE they are (location)
3. WHAT they want (pain points and needs)
Lockdown this information and you can pinpoint exactly what features and benefits of your product would appeal to them most.
Then your sales team can focus on pitching exactly what your potential customers want to hear without wasting breath on specs that won’t be of interest to them.
3. Create a Repeatable, Consistent Sales Process
If you want your sales team to be efficient, then you must train outline a repeatable, consistent sales process. Having a go-to guide for qualifying leads, selling at the right moment, collaborating with the team, and other important sales tasks will only help them work better and faster.
The key steps in a sales process are:
1. Preparation & Research. Know the scope of your product, what your ideal customer wants and needs, and what your company’s unique selling point is.
2. Prospecting. This includes the search for potential customers with the goal of moving them down your sales funnel. This is where the ideal customer data comes into play to help you identify promising prospects.
3. Needs Assessment. This is a way for your sales team to dig deeper into what the prospect needs and what issue(s) they are trying to solve. That way, they can custom-tailor a solution for them.
4. Pitch & Presentation. This is where your sales rep communicates the unique value of your product to the customer. It’s best that your rep establishes trust and hones in on what benefits your potential customer is looking for. Then they present your product as the ideal solution.
5. Objection Handling. The customer may have questions or concerns that need to be addressed. This is another opportunity to establish trust and communicate how you are different from your competitors.
6. Closing. This is when the sale is made or the proposal is sent. Reps should pay attention to the details here so that all the proper paperwork is taken care of.
7. Follow-Up. Referrals are the highest converting lead source. It’s worth it to follow-up with customers to encourage referrals and repeat business.
Not only will creating a clear sales process ensure that the same procedure is followed at every stage, but it will help you identify holes in the process. If leads are dropping off right before the close, you will be able to see this issue and address it quickly.
4. Align Sales and Marketing Teams
65% of sales reps say they can’t find content to send to prospects.
Often there can be miscommunication between your marketing and sales teams that can cause inefficiency.
That’s because most businesses see the traditional sales process like this:
Marketing hands leads over to the sales team and the sales team closes the leads.
Unfortunately, this method can lead to some major issues.
For example, a sales rep may pitch a product that was never marketed to the prospect. Or they may try to sell to someone who isn’t primed to buy.
In fact, only 35% of salespeople think that the marketing team knows what content they need, and only ⅓ of sales and marketing teams talk on a regular basis.
By aligning both teams, you improve communication and collaboration between teams, increasing your rate of conversions and reducing drop-offs in your sales funnel.
5. Train Your Sales People Effectively
82% of B2B decision-makers think sales reps are unprepared.
If your sales team isn’t trained properly, they will likely be inefficient. Some issues that can arise are sales reps wasting time and resources on approaches that don’t work, pitching to a customer before they are ready, or drawing out the sales process.
New hires should all go through in-depth training that instructs them on effective prospecting and selling. It should address any common questions that sales reps may have during the process, as well as tips on how to handle objections from customers.
Providing ongoing training will also help your team stay sharp and up-to-date on the latest selling techniques.
6. Strategic Sales Rep Assignment
Image: screenshot of the SPOTIO territory management interface.
Strategic rep assignment is a method for avoiding redundancies in your sales process. That is, it ensures that no sales reps are selling to the same areas/leads at the same time.
We recommend assigning your top reps to the most lucrative territories to ensure a better close rate on those high-ticket offers. Check out our guide on Sales Territory Management for tips on how to create your own efficient rep assignment strategy.
7. Sell to Customer Needs
The research you conducted around your ideal client persona will tell you what issues your potential customers are struggling with, what they need, and what they want.
Understanding their needs and articulating how your product is the best solution to their needs is the surest way to win them over.
While your competitors are hitting on all the features of their products, you will be speaking directly to your target customer’s strongest pain points. If you are able to drive home the benefits, it will be a no-brainer buy for them and a straightforward sale for you.
8. Manage and Nurture Leads Effectively
Nurtured leads produce, on average, a 20% increase in sales opportunities versus non-nurtured leads. (DemandGen Report)
It’s always easier to sell to a “warm” lead – someone who is familiar with your brand and has been primed for the sale – than a “cold” one. That’s why it’s essential to have a lead nurturing process to warm up your prospects.
