SALES

6 Easy Ways to Cut Sales Costs

These time-honored management tricks can increase profitability by radically reducing sales costs. (Unfortunately.)

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The cost of sales got you down? Feel like you're paying your sales staff too much to sell a product that, ahem, "sells itself?"

If so, here are six time-honored sales management techniques that, when applied creatively, will significantly reduce the cost of your sales efforts.

1. Position extra work as a sales perk. Why pay commissions when you can motivate the sales team by assigning them extra work? Rather than forcing them to attend sales training in Des Moines, for example, rebrand the event as a "gold star vacation reward." They'll be thrilled!

2. Make the carrot unachievable.  Sales people are motivated by goals, so here's a way to get that motivation into action–with no actual extra expense to you. Promise your team a huge payout in return for hitting "stretch goals" ... which are so high that nobody can ever hope to achieve them.

3. Complexify the compensation plan. The more details, exceptions, and special clauses that you put in the compensation plan, the more "wiggle room" you've got when you need to avoid actually paying commissions.  Be sure to use plenty of fine print in the employee contract!

4. Tie compensation to corporate performance. Making sales is all about making the corporation successful–so salespeople should only be paid well if the company makes money, right?  After all, it's not about making sales, it's about making a profit. Compensate accordingly.

5. Delay paying out bonuses. Always take as long as possible (or even longer!) to pay out the commissions that the sales team has actually earned. You get the interest on the "float" and, remember, the employees might leave before you actually pay out the bonus!

6. Change the compensation plan frequently.  This is known as "pulling the rug out." For example, if a big opportunity is about to close for, say $1 million, change the plan so that deals of more than $999,999.99 only pay half commission.

Experience shows–unfortunately–that the application of the above methods will, over time, eventually reduce your sales costs ... to zero.

Seriously, though: If you're truly committed to sales and marketing success, sign up for the free Sales Source newsletter.  I'll send you a weekly update with my Sales Source posts, along with extra pointers just for the newsletter readers.

Last updated: Apr 11, 2012

GEOFFREY JAMES | Columnist

Geoffrey James is an author, speaker, and award-winning blogger. Originally a system architect, brand manager, and industry analyst inside two Fortune 100 companies, he's interviewed over a thousand successful executives, managers, entrepreneurs, and gurus to discover how business really works. His most recent book is Business Without the Bullsh*t: 49 Secrets and Shortcuts You Need to Know.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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