Efforts to reduce sales costs might seem inevitable during tough economic times. Yet McKinsey’s client work shows that such measures can backfire unless the impact receives careful consideration: for instance, a company terminating back-office sales support employees must redirect their work to its frontline salespeople, who therefore have less time for selling. The solution? Understand your customers, so you can both focus sales resources on things that matter to them and cut waste, not value.

Consider the experience of a business-to-business wholesale company that had used high-cost face-to-face meetings to prospect for and manage accounts. The exhibit shows its new approach. For small customers, the company decided to rely on telephone sales backed by strong support for Web-based transactions. For larger ones, it created a telephone sales team designed to target the purchasing staffers who actually control individual orders, rather than rely, as it formerly had, on expensive personal contacts between its senior executives and its customers’ purchasing managers. Before the change, the company made a profit from only 45 percent of its small customers and 70 percent of its large ones. After it, those shares rose to 90 and 95 percent, respectively.

To learn more about approaches companies can use to improve sales operations, particularly in a downturn, read “Cutting sales costs, not revenues” (March 2009).