If you’re a sales leader today, there are a whole host of numbers and data that you may look to maximize your business. However, if you want to ensure that you’re operating a business that will succeed financially, it can help to shift your focus to a new view on sales efficiency. That’s where the often-overlooked benchmark of revenue efficiency comes into play. By shifting your focus to better understand revenue efficiency, you can ensure you’re bringing in enough money to effectively run your business and making enough profit to bring you continued financial success.
What is Revenue Efficiency?
To get started looking at your revenue efficiency, it can help to understand exactly what it is. The efficiency ratio indicates of your business refers to the expenses as a percentage of revenue (expenses/revenue), with a few variations. Essentially, revenue efficiency indicates how much a corporation or individual spends in order to make their companies a dollar. If you want to do the best you can in terms of finances, you should attempt to minimize your efficiency ratios (reducing expenses and increasing earnings).
How to Master Revenue Efficiency
If you want to focus on mastering revenue efficiency, think about the common adage: Do more with less.” You have probably heard a variation of that phrase — increasing return without increasing resources. This is, ultimately, the goal of every business. However, as your company grows, so does its complexity. Your organization probably has thousands of moving parts — employees, sales strategies, technologies, and more— and each of these things is working in concert to fuel growth and increase revenue. So, how do you boost revenue efficiency, drive more sales, and retain and expand accounts to scale your business? Here are some of the most important steps you should take as a sales leader.
- Fix fractured systems. One of the main roadblocks to revenue efficiency at a company is fractured systems. Essentially, fractured systems are systems that simply do not work well together. If you are using fractured systems, the processes at your company do not connect and are not secure cause issues for reps. Have you ever heard the saying, “Do not use people to hold broken systems together.” This means that you can’t simply rely on team members to step in and fix systems that don’t work. Eliminate clicks and keystrokes. Take a look at your sales systems and identify where things are breaking down. Then, change and repair the system, don’t make your employees work with a practice that isn’t serving them.
- Eliminate bottlenecks. Bottlenecks can stop the entire thing from functioning as well. If you want to eliminate bottlenecks, take a step back and assess the situation by looking closely at your sales process. Focus on each individual member as well as the team and do all you can to simplify, streamline and improve each individual person’s day. By eliminating bottlenecks for each individual person, you can create a system that runs smoothly and efficiently across an entire organization.
- Understand Metrics. Organizations need to be focused on measurement, data, and metrics in order to understand which areas of the process to improve and how to accurately measure efficiency. These metrics can include top-level numbers but also lesser-known metrics such as how reps are allocating their time during the day, admin time vs. actual time selling, etc.
Check out this article: Five Metrics You Must Measure in order to Be an Effective Sales Coach
How to calculate revenue efficiency in your sales organization
If you’re ready to maximize the way that your company runs, start by calculating revenue efficiency in your sales organization. Here’s how you can do that:
- Take a look at your revenue for a certain time period. Write that number down.
Take a look at your sales costs for that same time period. Record that as well.
Divide your revenue by your sales cost. Then, multiply that number by 100.
The resulting number is a percentage that can show your revenue efficiency.