By Walt Becker
Uncertainty looms around the 2024 U.S. election, turbulence in the economy, and tightening business budgets. In this unpredictable environment, organizations can drive revenue performance by assessing and adjusting their sales strategies and associated spend.
This means sales teams must become more agile in how they deploy sellers, engage customers and prospects, and manage sales performance. If organizations fail to address the current environment, their top and bottom lines will suffer. They could over-invest in low-value customers, miss cross-sell and upsell opportunities, or overpay for the wrong performance.
Many sales organizations are already adjusting their strategies in response to uncertain economic outlooks and shrinking budgets. Some are doubling down on customer retention, and others are shifting investments in some customer segments to lower cost-of-sales channels.
These are just a few strategies that can help you optimize sales spend, and during periods of volatility, spend optimization is at the heart of driving efficiency. It guides the amount of sales investment in various customer segments, aligns limited sales capacity across high-to low-touch channels, and directs incentive toward the most profitable outcomes.
Organizations can make five practical moves to maximize sales spending and drive more profitable growth in unpredictable conditions:
1. Optimize sales team capacity.
For most sales organizations, the largest expense is direct sellers. When not effectively deployed, sales teams face missed opportunities, slower sales cycles, and added costs.
To drive growth while maintaining or lowering costs, organizations must have a deep understanding of the economics and behaviors of their customer segments and how they interact with the company and products. Which segments churn more frequently? Which buy an assortment of offerings? Which require more—or less—customer support?
Once you have these insights, you can evaluate sales performance in each segment and determine whether you are over- or under-investing across your channels and coverage.
2. Approach discounting as an investment.
A 1% price increase can raise operating margin by as much as 10%. However, many organizations discount indiscriminately, ignoring segments and customer value. This behavior reflects a priority on revenue growth—but at what cost?
A more effective method for deal pricing is to approach discounts as investments, targeting higher-value customers from whom you expect a return. Organizations that do this well employ effective pricing and discounting governance, streamlined quoting processes, and properly aligned incentives for their sales teams.
3. Improve sales performance management.
Organizations spend billions on performance-based sales incentives. In good times, they can overlook design flaws in those incentives—but during uncertainty, these flaws can hurt overall performance against plan and incentives ROI.
Improvement isn’t simply about tweaking your plan design; it requires realigning sales performance, including territories and quotas. Conducting a data-driven sales performance assessment can help identify improvement opportunities. Additionally, many organizations find success through testing several “what if” analyses to project what could have happened under various scenarios around territories, quotas, and incentives to get insights into what they can adjust.
4. Enhance customer and revenue retention programs.
The cost of sales for acquiring a new customer can be as much as 25 times higher than the cost of increasing revenue with an existing one. In an unpredictable economy, appropriate investment in cross-selling, upselling, renewals, and even win-back strategies across marketing, sales, service, and customer care is essential.
For many organizations, it’s not a question of whether to put these motions in place but a question of measuring how effective they are and how much investment they require. Leading organizations invest in a set of capabilities to increase effectiveness and ROI, including customer insights; process and role design to drive greater focus and accountability; better orchestration across front-office success metrics; and alignment of incentives to drive desired behaviors.
5. Reorient sales operations.
Most organizations spend about 10% to 20% of their sales budget on operations and often disproportionately on administrative tasks such as bid and order management, quote generation, and sales technology management.
To transition to a more strategic, revenue-driving capability, many leading organizations are freeing up sales operations from repetitive tasks and investing in capabilities focused on informing strategic business decisions. Areas of opportunity include simplifying the sales technology stack, automating routine tasks, and using GenAI to realize gains in productivity and performance.
Today’s organizations should prioritize revenue performance and efficiency to improve ROI on their sales spend. This requires a data-driven approach to sales capacity, discounts, and incentives, as well as driving efficiency through sales technology rationalization, process simplification, automation, and AI.
To learn more about how sales spend optimizations can be a critical component in your revenue-growth objectives, read KPMG’s report Driving revenue growth in an uncertain economy.
Walt Becker is a Principal, Sales Transformation Lead, at KPMG LLP.
