Reducing Your Cost-of-Sales

As a key element of your value proposition, price influences many customers' decisions to buy, or not to buy. And many sales have been won on value, but lost on price.

Try as you might to be competitive, though, are you struggling to get your costs down? Certainly, the cost-of-sales is a key component of your overall costs, and therefore your price. And companies constrantly try to control sales costs with creative commission structures, and fiddling with their marketing mix. But what most people rarely look at is the relationship between the cost of lead generation and their overall cost-of-sales - but it is perhaps the most critical area there is.

People often make two mistakes when they consider the cost of selling. First, they ignore the impact of "lead quality" on "sales productivity." It seems logical to most business owners that the more qualified the leads are, the less expensive the sales process is. (For example, the sell cycle is generally shorter, and the close rate is usually higher.) But most people don't focus on lead quality. They simply take whatever they get, and work with it - when spending time on quality can have an enormous impact on field sales costs, productivity and profitability.

The other mistake companies make is they neglect to translate quality improvements into savings. For example, why pay a salesperson a 25% commission when, if you give him better leads, you could get away with 15%? (In fact, he might not only be willing to accept it, he might prefer it!) But such a change could translate into a lower price, and therefore a higher win-rate.

If the quality of your leads is leaving you cold, look at some of the solutions on the left.