You can generate improved growth and profits with sales development accounting

For many manufacturers, controlling sales results is more erratic than effective – particularly when selling through independent manufacturers’ reps, but also with employee salespeople.  It has been repeatedly proven that the key to improving results is using a structured system.  When effectively implemented, a structured sales process adds reliability to the achievement of profitable growth.

In manufacturing, if you want to know what you have achieved during a time period, you generate an earnings statement.  But if you want to know where you stand at a point in time, you generate a balance sheet.  In addition to accounts receivable and payable, the key numbers in a balance sheet are inventory – both finished goods and work-in-process.

While cost accounting can reveal the value of product work-in-process, an incremental sales process inventory is harder to determine.  One benefit to Sales Performance Quality Assurance™ is that sales development progress can be measured with relative accuracy.  The key lies in the design and documentation of the sales development process.  There are a number accounting benefits to SPQA. Let’s first consider territory potential.

Territory Potential – The number and size of available target accounts

How many target accounts are there in each territory, and how many are there in each industry type?  If you have identified target accounts based on valid projections of sales potential, any “good” rep – or employee salesperson with incentive compensation – will follow your guidance.

If you want to measure sales potential in dollars, estimate the average sales volume available from each account size (Large. Medium, and Small) and type (NAIC) classification.  Just remember, these dollar numbers will be estimates.  They only become objective numbers when the account has been screened for sales potential.

In future posts, we will cover work-in-process inventories, sales forecasts, and sales productivity. For more information, ask for Knotes & Comments 201 “You Can Achieve Profitable Growth by Treating Sales as a Production Process,” and 202 “Establish Measurability to Enable Manageability.”