So You Want to Improve Your Sales Efficiency
Tomasz TunguzVenture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. So You Want to Improve Your Sales Efficiency
With all the talk of recession, changing market dynamics, and the importance of efficient growth, many teams will be looking to boost their sales efficiency. How can the company drive more sales with less expense? Let’s start with the formula for sales efficiency.
Three paths emerge from the equation:
Each strategy is viable. Teams should select the path or combination that suits their business best. But these strategies won’t impact the sales efficiency number the same way. Why? Convexity. Convexity is a fancy word to mean one of these variables is a curve, not a straight line. Let me show you the difference with a chart. The x-axis shows a percent change from -30% to +30% from the baseline at 0 in both Notice the red line SM_Expense curves. That’s the convexity. This startup has a 24 month payback period to start. If the startup reduces Convexity works against the business in a deterioration scenario, too. Suppose The differences between these scenarios are a month in each case. The point isn’t to fully focus on As more startups peer into the components of their gross margin, Startupland should expect pressure on infrastructure costs - a direct result of sales efficiency optimization. |
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