Sales are the key focal point of almost any business, as their overall revenue largely depends on that. Hence, finding the ideal channels for sales, as well as garnering more customers is important for all entrepreneurs. Joshua Melick mentions that other factors business founders may be concerned about include acquiring funding, HR and legal issues, product fit, marketing elements, and so on. Another factor that entrepreneurs tend to dwell over is to understand whether sales can be classified as a science or an art.
Most entrepreneurs want the business to be a science and not an art. However, to approach sales scientifically, people need to understand the sales economics of their business as well. According to Joshua Melick, having a proper understanding of business unit economics and sales economics is important for any entrepreneur who desires to proactively enhance their sales prospects. Joshua has a background in engineering and math. Hence, getting the math right was vital for him in the process of transitioning to the role of an entrepreneur and sales leader.
There are several factors in a business that influences the aspect of sales, marketing being one of them. In many ways, marketing is a lot more complex than sales itself. Joshua Melick additionally is a proponent of most marketing being included inside the sales calculations. He mentions that in many cases, a large amount of marketing elements get left out and comes under an unaccountable term like awareness and branding. He also mentions that the situation of business development in the sales calculations is also the same. As per his knowledge, while SDR or BDR is usually located in sales, they may also at times get lost or become unaccounted for. Joshua recommends entrepreneurs to try and keep as many elements possible in their calculations.
Joshua Melick usually uses two different ways to do the customer acquisition cost and sales spend exercise, which includes the bottoms up and top down approach. While the top down method is the scariest, it also is the easier one. When it comes to the bottoms up system, he typically uses a unit economics type approach. Such an approach was taught to him by one of his professional mentors, and has proven to be quite helpful in his business.
Once the calculations are done, entrepreneurs should take a look at each channel and ask pertinent questions, such as is the SDR working, how the channel pans out for the PPC marketing budget, is a marketing tool too competitive or expensive for the model, and so on. While doing so, it also is crucial to keep in mind that each channel has its natural limits. Just because one may get 10 deals a quarter through trade shows at a particular expense, does not mean that they can get ten times that for 10x the cost. For most competent outcomes, entrepreneurs must push their finance team or ops team to focus more on granular tracking.