Perhaps you know the difference between effectiveness and efficiency. But do you take it into account in your daily work in sales? In this article, I show you how to upgrade your sales processes from effective to efficient to avoid “game over” in the next few fiscal years
Sales people often reach their goal – the sale of one or more products – even without technical support. However, high costs are usually incurred along the way. For example, through superfluous contact attempts, customers who leave the company, or unrealized price potential.
This fact provides a terrific example of the distinction between effectiveness and efficiency.
1. Am I Still Effective or Already Efficient?
I am convinced that most people reading this blog post would claim to know the difference between effectiveness and efficiency. After all, you hear these terms all the time, in all sorts of contexts. But how confident are you in distinguishing between the two concepts?
An equal and common understanding is important for the topic of the article. Let us therefore discuss what effectiveness and efficiency mean in the first place.
One always speaks of effectiveness when an action is effective, i.e. leads to the desired goal. Here it is not important whether the way to the goal was meaningful and fast, but only that it worked in the end.
An action is only efficient if it reaches its goal at the lowest possible cost and with the least possible effort, i.e., by the best possible route.
A popular example for the differentiation of the terms is the following: If you extinguish fire with champagne, it is effective, but efficient would be if you try it with water instead. The figure below visualizes this distinction and thus also summarizes the definition of the terms.
2. Level 1: Effective Sales.
I assume you are good at your job, know your customers and their needs very well. You probably already use various tools like a CRM system, or Excel spreadsheets to analyze data and make your work as effective as possible. I also assume that you often manage to sell more items to your existing customers, or even increase their loyalty and keep them from leaving to your competitors. You may even be able to tell, with the help of your documentation, exactly how many customers you have “saved” for the company.
However, I am also sure that you often misuse resources and capacities and thus waste them.
Why am I so sure?
It’s great that you were able to sell more products or prevent churn! But with hundreds or even thousands of customers, how exactly can you know who is still interested in another product, or who is threatening to leave? You probably come across such an observation by chance when you are in one of your regular meetings with a particular customer. You may also make the effort to contact all your customers as often as possible to find out if such a potential or risk exists.
But neither chance nor working through thousands of data sets will make your sales efficient. You should not rely on chance. However, the second option is hardly better, because you are investing unnecessary work and time that you could spend on acquiring new customers, for example.
If you’re now asking yourself “But then how can I manage my clients without wasting work time, or using chance to my advantage?” I look forward to answering you in the next chapters.
Level Up!
3. Level 2: Efficient Tools in Effective Sales.
Welcome to level 2 of sales. In this level, you have already discovered the latest technologies to make your sales efficient, but you are still stuck in the purely effective structures yourself. This level is usually a transitional phase to efficient sales. In some cases, companies don’t make it to the next level either because they get caught in the outdated structures.
I will explain in the next section which concrete tools help sales to move from the level of effectiveness to efficiency. But first I would like to state how they should NOT be used.
For example, it makes little sense to use data-based tools if you don’t have sufficient and high-quality data in your organization. This “cold start problem” is where many companies fail in their first attempts to walk with AI. However, even the best data will not lead to the desired results if people do not participate. Employees in a department or company need to be open to the technology and understand its supportive nature. They should not be afraid of being replaced or that their knowledge accumulated over decades will become null and void. A machine learning system is only as good as its users. An unwillingness on the part of users to embrace new technologies makes the adoption of machine learning much more difficult – if it doesn’t fail.
So, before you can hit the ground running with efficient distribution, you should set the course for it, because that’s the only way you’ll be spared any unwanted surprises.
On to the final level!
4. Level 3: Efficient Sales.
Congratulations! You have reached the final level and have thus become efficient in sales. So, for example, you are using state-of-the-art tools that support you with artificial intelligence and machine learning in your everyday tasks and you know what is important when using them: dynamic structures, acceptance and trust in the technology as well as sufficient understanding of how it works.
Using predictive analytics, you can:
1. Determine which customers are most likely to migrate to a competitor and focus loyalty efforts accordingly.
2. Understand which customers are interested in additional products from your portfolio and thus make the best possible use of their cross-selling potential.
3. Set the right prices per customer and use the potential as well as possible.
The tools help you to minimize the previous hurdles mentioned in level 1. You don’t have to rely on chance, nor are you forced to contact all your customers on a regular basis. Instead, the software calculates the most important key figures for you based on thousands of historical data. This is an optimal collaboration that leads to efficient sales.
CALCULATE NOW THE ROI OF QYMATIX PREDICTIVE SALES SOFTWARE
5. Conclusion: Game on or Game over?
I hope I could make it clear to you that it is up to you whether you work effectively, efficiently, or even both. You should open up to new things and upgrade your sales processes. Because if your competitors are one or even two levels ahead of you, it can be “game over” for you sooner than you think.