Sales Coaching: The Right Balance of Efficiency and Effectiveness

Posted by James Fennessy

Efficiency metrics are activity measures, while effectiveness metrics are outcome measures. The key word in this characteristic is balance. There is a balance that must be struck between efficiency and effectiveness. The good news is that it does not take very much effectiveness measurement to counterweigh an enormous amount of efficiency measurement. Effectiveness measures tend to be leading indicators (because they are indicative of something about the client) whereas efficiency measures tend to be lagging indicators - if that.

Efficiency is a measure of activity: number of calls, opportunities in the pipeline, total value in the pipeline, forecast values and so on. These numbers are important; they are the metrics we use to manage a business. In fact, the higher up you go in an organisation, the more you will find these numbers relied upon for decision-making, because they are the pure and objective data by which business decisions are made.

The problem with measuring only efficiency indicators is that what is measured is what gets done. When the focus is on measuring activity, activity will be done in spades, for its own sake. In tough times, managers have a tendency to push harder on the accelerator of efficiency, which is to say, they push for more activity – and they get all the activity they want. But it doesn’t go anywhere. And they get into a death spiral where the more they demand, the more they get, and the less outcome they get from it. And down they go.

The other problem with efficiency measures is that they tend to stymie top performers, who are focused on outcomes, not activities. It is average performers who focus on activities. Average managers tend to drive top sales performers away from their companies at the very time when they are most needed. The truth is, as the research shows, more does not equal better in consultative sales, and in fact it may be counterproductive as onerous paperwork and fruitless racing about generally frustrate top performers. In major sales, success comes from working smarter, not harder.

Sales efficiency is about how to get in front of customers for the right amount of time at a minimum cost. Sales effectiveness is about how to maximise sales potential once you’re there. The methods that increase efficiency are very different from the ones that increase effectiveness. Many sales organisations have run into severe troubles, because they have tried to apply efficiency solutions to effectiveness problems and vice versa. Many major sales managers damage their own success and the success of their people by intentionally adopting selling harder solutions for selling smarter problems.

Great sales managers find the balance: optimal efficiency metrics and practical effectiveness measures. Recall that just a few effectiveness measures will balance a myriad of efficiency measures. Efficiency metrics are quantitative; effectiveness measures are done in ratio form, e.g., did a call plan lead to the desired outcome? The full discussion of this is well beyond the scope of this white paper, but in essence, effectiveness metrics are oriented to a ratio measure of whether or not a progressive outcome resulted from an individual activity. Efficiency can be improved by activity management and territory configuration, for example. Effectiveness improvement requires training, modeling and great sales coaching. Great coaches help their salespeople understand the importance of outcomes.

The prerequisite for striking a balance between efficiency and effectiveness is the ability to understand customer behavior. Customer behaviour is the only indicator of effectiveness. The only indicator that we have done a good job is that the customer has said, “I’m willing to act” – whether that’s to make a purchase or to make an interim step. If the customer is not reacting, our activity is going nowhere. And if all we are measuring are activities, we have no idea what the client or customer is doing. The good news is that it only takes two or three effectiveness measures to counterweight all the activity. If we had just a few ways of understanding how customer behaviour maps to what we are doing, the world would come up roses. Few sellers know how to read or how to elicit customer behaviour, so they are lost in a sea of activity. Great sales coaches help to sort this out by putting in place a few effectiveness measures.