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Profit Improvement Report salesperson are extremely visible. There are recruitment costs plus the fact that the salesperson will undoubtedly need time to ramp up to a desired level. Even then, the replacement may be no better than the original. These factors make firms extremely hesitant to make staffing changes with regard to sales. It is not the intent of this report to decimate the sales force. It is simply to state that generating higher profit is indelibly linked to generating a sufficient rate of sales growth. That growth can only be achieved in a slug- gish economy if every salesperson is performing adequately. Not spectacu- larly. Only a few can reach that level. Adequacy should be expected from all. For outside salespeople, measur- ing performance accurately requires knowing the potential in each territory. Firms must spend at least some time evaluating account potential. Without this indicator firms can still intuitively distinguish great salespeople from typical, but will have real problems determining whether the low-end performer is inadequate or is saddled with a less-desirable territory. For inside salespeople, life is much easier. It is only necessary to know the total number of customer contacts. Sales per contact is a simple, but effective ratio. Ensuring that sales performance is adequate also requires incorporat- ing a specific set of metrics into the company's management information system. In particular, it is essential to understand the extent to which the salesperson is maximizing the potential of every transaction. Two key factors have always been important in transaction analysis. The first is the number of line items sold per transaction. This measures perfor- mance with regard to add-on selling. The second is the average line value. This reflects the capacity for upselling. Without a system that can pinpoint these issues on a per-salesperson basis, improvement is simply not possible. Moving Forward Sales growth must be maintained at a level that allows the firm to produce a sales-to-payroll differential of some- thing in the 2 percent range. When (not if) the economy starts growing again, this will be easier to accom- plish. In the meantime, firms need to use every tool available to ensure that the productivity targets of the sales force are being met. n DR. ALBERT D. BATES is founder and president of Profit Planning Group. His latest book, Triple Your Profit!, is available at www. tripleyourprofitbook.com, as well as Amazon and Barnes & Noble. ©2012 Profit Planning Group. AED has unlimited duplication rights for this manu- script. Further, members may duplicate this report for their internal use in any way desired. Duplication by any other organiza- tion in any manner is strictly prohibited. NO NEWS IS GOOD NEWS You may not have heard of BOK Financial, but sometimes no news is good news. As a $26 billion financial services holding company with decades of construction equipment experience, we understand your challenges. At BOK Financial, we work with companies like yours every day throughout the U.S. to provide unique solutions to help your business grow. So skip the news, and give us a call. Or better yet, let us come see you. Lending | Syndication 214.736.1054 | www.bok.com /construction ©2012 BOK Financial Equipment Finance, Inc. is a subsidiary of BOK Financial Corporation. Member FDIC. Equal Housing Lender October 2012 | Construction Equipment Distribution | www.cedmag.com | 49