INDUSTRY ANALYSIS

The Difference Between Effectiveness and Efficiency

When I started researching the difference between effectiveness and efficiency, as these terms relate to sales-force automation software, I was surprised that some dictionaries use the two words to define each other. The difference between effectiveness and efficiency was rather slight in those books. When the subject is sales or selling, there can be quite a big difference between the two.

A sales trainer once explained to me that the difference is between activity and accomplishment. Lots of sales reps have the activity thing down cold. They are high-energy people driven by a bias for action, and most are good at getting meetings, making presentations, developing proposals and other tasks that one normally associates with good selling.

The one action that determines effectiveness and trumps all others is linking activity to a purchase order. It is that single accomplishment to which all of our efficiencies must add up.

In between there are lots of opportunities to be inefficient and ineffective — bad leads and dead ends that take you off course to meetings with people who, for one reason or another, cannot or will not buy. Figuring out which prospects are not good is often even more important than understanding which ones are keepers — since eliminating the bad ones early leaves more time to spend in places where you might be effective.

The Focus on Efficiency

In the first stage of CRM’s evolution, SFA was the main selling tool, and it was largely focused on efficiency — streamline a sales rep’s tasks, and that rep will have more time to contact more people, and then sales will go up.

Or so the thinking went. Most early SFA systems were simple databases designed to impose some order on the inherently chaotic process of selling. They recorded basic contact information, free text, important dates and the potential deal sizes. Reports were all about efficiency measurements, with the most important one being the close date and the forecast percentage.

Coincident with this bare bones approach was one of the biggest economic expansions in history, a time when you could sell just about anything because there was so much money — venture capital or otherwise — sloshing around in so many company coffers. As a result, efficiency solutions like SFA systems were a good match for the times. Their overhead was low, and they aggregated the data most companies needed to keep their sales processes moving forward.

The Wisdom To Know the Difference

The economic nuclear winter from which we are now emerging taught us the difference between efficiency and effectiveness. When demand is slack, the importance of effectiveness rises significantly because it becomes much more difficult to close a deal than to get a meeting, and the need to identify and nurture real prospects takes precedence over wholesale efforts.

Effective selling requires more than simple data collection. It requires analysis and manipulation of more information about numerous opportunities than the average person can keep in mind. Many vendors have responded to the needs of the market by building systems with embedded analytics, data mining, rules processing and more to help sales professionals make the right decisions at the right times for each account. Other emerging companies, moreover, are delivering to the market specialized applications that are focused on effectiveness and that are built to integrate with older record keeping systems.

Sales effectiveness itself is such a new field that there are only loose definitions to describe it. There are applications that act as pseudo-sales managers playing devil’s advocate in the sales process by helping reps accurately determine where they are in the process and their chances of success.

Some systems help to reduce the workload of record keeping so that more time can be spent working with the client — one in particular captures a sales rep’s notes through dictation via cell phone — and other systems manage the workflow of a sales process. It will be interesting to see which of the many new offerings actually get used and which ones reps ignore.

Those Days Are Gone

When SFA was new there was a good deal of pushback by reps who did not like the regimentation of collecting data and storing it where management could peruse it at will. They enjoyed the independence of keeping it all in their heads or cribbing notes in longhand or on spreadsheets.

Those days are gone, and most reps now accept the need to capture deal-oriented data. Moreover, many welcome the insights they derive from the analyses they can get with a few mouse clicks. But managers have also made adjustments and discovered that accomplishment follows not only activity but also the planning that precedes it, which is made possible by these applications.

As sales effectiveness applications take their place alongside traditional SFA, some of the lessons learned from initial SFA rollouts will be put to good use if reps and managers keep in mind that there are learning curves to go down and that time spent learning a new systems is valuable and not a wasted investment.


Denis Pombriant is former vice president and managing director of Aberdeen Group’s CRM practice and founder and managing principal of Beagle Research Group. In 2003, CRM Magazine named Pombriant one of the most influential executives in the CRM industry.


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