Now is the time to think about reallocating your spend to improve sales productivity!
We have identified specific opportunities for shifting sales resources, namely to sales IT and lead generation, that will drive the largest increase in sales productivity.
The typical large technology company (over $3B in worldwide revenue) spends approximately 7% of revenue on sales. Smaller companies typically spend a much higher percentage of revenue on sales, as they are far less efficient.
For large companies:
- Program expenses run about 1.7% of sales, or 23% of all sales expense
- Fully half of this program expense is for T&E
- Sales IT expense typically runs 20% of all program expense
- Lead development is 1% of all program expense
RECOMMENDATION 1:
Move 1% or 2% of your T&E budget to lead development. You won't notice the reduction in T&E and you will double or triple your investment in lead development, generally a very weak part of the typical sales organization process.
RECOMMENDATION 2:
You've spent your sales IT dollars on infrastructure. Now you need to move your sales IT investment focus to sales productivity (Sales Enablement). This shift in focus will dramatically improve the productivity of your rep in their prep and customer face time activities.
RECOMMENDATION 3:
Competitive program expense averages 11% of all program expense. In many cases, this competitive program expense is used to cover the inadequacies of the value proposition and the ability of the sales organization to deliver it. The cost of discounts is important here too, but buried as a cost. Move your competitive program dollars to sales enablement, which will bolster productivity and contribution margin.
For more information on sales budget reprioritizing please visit the Sales Advisory Practice website.
5 comments:
Lee, the topic of Sales IT is very broad, so I'm wondering what specific categories you have in mind when you use that term.
Do you see any likelihood that online collaboration tools, like Webex, will be used more -- to supplement face-to-face meetings?
Given your earlier comments about sales metrics, I'm assuming that you are not suggesting investing more in the usual CRM or sales force automation IT money pit.
David,
You're quite right. Sales IT is a broad topic. Most large companies have put substantial investments into their sales IT infrastructure -- mostly CRM and SFA. Those systems largely enable management reporting capabilities (on faulty data, by the way), and don't do much for the rep in the field or for sales productivity.
The next wave of investments must focus on bolstering the rep's sales productivity -- minimizing the administrative burden, improving and optimizing the time spent on sales prep, and prioritizing the time spent working with prospects and customers.
These investments will deliver the right information at the right time to reps, providing a comprehensive view of an account or prospect (share of wallet, spending history, satisfaction, etc). Most companies don't yet have this figured out...and surprisingly the costs involved to get this right are a fraction of what they're already spending on Sales IT and sales processes.
As a follow on---most companies struggle far more with the processes than the technologies. We must get the processes right for sales productivity to grow quickly.
You asked about online collaboration tools. Most buyers don't want to see their reps very often. Instead, they want to talk with technical people who can address specific technical issues or concerns. Web conferencing tools and the phone are the key enabling technologies.
Lee
Hi Lee, it is not just the sales process and the information that needs to be reviewed and streamlined, although I do agree that this in itself is a problem, but organizations also need to optimize the skills of, and the deployment of, the sales professional's themselves.
How, by ensuring they are performing the role to which they are best suited and, by ensuring they are appropriately trained and motivated to perform in that role.
You have highlighted previously how little attention is paid to developing sales skills; and even less attention is paid to how well an organization's sales assets compare to global 'best in class'.
With streamlined processes and skilled, motivated, sales professionals - selling really could 'come out of the closet' and be seen as a true profession.
Keep up the great work!
Lee, thanks for the responses to my comments. I'd like you to consider a follow-on post about the importance of understanding the "buying cycle" -- in contrast to the sales cycle.
Sometimes prospect for our products and services don't know the questions to ask to ensure that they procure the best-fit solution for their needs.
My point: most of our efforts in tech marketing support the sales process, and little is done to address the needs of "buying facilitation" process.
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