Of all the metrics in the sales and marketing world (and there are a lot of them) probably the most misunderstood is cost-of-sales. Many sales managers view cost-of-sales as a labor cost; pay smaller commissions and your cost-of-sales goes down.
That’s naive, though, because sales costs are only meaningful insofar as they affect profitability. Cutting costs in a way that cuts into revenue (a more common situation than you’d think) is stupid. Your goal is to make sales costs more efficient, not just smaller.
More important, much of a company’s sales costs are hidden inside the budgets of other groups: specifically marketing, R&D and IT. Because of this, creating the most efficient cost-of-sales requires a broad approach. Here are some suggestions: