Quantifying the business value of what you sell in terms of reduced costs.
Here are some examples of how my business connects what we sell to reduced costs:
Sales falling short of expectations.
A sales shortfall increases the cost of a sale. Overheads remain the same so when sales are down, the cost of winning and delivering each sale goes up, affecting the profitability of all remaining sales.
Cost of sale can be measured by monitoring expenses over revenue. This is all expenses of a business divided by its revenue and expressed as a percentage.
Sales enablement helps maximise sales productivity and reduce the cost of sales.
Inaccurate sales forecasting.
If sales are higher than forecast, the unexpected demand can increase the cost of supply and put pressure on cash flow. If sales are lower than forecast, efficiency goes down, planned and provisioned resources are unused, and the sunk costs have to be reclaimed against future sales.
A sales shortfall also puts pressure on cash flow.
Similarly, the costs of inaccurate forecasting are reflected in the expenses over revenue ratio.
Sales forecast accuracy can be tracked by simply recording the difference between forecasted and actual sales at the end of each measurement period.
Sales enablement improves business predictability.
Higher than anticipated sales staff turnover.
The unanticipated cost of hiring and training replacements and the lag between unexpected departure and the effectiveness of replacements is a double blow that also increases the overall cost of sale.
The costs of hiring and training replacement staff can be isolated and reported.
The missed opportunity costs - the difference between the sales that should have been made and the sales that were made between the unexpected departure and the readiness of the replacement, should be added to the total.
Sales enablement reduces sales staff turnover.
Can you apply similar thinking to what you sell?
Create a table to display and sum up all the ways that what you sell helps reduce costs.
Could you share such a table with sales prospects?
Update or create a reference resource to store your table.
If you are stuck, ask. I'll be happy to make some suggestions. clive@salessense.co.uk
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If you have the discipline of an autodidact, use our self-led B2B sales training course. See the index here. This page presents 2.31, about ways to quantify reduced costs inherent in a value proposition. If you need more, have any of our B2B sales training courses or any element or any combination of elements delivered for groups or individuals through online sales training sessions or one-to-one coaching. Call +44 (0)1392 851500 or email jimm@salessense.co.uk for details.