The best system for doing this is to use a centralized CRM or lead management system. This is software that allows your sales team to see where prospects are at in the sales cycle so that they can follow up with them in the right way at the right time.
A CRM tool will increase sales efficiency by:
– Letting your team know the best time to follow up
– Helping your team tailor communications to where prospects are at in the sales cycles
– Assigning priority to prospects that are further down the sales funnel
9. Work on the Basics
Sometimes the easiest and fastest way to improve sales efficiency is to simply brush up on the basics. No matter how long you have been in business or how precise your processes are, there is always room for improvement.
Consider new ways to find prospects, presents sales pitches, and extend follow-ups to fine-tune your sales process at every step. Don’t be afraid to look at your existing system from a different perspective.
10. Maximize Your Time
A recent study found that sales reps spend less than 36% of their time on selling. That means that the rest of the time is spent on non-selling tasks like traveling, attending meetings, or checking email.
There are many handy tools that you and your team can use to maximize your time and efficiency. For example, this route planning software helps your team determine the most direct route to their destination.
Look at your task or project management system to identify areas where your team can be more efficient, allowing them more time to focus on selling.
11. Measure Results
Knowledge is power and in business, that knowledge is in the numbers. To maximize your sales efficiency, you need to routinely look at your numbers to know where you are at and where you are going.
Top-Level Sales Numbers
Track your most important KPIs and schedule out how often your team should be reporting on these metrics.
Image: Pipeline dashboard inside the SPOTIO field sales CRM.
Set aside time to look for weaknesses at each stage of the pipeline. What is the ratio of new leads vs. qualified vs. opportunity vs. closed? In which areas are you lacking? Find areas for improvement.
Individual Sales Rep Performance
Image: Viewing individual sales rep performance inside the Sales Rep Tracker dashboard.
Check in on where reps are at in their quotas (if they have them) and if they are meeting expectations. Track which reps are performing at their best and which are underperforming. Then apply incentives and training accordingly.
5 Tools to Boost Sales Efficiency
Looking for fast and simple ways to increase sales efficiency in your business?
Try out these highly-recommended tools.
1. Prospecting: Leadfeeder
Leadfeeder helps you generate new leads by identifying who has visited your website.
You are provided with contact information for companies that have viewed pages on your site so that your sales team can reach out with content that is of interest to them.
Prospecting tools help you save time by generating warm leads for you fast.
|Editor’s Note: if you’re an outside sales rep, use SPOTIO’s Lead Machine software to find ideal prospects in your territory. It uses over 50 different demographic data points to uncover the strongest leads.|
2. Territory Management: SPOTIO
Save up to three hours per day with Territory Management tools. SPOTIO helps your team spend more time selling all while avoiding overlap with other sales reps. Assign your top reps to high-ticket prospects in order to get the best ROI from your team.
3. Lead Management/CRM: HubSpot
HubSpot’s marketing, sales, and customer service hubs make it easy to handle all your customer management in one place. Increase collaboration between your marketing and sales teams, track where prospects are at in the sales cycle, and ensure that no prospect falls through the cracks.
4. Document Hub: SPOTIO
Get access to important files when you need them with a reliable document hub tool. SPOTIO also offers e-contract and document software to streamline the closing process – ensuring that no minute is wasted creating documents from scratch. Your team can pull in exactly what they need in seconds.
5. Reporting/ Tracking: Pipedrive
Stay on top of the numbers and know that you’re always “in the black” with accurate reporting and tracking tools. Pipedrive works to help businesses measure the success of their sales efforts and make important adjustments along the way. With the right tool, you’ll always know whether your sales efficiency ratio is on point.
Editor’s note: Use the SPOTIO rep and sales tracking dashboards to measure performance at the company and rep levels.
Sales efficiency is the #1 priority for businesses that want to close more sales and get the best ROI for their sales investment.
Close rate alone is not an accurate measure of sales success; there are many metrics to track and steps to take along the way to ensure that your sales process is running as smoothly as possible (and keeping you profitable).
Is your sales team efficient?
See how SPOTIO can work with your sales team to increase efficiency, productivity, and more by requesting a demo today.
Questions or comments? Contact SPOTIO at firstname.lastname@example.org or comment below.
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