Deployment and Sales

Sales Management and Deployment

Cutting costs without cutting value

Few Companies have gone through the last few years without one of its priorities including lower costs of sales. An examination of a broad sample of company strategic objectives revealed that cost reduction was at the top of the list.  While looking for efficiency is a necessary and worthy objective, blanket cost-cutting can harm sales capacity and in any event will not provide a path to higher revenues.

The approach sales leaders need to take, should be based on a simple, overriding principle when they endeavor to reduce costs; it is the same one that guides physicians: first, do no harm. The recession spurred changes in direction and structure of sales organizations, and now senior leaders are looking to sales to grow revenue and profits, even as the dimensions of the job have grown larger. So it is crucial to carefully balance the effort to reduce expenses and provide the level of resources needed to reach revenue goals.

In most organizations, even those enjoying rapid growth, imperfections can exist that are not visible through the lens of the traditional management approach that represents an inefficient use of resources that if corrected could lower costs but also increase performance. For example, research shows that only about half of all salespeople have a solid understanding of the organization's sales strategy. However, while there is often considerable effort given to monitoring the level of effort sales reps expend, that isn't the most important thing.

What is a less well understood problem is how to focus them on activities likely to drive results.

Research shows that frontline sales managers spend as little as 20 percent of their time coaching and developing their reports.*

Utilization of a systematic management framework based upon a foundation formed with the building blocks of a customer perspective allows leaders to focus sales resources where they are needed, and to cut waste, not value.  In fact, the sales force can become better and less expensive. Research has revealed that where a well-defined customer perspective is at the center of the organizing agenda, sales-related costs could be addressed more quickly and carefully, cut sustainably by 10 to 30 percent, while minimizing risk of jeopardizing future growth. *

Such a mechanism enables leaders to peer deeper into the anatomy of the business and see aspects that would otherwise not be exposed. Those are the kinds of elements that can be brought to light: 

  • How much effort goes into each customer and transaction?
  • Which services does each of them need?
  • What are their real profit margins? [upon examination, it has been found that even large relational customers have failed to be profitable]
  • Which customers and markets are growing and which are shrinking?
  • What is the nature of the various transactions: highly complex, competitive, or simple?
  • Can greater efficiencies emerge through the sharing of knowledge and resources?
The reason for a systematic customer-oriented framework is unambiguous: in most situations, the move that has the biggest impact on sales force costs and performance is the adoption of sales model that makes desirable customers profitable to serve.

*McKinsey & Company
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