How to Reduce Your Cost of Sales

In a recent conference survey, all of our attendees, regardless of their title or the type of company they represent, agreed that reducing overall costs was a major priority for their organizations. But where to start? 

 

When we’re working with clients, one place we start is looking at the full time equivalent (FTE) cost of each sales employee. Then, we focus on each sales person’s attainment on revenue plan for the year to date, the time spent moving opportunities through the pipeline, and the resources required for them to win the sale. Examining all these factors allows us to calculate a percentage of the overall cost in relation to total revenue. Most industries have a percentage around 20%. If your percentage is higher, don’t fret. There are ways to get it down: 

 

1.Help customers clearly define the sales steps from lead to close and eliminate any superfluous or unproductive steps. A refined sales process leads to greater productivity, reduces waste, and increased conversion. 

 

2. Assign sales reps specific deliverables that enable them to move customers through the sales process more quickly. A clearly defined target is much easier to hit than a loosely defined goal. 

 

3. Coach the Coach! It’s unlikely for sales reps to improve if their managers don’t know where they need help. We help sales managers identify areas with room for improvement and then create an actionable plan with ways to improve each rep’s performance. 

 

The bottom line? Don’t assume where your organization’s inefficiencies lie. Perform a Cost of Sales Audit to determine if your percentage is too high. Then streamline your sales process to increase conversion and efficiency. Assign specific deliverables to hit sales targets more consistently. Create actionable plans for performance improvement on a per sales person basis.  

 

At Flannery Sales Systems, we help you analyze, define, and execute an effective cost reduction strategy in tandem with a customized plan for increasing sales performance and efficiency. We have over 26 years of experience in sales, sales management, and business ownership, and we’re committed to helping your organization succeed.