- When planning for the new fiscal year, sales leaders focus on adding resources as the primary method of accelerating revenue growth
- Better use of current investments in headcount and improved process discipline are often overlooked as ways sales leaders can grow revenue more cost efficiently
- To understand how to better utilize their current investments in sales leaders must benchmark their sales organization against the metric of sales efficiency
When figuring out how to grow revenue, sales leaders have been programmed to think first about adding sales headcount. But what about identifying how to get more out of the current investments in the sales organization – increasing sales efficiency? SiriusDecisions defines sales efficiency as the amount of revenue generated for every dollar invested in sales, and our data shows wide variability in this metric among the sales organizations of the thousands of companies in our Command Center® database.
Before asking for more resources during planning season, sales leaders must first identify ways to get more out of their current investments in sales headcount. This can be accomplished by ensuring that they’ve matched the costs to acquire a customer (routes to market and sales roles) with the lifetime profitability of that customer segment. They must also instill discipline across the global sales organization to standardize on critical sales processes.
The six key priorities sales leaders should look to improve sales efficiency are:
- Sales strategy. Sales leaders should ensure they have complete support of marketing and product on the prioritized target segments that offer the best opportunity to hit the revenue targets. This means aligning with marketing and product on the target personas and the typical buyer journey and identifying the optimal route to market (direct, indirect, e-commerce) that can reach those target customer segments more profitably.
- Organizational design and investment. SiriusDecisions data show that sales headcount constitutes 90 percent or more of typical sales budgets. Before adding sales resources, sales leaders should identify ways to reallocate existing investments headcount. For example, can lower-cost inside sales roles be used to pursue less profitable customer segments more efficiently?
- Talent management. Sales leaders must implement best-in-class sales recruitment and onboarding processes so they can quickly fill open requisitions and rapidly ramp new hires to full productivity, as SiriusDecisions data shows that it takes 6.8 months to fully ramp a rep.Sales leaders’ confidence in their organization’s ability to get new hires to contribute quickly can aid in any headcount reallocation plan.
- Demand engine. SiriusDecisions data shows only 24 percent of sales leaders rate their lead management as “very effective.” This represents a significant missed opportunity to improve sales efficiency. Sales leaders must ensure their prospecting function (business development reps/sales development reps) are adhering to a well-defined playbook to maximize lead output.
- Sales execution. Sales leaders should ensure that critical sales processes have been defined and are adhered to across their sales team. This includes defining a sales management cadence that lays out an efficient operating rhythm for their sales management team to utilize.
- Sales productivity. Only 53 percent of sales reps report receiving meaningful daily or weekly feedback from their front-line sales manager. Sales leaders must understand what is preventing sales managers from spending more time coaching sales reps and remove those obstacles.
With 2019 sales planning just getting underway, sales leaders should first look for ways to reallocate their current headcount and define critical sales processes to improve overall sales efficiency.