MANAGEMENT OF SALES DRIVING COST BY MINIMISING UNPRODUCTIVE COMPONENT OF THE COST
Keywords:variable cost, sales driven and sales driving costs, cost behaviour, sales driving programs
AbstractIt is not enough to analyse an investment or spending amount alone in order to understand how costs or expenses drive revenue. More elements such as timing of spending, segments of customers to whose investments are targeted, possibility to attract customers’ attention and how effectively money were or are planned to spend should be analysed.
Objective of the article is to explain nature of Unproductive Sales driving cost; identify factors impacting size of unproductive cost; explain relationship of return on investment and unproductive cost; show techniques how to increase sales with no additional investment through increase of productive component of the cost by reducing unproductive component.
Analyses of cost behaviour, identification of factors and drivers impacting size of cost, analyses of practical techniques to maximise sales and return on investment are the methods presented in this article. Regression analyses are the econometrical method recommended to use when analysing customer behaviour impact on sales driving costs and sales.
Conclusion – business should understand nature of sales driving cost, identify unproductive component of it, track it and use it to support decisions. Gradual reduction of unproductive component can drive continuous sales increase without negative impact on profit margins.
Accounting, Auditing, Taxation and Governance