The gap between a company’s sales and strategy are important now more than ever. While we may or may not be recovering from a lengthly recession, it has been a slippery slope towards recovery for many years. The average S&P company decreased its COGS by over 250 basis points, indicating that the prolonged recession has had an impact on firms. While this seems like a large number, SG&A has increased a percentage of the firms’ total costs. Shifts being made to include customer-acquisition, back office, and supply-chain costs as well as other go-to-market strategies have steered the focus to productivity improvements.
Most executives are surprised by the amount of money that is spent on sales. U.S. Companies spend 3-times their total media ad spend, more than 20-times their spending on all online ads, and 100-times their current spend on social media annually. The greatest point of implementation for most firms is selling yet, research indicates that less than 50% of employees fully understand their firm’s strategy. In relation to sales and service people at companies, the percentage beings to decrease even further. The outlook is not much better at the board level. A 2013 McKinsey survey of 772 directors found that only 34% of those surveyed believed their boards understood their companies’ strategies, proving that it is not only about sales but good governance as well.
Reducing operating costs is a good way to increase profitability. Aligning both strategy and sales has an impact on cost and revenues. Consider how costs and asset-utilization patterns are established in companies, specifically in B2B organizations that account for much of the economic activity in most countries. For the seller in a transaction, an order touches several functions as it transfers from a customer’s RFP or quote to a purchase order, through pre-sale applications, and post-sale services (ex./warranty or field engineering). The sales process continues through nearly all activities. The sales rep generally receives the customer’s questions, complaints, and is the one who interactions with other functions in order to respond appropriately to the customer’s need. Cost management without the proper attention to the relevant procurement and selling process is essentially limited.
Read the full article and listen to the interview on The Price of Business.
