Sales controlling: what it is and why you need it

Sales controlling is the process of monitoring and managing sales activities to ensure that they align with your company’s goals and objectives. By having a sales control system in place, you can more effectively manage your sales team, track progress, and measure results.

In this article, you will get a comprehensive idea of what sales control is, how important it is in your sales process and what different tools you can use to maximize your sales.

What are the benefits of sales controlling?

Here are a few of the numerous benefits that effective sales controlling can bring.

Increased revenue

By understanding what factors influence sales and where improvements can be made, businesses can see a significant increase in revenue. Sales controlling provides the data and insights needed to make informed decisions about where to allocate resources for the greatest impact, therefore, driving increased sales and revenue.

Improved forecasting accuracy

Another benefit of sales control is the ability to generate accurate forecasts. This is because businesses have a clear understanding of the sales pipeline and can track progress and identify any potential issues. This allows businesses to make necessary adjustments to ensure that targets are met.

Sales control provides an interface for sales in general

Sales management enables a company to manage its sales activities in a targeted manner. To this end, sales strategies can be managed and successful monitoring and verification can be performed. In this role, sales controls provide an interface for sales in general, with control over sales.

Set and track realistic targets

One of the most important aspects of sales control is setting and tracking realistic targets. This ensures that everyone in the sales team is aware of what needs to be achieved and by when. It also allows you to track progress and identify any potential issues.

Greater transparency and visibility into the sales process

Another key benefit of sales control is that it provides greater transparency and visibility into the sales process. This means that you can see where things are going well and where there are potential improvements to be made.

Why is sales controlling important?

The sales control system is a vital tool for managing your business’s sales. The data it collects and analyzes provides you with valuable insights into the performance of each individual department, as well as an accurate picture overall of how successful or inefficient that part has been in achieving its goals.

Sales controlling aims to monitor sales control operations and detect problems and identify sales shortfalls. This enables efficient management and sales operations. As the link between the General Control System and Sales Control Systems, it provides a comprehensive perspective. Traditional control systems focus more on the product and optimize the production process for time and cost.

Position of sales controlling in the company

Sales controlling is an integral part of the business that deals with the collection and analysis of data that provides information on sales performance. Sales controlling focuses on sales metrics and trends to identify risks and opportunities. Sales control is an essential component of business success and should be applied in every company because of its ability to improve sales performance.

Strategic vs. operational sales controlling

The entire sales control system is divided into strategic and operational responsibilities.

Strategic Sales Control helps to achieve medium and long-term qualitative results that release the potential for success. In this context, it is a good idea to decide whether a marketing campaign should be implemented or whether customer attitudes should improve.

In contrast, operational sales control focuses on short-term and quantitative aspects of sales efficiency such as coverage. This includes an analysis of whether the activities generate the expected results in terms of revenue, costs, and profitability.

In order to be successful, a company needs to have a good understanding of both strategic and operational sales control. By taking control of the sales process, a company can increase its sales and profits.

Sales controlling supports sales management

Sales controlling is a fundamental task in sales management. It includes data collection, analysis, reporting, and the formulation of recommendations for action. Sales controlling also helps to manage business activities. Managing the sales process creates transparency and enables accurate evaluation. It also provides a basis for planning and strategic organization, recruitment, and operations management. Sales controls enable sales management to structure information for reports, evaluations,, and recommendations.

The tools for successful sales and profit

Central instruments of sales controlling are indispensable when it comes to increasing the profitability of the company. They ensure optimal utilization of resources and enable control of the sales process. Sales controlling is an essential part of corporate management and should therefore be carried out regularly.

Effective sales controlling requires precise knowledge of the company’s cost structure. This should be recorded in a cost model containing all relevant cost types. Sales controlling is based on the cost model and determines the optimum sales price structure. It can also make statements about the profitability of products and services.

Product Life Cycle Analysis

Product cycle consists of the evolution of sales, profits, and sales for products during their release. The analysis of this development is composed of a number of objectives. It is possible that a new sale will appear soon. On these bases, strategies should be developed to address and promote the sales processes. Production planning can be supported by identifying the optimal times for market expansion or diversification strategy, e.g. during the growth of existing products. 

