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Astute Pricing By Sales Representatives Can Expand Profit
One surefire way to grow profit is to deploy sales resources that masterfully price your company’s products and services. The right price can boost profit more than improvements in the cost-of goods sold or reductions in SG&A. For example, a 1%...
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In the 1980s it was the fashion for businesses to be diverse and to offer a variety of service. This strategy was found to be wanting in the 1990s when many businesses decided to stick to the core businesses they know best and to dispose of...
How to Beat the 80/20 Rule in Sales Performance - Part 2
Another key reason why companies suffer from 80/20 performance is their processes for hiring, training and managing salespeople rely almost entirely upon SUBJECTIVE information. Think about it:
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What's a Professional Sales Manager?
I was in the depths of a major depression. As a third year salesperson with a good company, I was doing well, and was on my way to becoming the top salesperson in the nation for that company. But business had slowed down a little, and I didn't...
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A Profitable Growth Formula For Sales Managers
Sales organizations that successfully achieve profitable revenue growth do so through a sales system encompassing sales focus, the integration of organizational and people competencies, a balanced sales effort between new customer acquisition and current customer penetration, and employee engagement.
These organizations match sales resources to the best opportunities, often overlooking customary territorial boundaries or customer assignments and applying a “best in front” approach in the allocation of sales people to high value opportunities. They’ve adopted cross-functional team selling approaches – emphasizing collaboration to deliver value-adding solutions and hold sales/service teams accountable for improved customer-level results. In addition, they utilize their full organizational capabilities, and those of their external partners, to create an integrated product/service offering that enhances their customers’ business results, differentiate their value proposition from the competition, increase the average deal size, “win” the sale, and build durable customer relationships.
While highly effective sales organizations emphasize new customer acquisition, they also recognize that creating new customers is more expensive than penetrating current accounts. Furthermore, they know the temptation is great to discount the initial sale to “get in the door” – producing less profitable business through an expensive sales effort. So, they balance new customer selling with a focus on “deep drilling” current customers with existing and new products. They are also sensible about discounting. Pragmatic sales leaders know when and when not to discount, recognizing that in the long run significantly more discounted revenue is needed to equalize the profit generated from non-discounted sales. For example, assuming a 50% gross profit margin and a 20% discount, a salesperson must capture 25% more revenue to achieve the gross profit generated on a non-discounted sale. The amount of
revenue needed to equalize the profit expands as the discount is increased.
Sales representatives in growth-focused sales organizations spend at least 55% to 65% of their time on direct sales activities. Their leaders achieve this concentration by:
> Optimizing the number of current and prospective customers assigned to a salesperson;
> Right sizing the type and number of technical and customer service personnel supporting the sales effort; and
> Providing and insisting upon the utilization of sales automation tools to move opportunities through the sales funnel, create administrative efficiencies and facilitate effective customer management.
Sales leaders that are successful at growing profitable revenue understand the negative impact of turnover and the associated affect of uncovered or inadequately covered customer relationships on growth. They strive to retain their sales people by implementing practices that create employee engagement and a passionate commitment to growth. Among these are, creating organization-wide accountability for results, setting goals set at the individual sales person level, defining minimum performance thresholds below which no incentives are paid, and uncapping incentive opportunities.
About the Author: John F. Tallitsch is the founder of TopMark, a consulting boutique specializing in sales effectiveness and sales compensation. TopMark helps companies create finely-tuned, results-oriented sales capabilities through solutions encompassing: customer segmentation and targeting; sales strategies; sales force and territory design; performance-driven sales incentives; and talent strategies. You can contact John at 440-963-1240 or visit http://www.top-mark.com for more information.
Source: www.isnare.com
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