Revenue and Cost in the Sales Process
Sales are events or actions related to the sale of products or services at a certain targeted point of time. An example of sales activity would be the sale of a product or service to a customer. The delivery of a purchased service to a client is also considered to be a sales transaction. Sales may occur at the point of purchase, the point of sale or even after the sale has taken place. The whole business of sales is based on interaction between the seller and the buyer.
Nowadays there are two types of sales: inside sales and outside sales. In an inside sales transaction, the salesperson sells to an individual client. In an outside sales transaction, the salesperson sells to an individual or company on behalf of another. An inside salesperson earns by earning a commission from the sale while an outside salesperson makes money by receiving a share of the profit from the sale.
Inside sales involves activities that directly relate to the selling practices of the salesperson. In a sales department, these are the accounting, the bookkeeping, the quality monitoring, the marketing planning and all the other things that deal with running a business. These activities must all be coordinated by the same person, the salesperson. This is why the term ‘inside sales’ is used.
A part of the responsibility of the sales manager is to handle the accounts receivable, accounts payable and inventory. This is why the accounts receivable is so important to a sales organization. If it is not handled properly then the salesperson will lose out on revenue and the marketing effectiveness will be reduced. The reason being that if the client cannot pay for the merchandise on time then no one gets paid and the business suffers a severe blow.
On the other hand, marketing departments deal with the other functional areas like research and development, the promotion and advertising. Sales managers usually deal only with the accounts receivable and accounts payable area of the sales process. Therefore, the two functional areas are usually related and dependent on one another. This is what is meant when the term, ‘functional sales process’ is mentioned.
Marketing and selling are basically the same concept, but they are executed in different areas of the business. Selling, just like accounting, is primarily concerned with revenue while marketing is more concerned with the cost of purchasing a sales opportunity and the marketing efforts related to that opportunity. There are many examples of sales and marketing combinations. Examples include combining the sales department with the marketing department in creating a sales process that brings in both revenues and costs for the firm.