Customer Value Management

Customer value management involves assessing customer value to ensure success and value for the business and organization. This is essential for budgets. Essentially, most of the money should go directly to the company’s most profitable customers. 

According to ABC analysis, customers are divided into three categories: A, B, and C.Category A comprises potential high-value customers that need more attention. Category B is for important but less valued customers. Lastly, Category C refers to low-value or unprofitable customers that aren’t worth selling power to because they generate little revenue.

Benchmarking

It refers to product/service comparison with the strongest competitor product/service comparison. However, it should never have been seen as a comparison of strengths or weaknesses. Instead, it requires continuous evaluation and improvement and should have a direct impact on business objectives. 

Sales Reporting

Reporting refers to the assessment of sales control. A considerable number of relevant figures collected during the sales control stage are evaluated and put into an environment. 

The comparison with the other periods shows a current development that drives companies and enables a conclusion of successful strategic decisions. Consequently, sales plans can also be made based on these figures. Reports are crucial on a very personal level. Especially in sales, variable compensation components play an important role.

Key Account Management

The consequences for key account management arise from the value management of customers. Key accounts usually A customer with very good customer values is marketed by a key account manager. The idea behind this approach is to improve customer service by promoting customer loyalty. Recurring customer rewards are worth it. 

Portfolio analysis

Portfolio analysis involves evaluating various products and services that are important and valuable to customers. In the case of the results, a variety of strategies are taken. It tries to balance low-risk with high-risk business units in the portfolio. Among many portfolio model options, the most widely used and widely accepted is the four fields matrix by Boston Consulting Group. These methods divide portfolios into four products based on a variety of investment strategies.

GAP analysis

The goal is an objective comparison between the planned development and the actual development of some targets (e.g. profit). This difference between desire and reality is called GAP. The basic theory is the existence of gaps without intervention during the period: this distinction distinguishes between two different gaps or GAPs. The GAP analysis identifies gaps that lead to specific actions and adjustments of the hedging screws.

What is a sales controller?

Sales controller plays the biggest role in the entire sales controlling process. He is the one who has the most overview and can give the best recommendations for process improvements. The sales controller should be very familiar with all steps in the sales process, as well as with market trends and customer behavior.

The main task of the sales controller is to increase efficiency and optimize processes. He is responsible for the whole budget and has to control it. The controller must have an overview of all processes in order to be able to intervene at any time.

What KPIs should you focus on in sales control?

Revenue and margin are the most important sales KPIs. The following list includes other essential indicators:

Sales

Apart from profits, revenue is probably the most important indicator but does not serve as a single indicator of the problem. To determine the reason for the decline in revenue, other KPIs are needed in addition to analytical tools.

Claim rate

How many people purchase an eligible item? Increasing complaints are attributed to poor product quality and represent a preventability problem.

Cancellation rate

What are the cancellation rates for new contract signings? High cancellation rates can mean missed delivery or misplaced customer advice.

Contribution margin

The amount used to cover fixed costs is considered a financial contribution. It is a portion of revenue that exceeds unit cost revenue.

Profitability

Profitability refers to the relationship between profits and investment in a business.

Market Share

Market share has an average annual value of 100 percent for each year.

Thinking strategic and operational sales controlling together

Sales controlling consists of two dimensions: long-term strategic and short-term operational.

Long-term goals and risk management

Strategic dimensions involve long-term concept design, goals and planning, fundamental decisions about customer structure, product portfolio and risk management. You need to understand how to minimize vulnerability by turning the market around.

Sales controls can influence decision-making processes and improve a company’s performance. The strategic direction of sales control is strongly tied to marketing.

Operational sales control in day-to-day business

Sales Control is concerned with maximizing efficiency in day-to-day operations. Decisions usually involve a time period of less than 1 year to the scheduled month or current week. Control documents the immediate economic impact of sales activities. Operations control ensures proper implementation by maintaining sales and operations control.

Conclusion

Successful sales require a clear strategy, which is only possible through effective sales controlling.  By taking a strategic approach to sales controlling, businesses can make data-driven decisions that will have a positive impact on their bottom line.  

If you’re ready to take your company’s sales to the next level, get in touch with us today. We’ll help you create a successful sales strategy that delivers results.