Sales operations remain a "great unmanaged cost center" and an "underleveraged source of growth and differentiation," according to a new article by McKinsey Quarterly.
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The authors say that sales reps spend less than half their time actually selling. One way to maximize time for selling and relationship building - what McKinsey calls the "guiding principle for all sales operations makeovers" – is to realize that functions supporting sales are all interdependent and that the full cost of sales is actually much higher than most executives realize.
"Gaining this comprehensive view of sales operations is critical to identifying opportunities to free up the time of reps so they can concentrate on actually selling, as well as to eliminate the duplication of activities," the McKinsey authors write. One way to do this? Follow orders to completion from their start as a qualified lead. Use this data to better understand how actions in one area affect others.
This article reminded me of comments made by author Jonathan Byrnes in an MDM interview – Building Blocks to a Profitability Mindset. He said that the right processes need to be in place to make the unprofitable profitable in a business. "Standardize relationships so salespeople can't sell a hundred different relationships to 100 different customers, which will drive your supply chain costs crazy," he said.
Like in the McKinsey article, he said that you have to understand how you are serving different sets of customers, which involves not just the salespeople, but also supply chain and other functions in the company. Byrnes told MDM that bringing other functions more formally into the sales process can help make the entire supply chain more efficient.
Byrnes talked about profitability turnarounds in a recent episode of MDM Executive Briefing. Watch his segment below, or download the program here.
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