Sales trends for 2014: Sales management will look to drive costs out of sales

Since 2009, we have been publishing our annual 12 Sales Trends reports. It has been very interesting to see the speed at which these trends are taking hold and becoming the new normal in business. 

For instance, when reviewing the 12 Sales Trends for 2013 you can see hard evidence of these trends in mainstream practice. So let’s see what is in store for us in 2014. Here is the first Sales Trend for 2014 – sales management will look to drive costs out of sales.

In 2014, sales management is going to come under increasing pressure to drive down costs of sales. Whilst being effective and generating more business will continue as the main thrust for selling, reducing the cost of sale and selling at better margins are going to be the two primary challenges facing management, as they look to squeeze profits in a somewhat stagnant market.

Over the past few years the cost of sale has been escalating. Salespeople are demanding higher salaries and commissions; customers are pushing suppliers for lower prices; and all of this in a market place that is not growing quickly enough to sustain the growth demands of shareholders. If that were not enough, competition – particularly from offshore players – is on the increase as they too look for additional markets and sustained growth for themselves. And many of these offshore competitors have an advantage over Australian companies where labour costs contribute to a high end product selling price.

Whilst sales effectiveness – selling more, to more buyers – has been the primary focus for the past few years (and will continue in the year ahead) market conditions will force sales management to find ways to cut costs out of selling. As a result of these pressures, there are five major areas that are likely to be targeted for change:

1. Sales managers are likely to look for ways that will allow sales teams to sell in smaller geographic territories and to use saturation selling to get more customers in an area, in the process reducing both the time and cost to sell as well as the cost of delivery, service and support.

2. The drive to cut cost out of sales will see sales management looking for new and more efficient ways to service low value customers. More innovative use of the internet as a store front will see a drop-off in call centres and an enhancement in customer interaction using a combination of the internet and social media.

3. Salespeople will find that the organisations they work for are going to introduce packages that link sales results to their remuneration. Sales productivity measures will focus on outputs rather than inputs and salespeople are going to have to work smarter to satisfy the demands of their organisations.

4. There is likely to be a shift away from volume as an indicator of sales effectiveness to a combination of volume and value, as companies look for ways to sell more profitable lines at higher margins. In 2014, instead of volume-based incentives, salespeople are likely to find margin and profitability high up on the list of their sales performance indicators for success.

5. To improve sales productivity, sales management is going to invest in technology to shorten the sales cycle and speed up order processing. Salespeople will find themselves being trained to sell more effectively – not only in order to close more business, but to do so faster. And that means that salespeople will learn more about territory planning, management and sales strategies so that they can saturate their designated territories.

The take-out

Whilst sales effectiveness – selling more, to more buyers – has been the primary focus for the past few years, market conditions will force sales management to find ways to cut costs out of selling.

And, how timely is this sales trend, given the current state of manufacturing in Australia. Food for thought.

Remember, everybody lives by selling something.

Sue Barrett is a sales expert, business speaker, adviser, sales facilitator and entrepreneur and founded Barrett Consulting to provide expert  sales consulting, sales training, sales coaching and assessments.