Sales Effectiveness: What It Is & How to Measure It

Some will talk about performance against goals, while others may refer to revenue or profit. Many say effectiveness has to do with making better use of one’s time.

This latter point is related to a common misconception about effectiveness, one that equates it with efficiency. Efficiency is not the same as effectiveness. Efficiency is the rate at which you complete tasks, but it says nothing about whether you’re doing the right tasks.

A highly efficient team performing all the wrong tasks will still be a highly ineffective team.

Without a clear definition of sales effectiveness, it’s impossible to measure, and without measurement, it’s impossible to reliably improve. We can measure win rates or quota attainment, but these are not necessarily the same as effectiveness.

How are we to define sales effectiveness?

Before defining sales effectiveness, we have to take a look at company strategy. No matter how great a sales team’s numbers are if their work is not supporting company strategy, it’s not effective.

For instance, if company strategy calls for penetration into specific markets, expansion of certain products or services, or a shift in geographic footprint, an effective sales team will deliver sales to support that strategy.

A simple definition of sales effectiveness

In order to understand and measure sales effectiveness, we must have a simple definition that leaves room for aligning with company strategy. I have found this simple definition to be useful:

Sales team effectiveness = average output per salesperson, where output is aligned with company strategy.

Thus, “output” might be “profit,” “revenue,” or “sales of the new product line,” based on company strategy.

This simple definition makes it possible to measure effectiveness over time, and thereby determine the impact of actions taken to improve effectiveness.