The Concept Of Sales Productivity Defined

Author: Sam Miller

| Posted: 08-02-2008 | Comments: 0 | Views: 21 | Rating: (59)

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We all know how important the concepts of "sales" and "productivity" are in the successful operations of any existing business in today's corporate world. But when you combine these concepts, the result becomes a bit too hazy for comfort. Still, you have to familiarize yourself with the combined concept of sales productivity because this can actually fuel more profit and success for your company as a whole.

So, just what is sales productivity? And why should companies pay attention to the concept? To further understand this, you need to have a firm grasp on what productivity is all about. Simply put, productivity refers to the total amount of labor that is needed to accomplish a certain process or task in the operations of a company. Let us take a coffee shop, for example. It usually takes a barista 5 minutes to prepare an excellent cup of cappuccino. That is, on an ordinary day. But what happens when rush hour sets in? The barista would have not just cappuccino drinks to prepare. He might have to prepare cold drinks, such as blended coffee drinks and milkshakes. And the preparation time for each of these drinks would not necessarily amount to just 5 minutes. Thus, for your coffee shop to be more productive, the management staff and crew should come up with ways to maximize prep time for the drinks without sacrificing quality in the process.

The same concept rings true when it comes to sales. Let us say that you need to spend an amount of $30 just to garner a gross profit of $100. This means your net profit would amount to $70. But as your business grows, you would expect that sales cost of $30 to decrease because you become more experienced in your craft. This significant improvement in experience could then be manifested on the decrease in sales cost. But if your sales cost remains at $30, then you are not being productive at all. You have then become stagnant in this aspect.

Let us look at your target market at this point. If you see your target market as having a flat nature, or if your neck has become strained from constantly looking at your competitors at both sides, then you should familiarize yourself with sales productivity.

Going back to the scenario of the coffee shop, let us say that your workforce grabs around 25% of your gross profit. Strategically, you discover that you can decrease this percentage down to 23%. What then would you do with this extra 2%? You can actually treat it as savings, crediting it to your bank account. But if you use this extra 2% to make certain investments to improve operations for your coffee shop, then you can maximize sales productivity for your whole business. And this is not the only way that you can increase sales productivity! You can go over your financial records and statements in more depth, so that you can determine the many ways that you can increase this. It's not that easy, and you just might need the help of your management staff and crew. Still, determining these is a step closer to more profit for your business as a whole.

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Article Tags: Sales Productivity, Increase Productivity, Measure Productivity

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The Concept Of Sales Productivity Defined

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