Selling expenses are always the focus of improvement by any area manager. How to reduce costs and, in addition to not losing current performance, improve it and make the process more efficient? Know that some strategies help companies in this mission.
Sales costs are something that all managers must optimize. Even more so after a global pandemic like Covid-19.
Many teams (marketing, pre-sales and sales) are under pressure because, for many sectors, demand has dropped dramatically.
Many salespeople will see their opportunities stagnate and there is no “saint” to solve it.
The decision makers they were dealing with today think 3, 4, 5 times more before saying “yes” to any offer.
At this point, internally, many discussions, ideas and solutions must have appeared to make you sell faster, better and spend less, right?
Today’s article is intended to help you within this mission of optimizing spending and increasing the productivity of your entire business force.
The idea is to take a more analytical approach, providing some strategies and steps in that direction.
What is the difference between costs and selling expenses?
It may not seem like it, but there is a difference between sales costs and expenses. And it is important that you understand this beforehand.
After all, the accounting area of the company that you manage sales treats both differently.
Let’s start by talking about costs.
This is the sum of expenses incurred and fundamental for the acquisition, conversion and other tasks necessary to bring inventories to their ideal condition.
It comprises all the expenses incurred in the acquisition or production of products, as well as all the essential actions to put them in a condition of sale.
In this way, then, cost is the amount spent on goods and services for the production of other goods and services.
This account includes salaries for professionals and sales commission, used raw material, among others.
Expenses already include the amount spent on goods and services to maintain the company’s activity.
Here, investments are made, for example, to generate leads to equip the sales team.
But it also includes office supplies, tools used, travel expenses (for field salespeople), etc.
That is, the amounts spent to make your company sell more.
How to differentiate costs and expenses with sales?
Costs have the capacity to be attributed to the final product. Expenses are, in turn, of a general nature and it is difficult to link them to the products or services created.
So, for example. What would you answer about investments with online ads: is it cost or expense?
Well, if you reduce the amount invested in Ads to zero, you would not suffer changes in the production of your products or services.
The impact, if it occurs, would be on the company’s sales performance. With less money to attract customers, it is possible that less business will be done.
Therefore, investments in marketing strategies, like the one mentioned above, are selling expenses.
I think it’s clearer now, right? So let’s go ahead!
How to reduce sales expenses in your company? Check out 4 actions!
When a CEO, a head of the sales department analyzes the company’s balance sheet, it’s like a doctor taking a patient’s vital signs.
It is necessary to understand that each metric is interconnected, that it is not enough to simply cut A or B as it can be reflected in irreversible damage.
So, as we talked about in the previous topic: simply cutting marketing expenses like ads on Google Ads, for example, can affect the entire sales industry.
This will be reflected in fewer leads for the SDR; therefore, less agendas for the seller, less sales made and, obviously, less money entering the company.
Any decision making must be discussed among managers. Checked and analyzed to exhaustion before any execution.
This will ensure that you maintain your operational sales efficiency, identifying points that can really optimize your investments without jeopardizing current results.
And how is that possible? Well, we have separated 4 actions to help your company in this mission:
1 – Challenge your team
Layoffs and constant changes of teams cannot be the most efficient way, nor the immediate one, to reduce selling expenses.
Perhaps at some point this is inevitable, of course: but it cannot be the first thought that comes to the heads of managers.
Instead of layoffs, initially consider an alternative pay structure for the business’s sales force.
A strategy for a time of crisis may be to reduce the base salary and offer a higher commission.
This will encourage people to produce more while they are working; to reduce distractions and optimize working time.
For this, the application of work methodologies helps a lot to change the team’s mindset. SCRUM is one of them, for example. The PDCA cycle, another.
The search must be for constant improvement. By looking at each process, each step and realizing what can be improved.
It is also the opportunity for a head of sales to manage by numbers, with relevant sales metrics.
It is the role of management to identify gaps, show teams and everyone to discuss together point by point for improvements. Apply them and monitor your results.
Oh, and just remembering that:
It is likely that the goals and objectives of the month will be revised down a little, so that it is possible to reach the numbers expected by all.
Don’t forget this so as not to cause demotivation in everyone before you even start.
2 – Change the sales model and face-to-face work
Two changes are important and can bring a considerable reduction in selling expenses in your company:
- Change in the sales model;
- Migration from physical to remote office.
The first point is the exchange of the field sales model, with the seller on the street knocking from door to door, to the inside sales – when the sale is carried out internally.
The costs of having representatives in yours are high: travel, food, graphic materials, electronic equipment, accommodation …
The CAC (Customer Acquisition Cost) is high. Even more so if the rate of closing sales is not high.
