The Key Levers for Modelling and Controlling Sales Team Productivity and RoI

Posted by reallynicearticle on January 6th, 2021

Ever pondered how much your company invests to pay, incent, equip and fully mobilise the sales force to deliver the revenue budget they are set? Ever wondered what impact reducing the investment by 10% would have on the ability to deliver the revenue budget? What if the revenue budget was increased by 10%... what increase if any, would be required in the investment on the sales team? What would happen to the revenue budget if there was no sales team at all? New Tab To-do List 

Ever thought that calculating and modelling your Sales Team productivity and ROI could be likened to an accounting equation, where the left hand side has to equal to right hand side? Neither did I until this universal truism dawned on me many years ago. It has always been there... all I did was simply realise it and articulate it. As I attempted to write it down, I realised that the left hand side equaling the right hand side depends on one's perspective... LHS = RHS is ideal from a productivity perspective. "Significantly less than" is true from a ROI perspective. Here is the equation...

RESOURCE LEVEL X VISIT CAPACITY = CUSTOMER COVERAGE + PROSPECT PENETRATION

Too simplistic for those of you more mathematically inclined? Here it is again expressed with some more detail...

SUM [#heads (each role) X % dedicated to sales] X [ave says pw on territory X ave visits pd on territory] = SUM [ # customers in each class X min visit freq per class] + [# targets prospects X ave visits to convert/recycle]

The equals sign aligns to the Sales team productivity modelling pursuit. This version aligns to the ROI on the Sales Team...

SUM [#heads (each role) X % dedicated to sales] X [ave says pw on territory X ave visits pd on territory] = SUM [ # customers in each class X min visit freq per class] + [# targets prospects X ave visits to convert/recycle]

Ie: Cost Base < Revenue Base

Why is this important? These days, in many B2B sales environments the cost of a sales visit ranges from 0-400. The cost of fully equipping and supporting a Sales Exec ranges from 0K pa to 0K pa. We have seen Sales Execs spend up to 50% of time on sales admin and support tasks, and only manage 5-10 visits per week. Sales Team productivity can be monitored, measured and managed with the rigours that our colleagues in Finance like to apply to their trade.

There are principles for classifying the customer base for superior field targeting. This is the leg-up you need for optimising your customer coverage. A previous article outlined the principles for optimising prospect pipeline specification for superior prospect penetration.

But how do you model the various Sales Team productivity: ROI scenarios? For example, maybe you are reconsidering your options in terms of reducing cost of sales by reducing headcount. Or what increasing head count will do for your sales effectiveness? What is a reasonable visit productivity rate to set? And how do you model a range customer coverage scenarios? Or superior prospect conversion rates... or the number of visits required per prospect to get the conversion rate to a particular target level? At The Next Level we have a tool you can access that can assist with any of these critical considerations.