You've established the various stages of your sales process. You know how the typical prospect goes from an email address in your CRM to a paying customer. You've trained your salespeople on the key actions required to move prospects from stage to stage.
But how do you know if it's actually working? What factors should you be taking into account? And if it's not functioning as well as you'd like it to, how can you improve it?
The concept that underlies all those points is known as sales effectiveness. Here, we'll go over what that means, how to most aptly measure it, some steps you can take to improve yours, and some of the best resources available to get the most out of your sales process.
The concept of 'sales effectiveness' is fluid, but it typically refers to how well an organization's sales reps can successfully convert prospects and guide them through its sales funnel. Sales effectiveness is evaluated via a variety of metrics, like conversion rate, close rate, and quota attainment.
The way that sales effectiveness is measured can vary by company or sales organization depending on which sales metrics are the most important to them.
Some other ways to measure sales effectiveness include:
Individual quota attainment
Percent of the sales organization achieving quota
Average annual on-target earnings
Sale cycle length
Average new deal size
How to Measure Sales Effectiveness
Before diving into conversion rates, we need to understand the process a contact takes to convert.
Lifecycle stages help you organize your contacts based on the stage of your sales process they're in.
The definition of a "lead" depends on how you acquire customers. If you're connecting with prospects on LinkedIn and then following up over email, a lead might be any LinkedIn user you've identified as a potential good fit. If you're meeting buyers at trade shows, a lead could be anyone who left their email address at your booth.
An "opportunity" is a contact in your CRM confirmed their interest in your product or service. That could mean they've confirmed their interest over email, booked a demo, requested to speak with a salesperson, etc.
Lead to Opportunity Conversion Rate
Which percentage of your leads are turning into opportunities?
This metric tells you several things.
First, are your salespeople getting enough leads to hit their goal? Maybe they're converting a high number of leads into opportunities, but they're still missing quota. That could suggest your marketers need to generate more leads.
Second, are your salespeople effectively following up with those leads? If your reps have the opposite problem — they're converting a low percentage of leads into opportunities — their follow up could be the problem.
Review their approach. Are they personalizing their outreach? Using multiple channels (email, calls, voicemail, social media, etc.)? Are they reaching out enough times before giving up?
As a subset of this, you can also monitor how many leads your salespeople are trying to contact at all. Let's say marketing usually sends sales 1,000 leads per month.
If your reps only email 200 of those on average, the leads may be extremely low-quality. Ask your sales team why they didn't work specific leads; their answers will reveal whether it's a matter of fit ("This company is way too small to need our product") or inefficiency and laziness ("Carla called them in February and they weren't interested.")
Opportunity to Close Rate
How many of your legitimate sales opportunities become paying customers?
That's why it's important to compare your opportunity to close rate to other businesses in your space, if you can. However, there are a few universal takeaways you can draw.
If your opportunity to close rate is really high (think 60% or higher), your salespeople are probably being too selective with the accounts they choose to work. They're cherry-picking the prospects who are determined to buy — or at least, require very little convincing — and the ones who are nearly perfect fits.
The problem with this? You're leaving money on the table. It's likely you could be selling far more if your reps were less discriminating.
You may also need to hire more reps. Demand for your product is clearly there, so expand your team to meet it.
If your opportunity to close rate is extremely low, your salespeople might require more training. Try to figure out where prospects are dropping out of your funnel.
Do most of them say they're not interested after the connect call? Teach your reps to offer immediate value so buyers view them as a resource and see the benefits of continuing the relationship.
Do the majority of prospects go dark after the demo? Coach your team on giving tailored, benefits-driven presentations, uncovering urgency, and setting firm next steps.
Measuring your opportunity to close rate over time gives you a good sense of your salespeople's collective performance. It should either be flat or increasing.
Finally, compare an individual rep's opportunity to close rate to the team average. If theirs is far lower, they need training or a performance plan (and if you don't see any improvement, you should part ways).
If theirs is right in line with the average, they're a solid performer; make sure you're consistently working with them to help them get better and make sure they don't leave for greener pastures.
If theirs is far higher, leverage them as a mentor and inspiration for your other salespeople — and don't forget to keep them happy so your competitor doesn't poach them.
How to Improve Sales Effectiveness
Invest considerable time, energy, and resources into training.
This one is kind of a no-brainer. Your reps' ability to make the most of their engagements with prospects can only stretch as far as their skills and preparation will take them. So, naturally, it serves you to make sure they're skilled and well-prepared.
Training is the most fundamental, straightforward base to cover when you're trying to get there. Make sure your reps have a thorough understanding of your sales process, preferred sales methodology, and your product or service.
If you feel your training isn't extensive or rigorous enough, you might want to consider enrolling your team in an externally coordinated sales training program.
And while some of these programs might be pricey, they can still be extremely valuable in helping your reps refine their sales skills and improve their sales effectiveness.
Refine your opportunity management infrastructure.
