Categories Articles, Sales and Marketing

What is the difference between effectiveness and efficiency? They are two buzzwords that are popularly used by CEOs and Sales VPs in charting the course of their organization. Yet, they are also commonly misused and misinterpreted, not just in the lexicon of business-speak but also in daily use. For all intents and purposes, let’s begin by defining efficiency and effectiveness in general terms, borrowing from Dictionary.com:

Effective (adj.) – Adequate to accomplish a purpose; producing the intended or expected result.

Efficient (adj.) – Performing or functioning in the best possible manner with the least waste of time and effort.

The difference between effectiveness and efficiency can be summed up shortly, sweetly and succinctly – Being effective is about doing the right things, while being efficient is about doing things right.

Learn How to Measure the Effectiveness and Efficiency of Your Sales Team »

Another way to illustrate efficiency vs. effectiveness is with the 2×2 grid below. By referring to this chart, CEOs and sales leaders can find an optimal balance between effectiveness and efficiency:

Effectiveness vs. Efficiency

Companies usually seek to increase and improve the efficiency of their operations and sales processes. After all, when working with limited resources, they would prefer to maximize the use of each of these resources, from budget and technology to time and sales reps. However, by pursuing efficiency at all costs (irony intended), some of these companies are missing a valuable chance to take a step back and look at their overall effectiveness from a big picture perspective.

The Holy Grail for every company is to always pursue the top right box – pursuing the right goals and being efficient, by making use of technological advances, not wasting time, and having better alignment and collaboration of between employees. Many companies have their hearts in the right place – they know what goals they want to achieve, but are inefficient in achieving those goals. Other companies are tightly run ships, with all employees working together, humming along and all singularly focused on the task at hand…but what if the task at hand is the wrong goal?

An Example

For a practical example, consider the differences between activity effectiveness and activity efficiency among your sales reps. Every sales team has daily, weekly, monthly and quarterly goals that, when achieved, are representative of the effectiveness of their roles. If your reps are tasked with making 70 calls each day, and they easily hit their numbers, they are effective at their jobs. Some might even go above and beyond and make 80 or 90 calls each day. But what if those dials are producing few connects and even fewer deals?

Activity Effectiveness

That’s where activity efficiency ratios come in. For a sales manager, having reports that track how many calls lead to connects, how many connects lead to demos and how many demos lead to deals can be an incredibly powerful indicator of which of your reps are not only effective at their jobs but efficient in performing them.

Activity Efficiency Ratios

Learn How to Measure the Effectiveness and Efficiency of Your Sales Team »

And therein lies the rub – is it more important for your organization to pursue effectiveness or efficiency? If you’re trying to grow aggressively and have resources to burn, optimizing effectiveness might be the way to go. However, if a smaller company has very limited resources to work with, they might be more interested in pursuing efficient operations in order to maximize their capabilities and not stretch themselves too thin. Finding the sweet spot between effectiveness and efficiency is truly that ultimate goal for all companies.

 

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Showing 35 comments
  • Robin Bull

    It is important for a company to have both efficiency and effectiveness. It’s hard to be effective if you aren’t being efficient. It’s hard to be efficient if you aren’t being effective (because you waste your time on techniques that don’t work). The same can be said for technology and software. Your webinar software might be efficient, but is it effective? It may be effective, but does it offer everything you need to make you more efficient as a business? Mikogo presents businesses with a cost effective solution for their online collaboration needs. It’s efficient because it has so many ways to use it. You can even record your webinar for later use. It’s effective because it has features that help hold the attention of your audience such as an interactive whiteboard. Check it out and let us know what you think. 🙂 We’d like to think we are both efficient and effective, but we also know there is always room for improvement!

  • Lee T

    In my mind efficiency encompasses effectiveness…at least from the perspective of the objective at hand. Doing the wrong things the right way fails to meet the objective, so how can efficiency be claimed? Lots of things can be effective that are not efficient, but nothing can be truly efficient that isn’t also effective.

  • amardeep titung

    cannot we define the effectiveness as the act of thinking right as efficiency as implementing thing in right way

  • Charles

    Effectiveness vs. Efficiency
    Efficiency I believe is a sub task to become Effective. If you are set on Effectiveness vs. Efficiency then I would say if your Effective then your company should recognize that over Efficiency. Effective should be priority with Efficiency following close behind. However you can’t leave Efficiency out of anything either.

  • Charles

    Let me give you an example from this company that is automated. It’s affective but yet not as efficient. Here’s the email I received below. As you can see from the response from above my name is spelled correctly. CHARLES. However in the responding email it’s totally incorrect somehow. I’ve copied and pasted the email so that I didn’t mistype it.

    Thanks for signing up!

    Hi Charlse,

    Thanks for subscribing to the InsightSquared Blog Digest – we couldn’t be more excited to welcome you on board! You’ll soon start receiving our top content and most popular articles – the best of the best! – straight in your inbox every Saturday morning.

  • Anonymous

    thank you

  • boxs

    Thankyou

  • phumzile

    somebody help me is it possible to operate efficiently while customers need to be served effectively? if yes why and if no why i am busy with this question in my assignment

  • Ben

    I believe efficiency is the skill of using the best procedures, which have been tried and tested over time, to increase one’s chances of getting the job done. That means using the least amount of resources and generating the least amount of waste in doing so. Usually it means making the least amount of mistakes.
    Effectiveness, though, is getting the job done. Achieving the set goals. That may happen but not at optimal cost. It is still effectiveness.
    But the primary goal of every person is to get what they want at the best price, within the best timelines and the right specifications. That is being both effective and efficient. That’s why people visit a number of web markets to ascertain the best price for the best specs and the best delivery timelines, before they place their orders.

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