Werner gave this presentation at the Future of Sales Festival in December 2022. You can find the replay of this talk and a whole lot more in the SEC membership dashboard.

I’m Werner Schmidt, CEO and Co-founder of Lative. In this article, I’ll be talking about how to measure your sales efficiency, including looking at:

  • What it means to grow efficiently
  • Four key components of measuring sales efficiency
  • Why this is so important now

Let's get started. 👇

Is a company's growth at the expense of sales efficiency?

There's a great quote from Kasper Hulthin, who's the Chairman of Normative and co-founder of two successful startups.

The quote goes:

“If you've ever attended a board meeting, you'll know the conversations hyper focused on grow, grow, grow, and whatever cost. The next meeting, it switches to ‘we need to grow more efficiently’.

So what do we mean by growing more efficiently? Because we've had two decades of hypergrowth, where it's been growth at all costs, and as we know, that's no longer being rewarded in the market.

What does it mean to grow efficiently?

Growing efficiently means investing in the most productive and cost-efficient areas, in order to generate revenue. I think everyone will agree with that.

So if that’s the meaning, then what’s the outcome of growing efficiently?

Well, if we can grow efficiently, then we know:

  • We can align to the company's goals and objectives
  • We're able to invest in the right areas
  • We’ll get the return that we could expect
  • We'll be able to establish the sales teams effectively and efficiently.
  • And importantly, actually secure sales capacity to reach their targets.
  • Set the targets that drive the right behaviors
  • Invest in enablement programmes that lift productivity

Four key components to measuring sales effiency

First, I'll write about the four key components to measuring sales efficiency.

Sales contribution

Sales contribution is the value that a sales organization brings to a business. Let's break it down.

So really, it's maximizing your headcount return on investment, by seeing what your sales teams produce versus what they cost. It’s the sales team’s productivity versus the cost of their sales organization.

What does this figure do?

  • It determines if the headcount investment costs are yielding the expected return
  • It allows you to start comparing one sales team to another

That’s when we start to look at sales teams based on what they generated versus what they cost, what that return on investment (ROI) was.

You can start thinking about the percentage of the contribution that the team is bringing into the sales organization, not just in dollars that are being booked, but also what it's costing.

We know, for example, new business teams will cost more, when it comes to the cost of acquisition, than say a renewals team, and that needs to be factored in as well. But it’s important to be looking at it.

Lastly, what's key about sales contribution is knowing when and where to hire.

Because that then helps you identify when it’s time to put extra headcount in, and where it should go.