Apr 07

Increase Sales! and other lies to justify IT

“The website for the ten million pound sales campaign with this partner will take just two days effort to develop!” appealed the sales leader to the Star Chamber for technology project justification.

“This is not going to increase our revenue by one pound” said the CEO. “Our web developers’ time is better spent on other projects. Next proposal…”

The CEO was right. The addressable sales opportunity was not going to get any bigger because of the website. The website was not going to reduce the sales force assigned to the program.

It is all too easy to justify benefits as simply increased sales. It is the easiest way to get a big number on the benefit side. And the easiest trap to fall into for a business case.

(A search on Amazon shows that there are 127 books with “increase sales” in the title, bought by sales people who justify the purchase as “cost £20, benefit increased sales”.

They are written by very canny salespeople who have discovered the benefits of scalability: If they sell then their income is limited by the number of hours in their day. If they write a book on selling then their income is no longer limited by their time but the marketablity of their ideas.)

So if you use “increased sales” as one of your benefits look long and hard at it.

  • The benefits of the process improvement are not the total sales increase – but the increase in net revenue, after allowing for the full cost of sales and marketing and all other overheads.
  • It is essential that there is a clear link between the increase in sales revenue and sales process improvement. It is not enough to attribute the increase in sales revenue in the current year to the process change. You should provide some firm and auditable types of deals or specific sales that can be justified and backed by sales management – who will need to ensure that the specific sales revenues have not been double counted for benefits or commission elsewhere.
  • If you have an innovative sales channel then you need to make sure that you allow for any loss of sales revenue from other channels.

If you don’t have the specific link from the process improvement to the benefit the risk is all to clear in the current economic climate: The process is implemented but because of the global recession sales fall. Now where is the benefit in that?

Permanent link to this article: http://transformingfinance.eu/increase-sales-and-other-lies-to-justify-it/