9 March, 2021

How to Measure Sales Productivity

Enterprise Sales, Sales Strategy

Drew O'Brien

In one of my recent posts, I talked about the importance of using more data-driven ways to improve overall sales rep performance. But how do you know if your strategies are working? 

In this post, I’ll take a quick look at the basic methodology and benchmarks for gauging your team’s current status and progress over time. We call this a Sales Cohort analysis.

Which metrics matter?

First off, it’s important to know which numbers to follow for the best snapshot into your performance. There are standard metrics like sales booked, number of meetings, and quotas achieved–but once you get beyond those, which ones carry the greatest weight when it comes to measuring the success of an Enterprise Sales Rep (read: someone who is targeting $1M+ in bookings annually and is getting compensated $200k+ in OTE)?

Remember, we’re trying to measure the performance and productivity of your sales organization as a whole–and that means looking not only at the end results of the work done, but also at the workers who are delivering these results. Our experience shows that the most telling data comes from the following statistics, so you’ll need these figures ready to go in order to determine your current standing. Furthermore, we’ve included the benchmark numbers that we’ve seen proven to tip the scales, so you know where you’re succeeding and where you might need work.


Metric 1: In the last 12 months, what percentage of your reps made quota?

Why measure this?

You set quotas for a reason, so it’s critical that you track the progress of your reps against their stated goals.

What’s the benchmark?

Look for a minimum of 75%. Anything less means that the sales organization as a whole is inefficient. Reps aren’t fulfilling their objectives, and you need to explore why. Are they lacking experience? Do they have the right data to target winnable accounts? Are they equipped with the right technology and tools, so they can use their time wisely? Or, were your quotas set appropriately to begin with?


Metric 2: In the last 12 months, what percentage of your Account Executives closed a deal valued at over $1M?

Why measure this?

The reason we look at this number is not to isolate your highest dollar deals, but rather to see what segment of your Enterprise team is actively and successfully structuring large deals that drive large customer outcomes.

What’s the benchmark?

Look for a minimum of 20%. Anything less shows that the vast majority of your reps lack the requisite business acumen and maturity to close big deals.


Metric 3: In the last 12 months, what percentage of Total Net-New Revenue was closed by these top reps?

Why measure this?

We look at this figure to determine how heavily you’re relying on your highest performers to bring in new business.

What’s the benchmark?

This one depends on your percentage of AEs closing $1M+ deals, and the goal is to ensure that you don’t rely on too small a group of superstars to fulfill targets for new revenue.

If the % of AEs closing $1M+ deals is… Your % of net-new revenue closed by this group of top performers should not exceed…
1-10% 20%
10-15% 30%
15-20% 35%
25-35% 40%
35-50% 60%
50-65% 80%

 

Understanding trends and making adjustments

After you’ve compiled the previous statistics, you can take it a step further and create your own chart of sales productivity to give you a better idea of your progress over time. Start by taking the last 12 months of sales data, filtered for net-new and expansion deals (remove renewals, as these aren’t the strongest indicators of performance). Next, create a histogram in Excel or Google Sheets showing the performance by deal (don’t sum by AE). Finally, identify any outliers and then re-run from the prior year to see how the shape of the curve has moved.

Your finished chart might look something like this:

As you improve sales rep performance, this cohort analysis chart will show your progress in closing more deals of higher value.

 

The point of working and tracking these metrics is  fairly straightforward: You’re looking to scale your team’s overall efficiency. You want your organization’s performance to be at the point where just about every rep is able to close bigger deals and win new business. You don’t want to be in the position of relying on a small group of high performers to bring in the bulk of your revenue or to close your high-dollar accounts. You want your entire team to be equipped to work efficiently and productively, exceeding quotas, and armed with the necessary tools to excel. More importantly, you want this to be a continual process of scaling team productivity, so that as you grow your team, you have a planned methodology for preparing reps to find, target, and win bigger deals, over and over.

Databook helps streamline this process for sales organizations by providing a simple-to-use platform for in-depth customer intelligence. We make it fast and easy for reps to target the right accounts and elevate their business acumen, so they can engage to drive value right out of the gate. If you’re ready to learn more, we’d love to talk.