Sales leaders and sales managers are real confused by the whole notion of productivity.
I hate to say this. But, unfortunately, it’s true.
This is a problem in that it drives sales leaders to make the wrong decisions about how to improve productivity.
Let’s get the basics out of the way.
First, a sales person’s productivity is NOT measured by the number of hours they spend selling each day. Nor is it measured by the quantity of activities they accomplish in each of those selling hours.
It’s well past time we put those myths to bed.
For some reason, sales has historically used a definition of productivity that is at odds with how it is defined by economists.
Productivity is the rate of output produced per unit of input.
That’s how economists measure productivity the world over. Why do we think it is any different for sales?
In sales, the rate of output is revenue. The unit of input is an hour of selling time..
In short, true productivity in sales is equal to the revenue a salesperson produces per hour of actual selling time. Full stop.
The key to improving productivity in sales is to re-structure sales processes to be focused on increasing the revenue sellers can generate within each of their current sales hours.
However, the default actions most sales leaders take to improve their version of “productivity” are to attempt to squeeze more activities into existing sales hours or, even worse, to attempt to increase the number of hours of their sellers spend selling. Neither of these contribute to increased productivity.
So, rather than waste time continuing to tilt at the windmill of increasing “sales hours,” managers and sellers should be focused on increasing the revenue they can generate within each of their current sales hours.
Every rep currently functions at a certain rate of productivity. Let’s call it $X/hour. Adding an hour or two per week of selling time doesn’t change X. For every hour they sell, their productivity is still $X/hour.
In order to increase their productivity to $(X+1)/hour and higher, the challenge for sales leaders is to implement systems to maximize, and measure, the efficiency and effectiveness of each and every interaction they have with a buyer. Starting from the first call all the way to getting an order.
It’s tempting to think that technology is the answer to improving productivity. And, I’ll be the first to admit that we’ve got all this incredibly cool technology flooding into sales.
Yet, how can you really evaluate the ROI on any of these new technologies, or the reengineering of your sales process, if you aren’t measuring whether they actually increased your true sales productivity?
As a result, we’re investing tens of billions every year in sales. And we’re still guessing about the ROI.
It doesn’t need to be this way.