What is the difference between effectiveness and efficiency in sales?
When it comes to B2B sales tools, efficiency is prioritized more so than effectiveness. But what do you gain by reps generating more meetings if they are all mediocre at best?
Efficiency and effectiveness are both buzzwords popularly used by CEOs and Sales VPs to chart the course of their organization. They are also commonly misused and misinterpreted, not just in the lexicon of business-speak but 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: effectiveness is about doing things correctly, while efficiency is about doing more faster. The correlation between efficiency and effectiveness is further illustrated by this chart:
Effectiveness vs. Efficiency
Companies Struggle to Find Balance
Companies are always looking to improve the efficiency of their operations and sales processes. After all, when working with limited resources, they prefer to maximize the use of each resource, including budget, technology, time, and sales reps. However, by pursuing efficiency at all costs (irony intended), many companies miss a valuable chance to view their effectiveness from a wider lens.
The Holy Grail for every company is the top right box. Organizations can only achieve that by leveraging technological advances, properly managing its time, and fostering alignment and collaboration between employees. Many companies have their priorities straight, but are inefficient in achieving their goals. Others run tight ships with collaborative and focused work environments, but lack the leadership and direction to succeed.
Making Sense of Sales Activity
Consider the differences between activity effectiveness and activity efficiency among your sales reps. Every sales rep has daily, weekly, monthly and quarterly goals that measure the effectiveness of her performance.
If reps are tasked with making 70 calls per day, and they easily hit their numbers, they are effective in their role. Some reps go above and beyond to make 80-90 calls per day, but what if those extra dials are producing fewer connections and deals?
Raw numbers rarely tell you a whole story. To get a true read on performance, you need metrics that level the playing field from your greenest rep to your most experienced rep. That is where activity efficiency ratios come in.
Sales managers need reports that show the full customer journey. How many calls lead to connects, how many connects lead to demos, and how many demos lead to deals. However, each metric alone tells only part of the story. They need each other to tell the whole story. A full funnel report gives you a complete picture of the funnel and indicates both the effectiveness and efficiency of each rep and the team as a whole.
Activity Efficiency Ratios
So is it more important for your organization to pursue effectiveness or efficiency? If you seek aggressive growth and have resources to burn, effectiveness might be the priority. However, if you have limited resources with which to work, you might be more interested in operational efficiency to maximize your resources.
How to Find the Sweet Spot Between Effectiveness and Efficiency
The only way to truly measure effectiveness versus efficiency of your reps is with complete visibility into your sales pipeline. This means you need to capture every sales activity taken by your reps (e.g. every call, email, demo, etc.) and consistently view them from one central hub. Then your managers need to use the data to coach reps so they can improve their effectiveness.
However, it’s neither efficient nor effective for reps to track and report their sales activity manually. You’ll want a platform that automatically does it for you — providing both accuracy and immediacy to the process. Centralized data solves only part of your problem though if you are analyzing and synthesizing the data yourself.
As a sales leader, you must balance the efficiency and effectiveness of your reps and yourself. The best way to do so is via a single centralized sales intelligence platform — one that includes the six core features every sales leader needs. InsightSquared provides:
- Activity Capture
- Guided Selling
- Reporting & Inspection
- Machine Learning
InsightSquared delivers a complete sales solution that is both efficient and effective. With it, your sales organization can achieve both as well.
Find out how InsightSquared can improve both the efficiency and effectiveness of your sales team with a demo of our platform.