For each deal that is not closed, it requires that the next to be sealed pay the entire operation with more and more money.
When making internal sales, however, the expenses mentioned above are much lower – some don’t even exist.
This already reduces CAC and, without travel time, allows salespeople to deal with more opportunities in less time.
So, what do we have there? Productivity. After all, with the same number of people on the team, you can work on more business.
This, of course, as long as you have the right processes and tools to perform the necessary activities.
From physical to remote
If during the coronavirus pandemic your team was able to adapt to the home sales office, perhaps it is time to extend the period of remote work …
However, it is important to have the means to measure the productivity of your teams – not just the results.
This will give you a more realistic idea of the efficiency of this way of working.
In fact, there is no point in reducing sales expenses if your team is not producing as it should, right?
Perhaps it is time for this reassessment of the process and the way of working and managing sales.
The pandemic brought a different light to labor relations. Is it really necessary to have your entire team, 100% of the time at the company’s headquarters?
Or, better: does it take such a large headquarters, with so many workstations?
Is it possible that a hybrid model, with 3 in-person days and 2 remote days, for example, is not a good solution for everyone (company and employees?)
Anyway, these are questions that the pandemic and the “forced” home office brings. It is a valid reflection.
And if some of these actions are taken – always, of course, preserving productivity, well-being and results – you are moving towards a reduction in selling expenses without leaving performance aside.
3 – Reconsider your tool stack
This item is very important to not only be able to optimize expenses but, in fact, to make possible a change in the sales model, for example.
The first step, in fact, is to have the technology fully within your sales process.
That is, if your company still manages sales by spreadsheets, the digital transformation of the commercial sector is urgent.
That said, the CRM you choose must not only make sense for your business model and processes, but also fit in your pocket.
It is not uncommon for companies to adopt or a system that is too robust, with features that are not used or even understood.
As well as having a tool that does not fully meet them. And only perceive it in the worst way or at the worst time – like the pandemic, for example.
In the first case, you can try to renegotiate the price with your supplier – after all, he needs to be sensitive in a time of crisis.
But, anyway, you can put it on the tip of the pencil and ask a simple question:
- can’t I get another CRM software as complete as (or even more) paying less?
Moments of economic crisis tend to make foreign currencies soar against the Real.
So, if you use a foreign sales system, consider it a Englandian CRM at this time.
In addition to having collection and national support, you also strengthen the Englandian entrepreneurial ecosystem. It is the famous 2 in 1.
Does your system really help you?
A good CRM saves you on other tools – like the image at the beginning of this topic. It encompasses a number of features on one platform.
If you don’t have a good system or still manage sales in spreadsheets, all of them would be necessary for you to run your process …
But, if you already use a Englandian system and it does not meet your need to manage sales remotely, you need to change.
If you’re going to have your salespeople working from home – whether it’s full time, or part of the time, it’s important to have:
- telephony integrated with CRM;
- complete reports by employee, funnel, stage, activity …;
- rules of time of use (per user, day, fixed time …);
- integrated email system;
- account booking rule (for external salespeople, channels, partners, remote employees);
- fast page loading (for internet connections that aren’t that fast).
In addition, of course, all the features necessary for, in fact, your team to have productivity in their activities.
In this we can highlight features such as automatic actions; integrations with different tools; email templates, contracts and proposals, among many others.
4 – Boost strategies with higher ROI
In times of crisis especially, companies should take advantage of what works best in terms of ROI.
It is often common to associate selling expenses with customer acquisition strategies only.
They cut the resource source, the dry source and there are no leads to work with. The effect is cascading.
However, when you have a CRM that allows managers to identify the best channels for acquiring customers, the game turns.
It is no longer just a matter of cutting resources to attract new leads, but of directing them to the right place.
Where did the leads from your last 30, 40, 50, 100 sales come from?
Which acquisition channel brought the most customers? And the best? And those who pay more?
You discover this because of the integration of CRM with marketing automation tools; Facebook Leads Ads; Google Ads; website form …
If you have your best customers coming through Google ads and few coming from Facebook, you already know what to do, right?
But to do that, you need to have the technology to control your sales.
By managing them in the spreadsheet, or in limited software, you will only have one alternative: cut the entire investment – and you know that this is not ideal.
So, how can we help you?
If you want to know more about how a good CRM, complete, helps you to reduce sales expenses, talk to a consultant.
Enjoy and read two articles that will help you have a more efficient and productive process.
The first talks about tools for home office sales: which are indispensable?
The second talks about 5 strategies to build an efficient and really productive sales machine.
A hug from CWT, your CRM. #RunCWT