In a lot of ways, opportunity management is the practice of gauging sales effectiveness. Per HubSpot's own definition, it's "the process of tracking and managing sales opportunities — contacts who have entered your sales cycle with a demonstrated interest and ability to do business with you — as they move through your pipeline."
Committing energy, scrutiny, and resources towards your opportunity management efforts allows you to better understand your potential customers and prioritize your interactions with them based on their business potential.
It also helps you determine the best way to approach them based on the interest they've demonstrated and the stage of their relationship with your company. At the same time, it exposes flaws in your sales processes, allowing you to consistently improve how you interact with potential customers.
By taking the proper steps to improve how your company manages its opportunities — including firmly establishing a pipeline, encouraging extensive research on your opportunities, maintaining and tracking contact with your opportunities, and keeping a holistic view of your sales pipeline to identify room for improvement — you can set your reps up for success and improve sales effectiveness.
Leverage a sound sales process.
This one might be obvious in the context of this article, but it still bears reviewing.
Salespeople need a framework to operate by. They need some form of guidance and repeatable actions — specific to the product or service they're selling —if they're going to be effective. In short, they need a solid sales process to work with. Even your most talented reps will run into trouble if yours is unsound.
Your reps need to have a baseline understanding of how you want them to guide opportunities through your pipeline. You have to give them some concept of how they should be operating during whatever stages they're responsible for —from prospecting to closing.
As you can assume, the effectiveness of your sales process has considerable influence over the effectiveness of your reps, so you need to make yours as strong and efficient as you can. If you're finding your process is inadequate, thoroughly analyze where you might be going wrong.
Pin down the steps that seem to be giving your reps the most trouble. Give your reps a more thorough perspective on your target buyer personas and what their journeys should look like. Define the specific actions and exit criteria that characterize each step. And finally, measure whether the changes you're making are effective and stay abreast of any hitches that occur moving forward.
Those are all viable avenues to look into if you're interested in improving your sales effectiveness. That said, they're a bit more high-level and less immediate than some other steps you can take — namely, leveraging sales effectiveness tools.
The HubSpot CRM features tools that can improve sales effectiveness at every stage of your sales pipeline. Elements like email tracking, email templates, and call recording allow your reps to more effectively convert leads into opportunities.
From there, tools like its appointment scheduler, automation capabilities, and live chat help support your reps' efforts by keeping opportunities engaged. And pipeline management features offer your salespeople consummate visibility into how their opportunities are progressing.
The HubSpot CRM has free plans for smaller businesses with reasonably priced options that can suit your company as you grow and your operations expand. It's an excellent option for any business interested in a multifaceted tool to reduce friction in its sales process and improve sales effectiveness.
Clari is a revenue operations platform that leverages AI capabilities to gather data from across your organization to offer your sales team robust operational visibility via dashboards and execution insights.
As Clari puts it, "[The software] aligns your revenue team with efficient operational cadences for forecasting, 1:1's, pipeline reviews, QBRs and renewals, and expansion." All of which allows for predictable revenue and insight that can improve sales effectiveness.
The program is an excellent resource for sound pipeline management. It gives you thorough visibility into which transactions make up your inventory, what coverage each segment and territory has, and how much more you need to make the number in current and future quarters — all of which can help you identify risks and irregularities in your sales operations.
That perspective makes for a better-informed, more thoughtfully guided sales org and improves sales effectiveness.
Pipedrive offers a decidedly sales-oriented CRM platform — tailored toward enabling hard sales with data and automation. The software adds a new degree of insight and intelligence to a company’s sales efforts by gathering smart contact data and automatically pre-qualifying leads.
The platform includes tools that can retrieve web-data about your contacts from online sources like LinkedIn. Using this information, the platform can give you insight into the viability of pursuing the leads you gather.
The kind of intelligence and direction Pipedrive provides can set your reps up for success and boost your sales effectiveness. By giving them a leg up with and a predictive edge to their engagements with prospects and opportunities, Pipedrive ensures that your salespeople can consistently keep their sales efforts running smoothly and effectively.
Gong is a conversational intelligence platform that can provide sales reps and managers with real-time, actionable, AI-powered feedback on their calls. Using that data as a reference point, these kinds of platforms let you monitor and scan all the sales calls in progress across your sales org.
Those capabilities offer sales managers a bank of information to browse, benchmark, assess, and better understand their reps' calls — allowing for meaningful insight to smooth over hitches in your sales process and offer reps more targeted, helpful feedback about their efforts.
Gong can improve your organization's sales effectiveness by keeping your sales efforts sensible and streamlined, exposing any weak points managers need to address with both individual reps and their teams as a whole.
Keeping tabs on the effectiveness of your sales process is key to helping you gauge the health of your sales organization and ultimately learning how to sell better.
If you want to get the most out of your sales operations, it serves you to understand sales effectiveness, how to measure it, how to improve it, and the best resources for optimizing it.
Originally published Jan 6, 2021 1:45:00 PM, updated January 07 2021