Is your sales response strategy hurting your profits?

There are many factors that contribute to a company’s financial success. One common way to measure success is through profit margin. High profit margins indicate the cost of doing business is low in relation to the revenue generated by a business. Companies with high profit margins tend to maximize the use of resources in order to keep costs down and generally make the most of sales opportunities.

Making the most of every sales opportunity starts when leads are initially generated. Given the large budgets that many companies allocate to marketing and advertising in order to generate leads, a significant part of a company’s profitability can be attributed to its effectiveness in turning as many of those leads into paying customers.

Based on this rationale, our hypothesis: sales teams that have higher profit margins also have more effective lead response processes in place. To put this hypothesis to the test, we studied the sales lead response practices of the Fortune 100 and looked for a relationship between strong sales lead response practices and profit. A funny thing happened.  Velocify found an interesting relationship between companies’ relative response performance, as measured against Velocify’s research-based best practices, and profit margins.

As seen in the chart below, when grouped according to their profit margins, companies with the highest profit margins (the top 20% of companies studied) had response performance scores that were about 25% higher than the average. Similarly, companies with the lowest profit margins (the bottom 20% of companies studied) had response performance scores that were almost 40% lower than the average. Comparable results were discovered when evaluating the top and bottom performing companies in terms of revenue growth and response performance.

profit margins, may chart of the month

Response practices alone cannot predict the financial success of a company, but one can’t deny that improving response practices can certainly have a significant impact on maximizing the value of marketing and advertising investments and therefore profit margins.

In order to fuel growth, especially profitable growth, you need to invest in a competitive advantage. An optimized sales response strategy, enforced through technology, could be just what your business needs to give you the entitlement to future growth.  To learn more about optimal response strategies download the full report: Fortune 100 Online Buyer Experiences- A Study of Seller Response.

________________________________________________________________________________________________________________________________________________________

Jorge Jeffery, sales objectivesAbout the author: Jorge Jeffery joined Velocify in 2011 and is senior manager of strategic intelligence. Jorge has been instrumental in mining data from the more than 1,500 sales teams that leverage Velocify’s solutions today. Insights gleaned help establish best practices for Velocify clients in order to maximize revenue potential.

 

  • Very informative. As entrepreneurs we should be always on the lookout on our profit margins in order for us to stay on the business. Anyways, great read!

Subscribe to our Blog

Delivered by FeedBurner

Connect with us

Velocify is here, there and everywhere! Follow us on your favorite social networking sites.