Reducing the cost of sale

September 10, 2011

I’m sitting in the First Class Lounge at Paddington Station in London after a couple of meetings in the capital. The lounge is designed as a comfortable haven for passengers whilst they wait for their train to arrive. You have biscuits, cake and coffee available and comfy seats as well. Looking around the place is full of business people, on the phone, using their laptop, filling in their waiting time productively.

I guess most have been in meetings today and are travelling home like me.

The lounge is First Great Western’s move towards capturing the business travel market away from the roads and airports and they’re doing a sterling job, the lounge is fab. But what about the cost to me of being here seeing clients? Not cheap when you factor in the cost of a first class ticket, the time away from the office, not seeing clients but when you’re in the sales profession you need to find your clients and this costs money.

Its called cost of sales, is expressed as a percentage and is calculated by:

costsales

The percentage depends on your industry. IT sales people work with around 30%, broker financial services sales can peak at 35%. It costs money to get new business especially when you’re relying on people to do the selling.

There are some ways to reduce this cost of sales without reverting to standard class rail tickets although this might help. Technology is the answer and here’s some ideas to help you reduce the cost:

Use web based technology to do presentations rather than face to face. Don’t replace them all as the people element contributes a lot but consider putting some of your sales presentations on gotomeeting.com, the new Skype Group Video or another conferencing tool.
Make copies of your presentations and email these to interested clients or people within the firm who couldn’t make the presentation
Put the company expert on the line or webinar to help with answering questions. They’ll appreciate not being dragged out of the office and the call will take up minimum amounts of their time.
Remove all physical brochures from your inventories. Instead PDF everything and provide prospective clients with links so they can download and read them. Use print on demand software to send brochures if they’re absolutely needed.
Segment your target market more acutely so you reduce the number of face to face calls. Be crystal clear of the value you provide and the problems your segmented market face. Knowing your industry and players intimately will ensure you can call upon those that are most likely to do business with you.
Train your salespeople to optimise their time whilst travelling using mobile technology. Laptops, iPads, Smartphones are common place nowadays but what about evolving your training plans into more podcast based or video based training methods which can be consumed whilst on the move.
Move your people indoors and maximise the use of web based communications to allow them to interact with their customers without leaving the office. Commonly known as the Inside Sales Team, they have evolved away from just telephone based selling to more interactive sales with the technology at their fingertips.

My teenager son had some friends around recently and one of them left his bag behind. I asked Lewis to give his friend a call to let him know he’d left his bag behind. “Durrrr Dad, we don’t call anymore, get with it” and he reluctantly headed for his bedroom to contact his friend. How had he made contact? Using Xbox live of course durrrrr. The future has many ways of communicating with people not just by phone. The future will be inside sales teams rather than roving face to face sellers so let’s get used to this now.

Actually the future of sales will be Purchasing Software. Your sales software will interact with your client’s purchasing software to make the sale. Spooky stuff.

You could of course, cut back on the costs of travelling – economy class on planes, standard class on the trains or encourage austerity by getting your teams to book train tickets in advance and get great discounts. Why else do you think I’d be in the first class lounge?