Optimizing sales and increasing profitability poses major challenges for many B2B companies. A new approach called “Sales Profit Chain” helps to analyze the most important chains of effects in sales. Read what’s behind it here.
“80 percent of success lies in sales strategy, but more than 80 percent of failure lies in execution”. This guiding principle expresses the key function of sales for companies. The Sales Profit Chain (SPC) helps you to analyze and understand the effect chains of your sales decisions in order to increase profitability in your company through the correct implementation of the sales strategy.
In many companies, important sales decisions are made on a daily basis. The effects, for example on the company’s financial performance, are usually uncertain. One reason is that there hasn’t been a real understanding of the overall logic behind sales management. There are end-to-end approaches in IT, business model canvas for business models or GANTT charts for production 4.0, but no overall logic for sales, a key function in companies. With the new approach of the “Bochumer Sales Profit Chain”, such an overall logic is explained in detail, especially for B2B sales management. The basis for this overall logic is, in addition to more than 100 million qualified data points from over 4,000 companies.
What are the cornerstones of the Sales Profit Chain?
The Sales Profit Chain (SPC) is a new approach that describes a coherent overall logic (end-to-end approach) of sales management. Instead of looking at the individual building blocks of sales in isolation, the functional chains of sales management are made transparent. This transparency is intended to make it easier for companies to better understand the effects of their decisions.
The Sales Profit Chain consists of the following four pillars:
1. management measures,
3. Customers and
4. financial results.
The pillars 2. Salesforce and 3. Customers can in turn be divided into the components of behavior, psychology and structure and often still represent a black box for many companies.
What logic does the SPC approach follow?
In classic sales management, the thinking logic is often still carried out from left (1) to right (4). The SPC approach, on the other hand, follows the thinking logic from right (4) to (1) left. An example of the right-to-left logic is given in the book Sales Profit Chain by Prof. Dr. Jan Wieseke described as follows:
“You want to achieve 10 percent revenue growth. In order to achieve this, you would first systematically derive the maximum sales potential that could be achieved in individual customer groups in order to prioritize the target customers on this basis. You would then check whether your current sales structure (channels, capacities, competence profiles) fits in with this. Do you know the exact sales force capacities that would be necessary to exploit the achievable sales with high-potential customers? Do you have precise requirement profiles for various sales roles in order to optimally support the individual customer groups? Only in the final step would you derive the appropriate management measures, such as changing targets or using budgets for recruiting.”
The right-to-left thinking logic enables companies to carry out a “sales ultrasound” and thus derive important success factors for companies.
With the help of the TUNE method, the impact chains are analyzed on the basis of 12 fundamental questions:
- T: Questions about T management measures, these are the four most important areas of Sales Excellence: information, process, personnel, and support management.
- U: U chain analysis: The questions here are aimed at the potential customer and sales structuring.
- N: N-chain analysis: The focus of the questions is on critical implementation hurdles.
- E: This is about choosing the resulting focus. This is important to measure the success of management measures.