"sales rank among the less efficient and less effective functions in most companies"

"More Effective Sales Activities

My decades-long experience tells me that sales rank among the less efficient and less effective functions in most companies. Perhaps that is inevitable because there is a participant in the sales process that cannot be controlled like a machine: the customer. Sales efficiency means that the best possible sales result is achieved with the available resources. Effectiveness means that sales do the right thing. The “right thing” is ultimately the achievement of profit, which depends on sales volume and price. Sales also influence costs, directly through its own expenses and also through obligations that sales agree to in the negotiations.

In our projects, we see over and over that sales teams have many levers they can pull to achieve higher volumes and generate higher profits. That long list starts with increasing the effective time that the salespeople spend with customers. That often accounts only for 15% of their time. The list also includes administrative tasks that are often done by hand instead of with modern information technology. Another bottleneck is improving the skills of the salespeople so that they can sell on the basis of value communication, not through price concessions. Many companies, if not most, incentivize their sales teams to achieve revenue, not profit. When this incentive structure applies to teams with price negotiation authority, one can assume that the team will maximize revenue, and probably sales volume, but will almost certainly not achieve the highest possible profit.

Profit-oriented leadership of the sales function brings complex challenges with respect to talent selection, training, motivation, incentives, and organization. In general, sales departments have considerable latent profit potential, but admittedly it is difficult to tap that potential quickly."

Trecho retirado de “No Company Ever Went Broke Turning a Profit” de Hermann Simon.