close Visitor Edition

The McKinsey Quarterly is the business journal of McKinsey & Company. Register now for immediate access to hundreds of articles.

Register to read this article

  • Text Size

  • Print

  • Download PDF

  • Link to This

Bringing science to sales

By integrating systems in order to generate transaction-level costs and revenues, companies can determine where to focus their sales efforts.

AUGUST 2004 • Timothy E. Lukes and Jennifer E. Stanley

Any executive running a sales organization would love to know which prospecting efforts generate the highest returns. Making the necessary calculations calls for tricky estimates of individual transaction costs, such as promotional expenses and the salespeople’s time as well as engineering, finance, or accounting resources. Luckily, many salespeople now use laptops to track their activities. This development, along with the increasingly common tendency of companies to integrate their enterprise-resource-planning and electronic-data-interchange systems, allows them to generate transaction-level cost and revenue figures, which they can use to calculate their return on investments in sales. Common mistakes—for instance, an overemphasis on high-volume accounts or too many salespeople chasing small customers (exhibit)—can be revealed only through such a detailed analysis. Spotting these problems may help organizations to refine their product- and account-level strategies and assist salespeople in targeting the right customers. We have seen bottom-line improvements of up to 15 percent and top-line sales growth of 30 to 50 percent, suggesting that it pays to bring a little more science to sales.

Chart
About the Authors

Tim Lukes is a consultant in McKinsey’s Miami office, and Jennifer Stanley is a consultant in the Atlanta office.

...

Free Membership

As a free member you can also:

  • Read hundreds of free articles
  • Receive e-mail newsletters and alerts
  • Search our archive

Simply fill in this form

View our privacy policy.
We will not share your e-mail. See details.

* Required

New In: