Any executive running a sales organization would love to know which prospecting efforts generate the highest returns. Making the necessary calculations calls for tricky estimates of individual transaction costs, such as promotional expenses and the salespeople’s time as well as engineering, finance, or accounting resources. Luckily, many salespeople now use laptops to track their activities. This development, along with the increasingly common tendency of companies to integrate their enterprise-resource-planning and electronic-data-interchange systems, allows them to generate transaction-level cost and revenue figures, which they can use to calculate their return on investments in sales. Common mistakes—for instance, an overemphasis on high-volume accounts or too many salespeople chasing small customers (exhibit)—can be revealed only through such a detailed analysis. Spotting these problems may help organizations to refine their product- and account-level strategies and assist salespeople in targeting the right customers. We have seen bottom-line improvements of up to 15 percent and top-line sales growth of 30 to 50 percent, suggesting that it pays to bring a little more science to sales.
About the Authors
Tim Lukes is a consultant in McKinsey’s Miami office, and Jennifer Stanley is a consultant in the Atlanta office.