Sales productivity directly measures the profitability of your sales activity and investment. Knowing how to optimize sales productivity can help you maximize your profits. In this blog, we’ll cover some keys to improving sales productivity. First, we’ll look at what sales productivity is and how you measure it. Then we’ll review some technology tools which can help you increase your sales efficiency and hence productivity. Finally, we’ll cover some practical tips for getting the most out of your sales efforts.
What is sales productivity?
Sales productivity refers to how much sales output your representatives and team generate for the time and resources you put in. The term can be used descriptively or it can be defined mathematically as a key performance indicator (KPI).
When used as a KPI, sales productivity is expressed as a ratio of output over input, where output and input can be measured in terms of different variables. For example, output can be measured in terms of revenue generated per sales representative per month.
Other ways of measuring sales productivity include sales volume per month, closes per lead, closes per appointment, or revenue per close. Sales productivity metrics can be tracked for your entire sales team, for segments of your team, or for individual representatives. Measuring productivity in different ways provides different insights into the efficiency of your sales strategy.
How do you calculate sales productivity?
A simple way to calculate sales productivity is to divide total sales revenue by the total number of sales representatives per month. For example, if your team generated $20,000 in sales in a given month and there were 10 members on your team that month, your productivity would average $2,000 per representative.
A similar method would be used to calculate productivity for ratios using other measures of productivity. The general formula can be expressed as:
Sales productivity = Output / Input
Here Output stands for whatever measure of sales output is being used and Input stands for the chosen measure of sales input.
Important sales productivity KPIs to track
A number of KPIs have proven useful as standard metrics for measuring and tracking sales productivity and related sales performance indicators. Some of the most important include:
- Sales revenue per employee: as explained above
- Monthly revenue growth rate: the ratio of change in revenue over a month to the revenue level at the beginning of the month
- Lead conversion rate: converted leads divided by total leads
- Average purchase value: total revenue divided by the number of sales
- Customer lifetime value: lifetime revenue per customer
- Customer acquisition cost: marketing cost per customer acquired
There are many other sales KPIs you can track. Select the KPIs which are most relevant to your sales goals.
What are some leading sales productivity tools?
Smart use of sales technology can significantly increase your team’s productivity. Here are some important categories of sales productivity tools and examples of leading providers:
- Customer relationship management (CRM) apps: help you digitize your customer database, plan sales opportunities, schedule appointments, record notes, and manage sales teams (example: Dynamics 365 Sales)
- Route optimization and planning apps: let field sales reps save time and mileage by automatically planning optimized routes (example: portatour®)
- Prospecting apps: let you mine digital data to find markets and buyers matching your ideal customer profile (example: InsideView)
- Sales content management apps: provide convincing sales collateral to your reps which they can quickly find and adapt for each lead (example: Seismic)
- External communication apps: manage communication and engagement with customers through automated campaign management (example: Autoklose)
- Video messaging: can be used to record customer meetings and send sales material (example: Loom)
Using these types of tools increases your sales productivity by improving your efficiency. The less time your sales representatives spend on routine tasks which can be automated, the more time they have to focus on cultivating leads and closing sales.
Sales productivity tips to increase efficiency
Sales technology tools work most efficiently when used in conjunction with best practices which increase productivity. Here are some top tips to help your representatives and team maximize sales productivity:
- Start each day by preparing with a mental rehearsal. Go through the customers and leads you’re going to visit. What material do you need? What stories are you going to pitch?
- Prioritize your leads and customers according to revenue potential. How much revenue do you expect from a given lead or customer?
- Plan more and longer visits to customers representing high potential revenue.
- Set customer appointments by calling customers on the phone beforehand to arrange meetings. This minimizes time lost visiting customers who don’t attend appointments.
- Write precise call reports (visit notes) for each visit. With whom did you talk? When was the visit? What topics were covered? What are the follow-up activities and next steps? Write down everything right after the visit. Go through your notes in the evening, fill in gaps, and follow up with your customers. This helps you go beyond customer expectations: the next time you visit the customer, you can continue where you left off the last time. You deliver what you promised. With portatour®, call reports are a breeze: fill them in on your mobile device right after the visit.
- Adapt your day when unforeseen changes happen. Stuck in traffic? A customer calls and needs a visit right now? Forget about cumbersome re-planning with Excel or Google Maps. With portatour® route planning app you receive an updated schedule with the click of a button.
Building these practices into your standard operating procedures and training your team to follow them will increase your efficiency and productivity.
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Optimize your sales productivity to maximize your profits
To sum it up, sales productivity measures the efficiency of your selling activity in terms of output per unit of input. This can be expressed in a number of ways, such as monthly revenue generated per employee. Various KPIs can be used to track sales productivity and related sales metrics, such as monthly revenue growth rate.
Sales productivity can be increased by using technology tools such as CRM and route optimization apps in conjunction with best practices such as prioritizing leads based on revenue potential. The portatour® app is designed to help you save time planning sales routes and get the most out of each day on the road. Start a free 30-day trial today to experience how route planning optimization can improve your sales productivity and increase your revenue.