Are You Managing for the Sales of the Future?

Source: Rain Today

In this article, Charles H. Green argues that sales effectiveness is becoming increasingly important, but many firms continue to place too much emphasis on sales efficiency. Sales efficiency refers to the amount you invest to produce each dollar of sales. Sales effectiveness measures how well you're selling in comparison to the competition or whether you're closing as many deals as you could (or should) be.

Ideally, a company will enjoy both high efficiency and high effectiveness, but how do you get there?

For certain businesses, such as software companies, it makes sense to lead with sales efficiency, striving for the fastest sales at the lowest cost. Gaining market share rapidly allows them to take advantage of scale economies, providing a low-cost advantage that eventually leads to sales effectiveness.

Personal service businesses, on the other hand, which rely heavily on repeat business, referrals and cross-selling, demand sales effectiveness up front — that is, high closing rates and a good reputation — even at the expense of low sales efficiency. Over time, this strategy will lead to both higher effectiveness and higher efficiency.

As the world moves toward an effectiveness model, it's important for firms to be sure that they are managing their businesses in that way. For example, which do you reward more, initial sales or repeat sales? Which do you emphasize more, acquiring new leads or increasing the closure rate on existing leads?

Answering these and other questions will help you focus on effectiveness measures and position your firm for the sales of the future.

For the complete article, click here.

From Rain Today, www.raintoday.com, September 2, 2009, “Focus on Effective Sales if You Want Future Sales.”