by Mary Cantando, Founder of The Woman’s Advantage, Guest Contributor
One key way to improve your profitability is by lowering your cost of sales. You do this is by analyzing and improving every element of your sales process. While it sounds like a lot of work, imagine what it would feel like to end the year with an additional 5 or 10% increase in your profitability.
Here’s what the five-step process improve profits by lowering sales costs looks like.
Five Steps to Lower Your Sales Cost
1. Break down every component of your sales process.
List every step from setting sales goals to collecting on outstanding accounts. Document: Who does what? How? When? How successful is this step in the process? Where are the bottlenecks?
2. Analyze, measure and determine the cost of every component.
Calculate costs for: leads, referrals, appointments, proposals and closed sales.
3. Determine the gross profit of each sale.
Compare that with the cost of the sale. Include costs for marketing, advertising, sales staff, sales commissions/bonuses, and overhead.
4. Determine which sales/marketing activities you can streamline, eliminate or delegate to lower-cost employees.
Document: How do your top performers do these tasks compared to others? What do your top performers consider a waste of time? What do they do that others don’t? What do they delegate, or wish they could delegate?
5. Implement the changes.
Document your new process. Rework your comp plan to reward profitable sales. Show your team how the new process will make them money. Celebrate with a splashy kickoff and make noise when people are successful with it.