How to Use Profit Margins to Maximize Inside Sales ROI

Several years ago, before I went into sales myself, a friend of mine was working at one of the major musical instrument retail stores. I vividly remember him telling me something that reshaped the way I thought about sales, that the people who worked in the accessories department (selling strings, distortion pedals, tuners, etc.) made a higher commission on average than the guys selling high-end guitars. The reason, of course, is that the accessories had a higher profit margin than the high-end instruments. This was the first time I ever realized how critical profit margins are.

My experience working at a marketing agency, and now at RingDNA, have only further proven to me that, at the end of the day, it’s not what you sell, but how much revenue you actually take home. Selling certain goods or services will simply deliver a better ROI than others. To that end, I think that more inside sales managers should pay attention to profit margins following sales. That’s why it’s so crucial to not only ensure that managers have a clear knowledge of profit margins, but also reps themselves.

Knowing profit margins enables inside sales managers can see past close rates and identify which reps are truly driving the most profits. Managers can then maximize ROI by encouraging reps to double down on services and goods that yield the best returns. geraldine

For our latest eBook, we asked some top sales executives to name a metric that more inside sales managers should be tracking. Many sales leaders focused on pre-sales metrics like lead closure percentage and meetings with key decision makers. But Geraldine Gray, Salesforce MVP and Founder of Endiem, challenged more sales managers to track profit margins.

According to Geraldine, “If I could pick one number I wish more sales managers would monitor more closely, it would be measuring their profit margin against delivered projects or products. Too often, our customers know they are making a profit, but they don’t know exactly why or where the money comes from. If they knew what their top margin items were, they could better coach sales reps to cross-sell or up-sell these lines. It would also help drive a better customer experience, as the company would swiftly become known as the “go-to guys” for that product and expertise every time.”

Geraldine Gray knows the importance of checking margins. As an expert Salesforce consultant she offers a variety of  customized development and implementation services. When selling services, profit margins are, in my opinion, even more vital than when you’re selling products, since time investments play a much larger role. But whether you are selling products or services, checking margins after sales can help you identify opportunities to maximize sales ROI.

Download our latest eBook now and see which metrics 13 other sales leaders think you should start measuring right away!

Recommended eBook: 14 Top Sales Leaders Reveal Their Most Essential Sales Metrics

About the Author

Jesse Davis

Jesse Davis is a sales and marketing strategist and Sr. Content Marketing Manager at RingDNA. Over the past decade, Davis has honed his business communications skills working as an inside sales manager, business writer and agency marketer. He is a proponent of utilizing platform technology and evidence-based methodologies to optimize creative campaigns, marketing ROI and sales performance.

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