Aligning Sales Management with Profitability

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Many top managers are frustrated with the disconnect between the sales process and corporate objectives, writes Jonathan Byrnes in his March The Bottom Line column for HBS's Working Knowledge. Why the disconnect? The process of transforming management's goals into sales breaks down for numerous reasons including lack of clarity about objectives, vagueness in communicating objectives, and failure to align compensation with objectives among other reasons.

How can does a company reconnect the two camps? Byrnes and co-author Paul Bergeron suggest a five-step remedy. (Here's the gist of what they've outlined in the article):

Understand profitability. Sales often doesn't maximize a company's profitability because top managers seldom have a clear grasp on the "company's key profitability drivers."

Translate into business objectives. Create a business plan that addresses how your company intends to maximize profit on a day-to-day basis.

Communicate the objectives. Direct communication results in two things: top managers become better educated on the nuances of what drives profitability in a business, and it shows the sales force that top managers are committed to accomplishing the objectives.

Translate into a compensation plan. Create specific objectives that can guide the sales force every day, and then tie compensation to its accomplishing the goals.

Create individual sales plans.

Last updated: Mar 10, 2004




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