Sales is a cyclical process of commercial relationships between a consumer who desires to buy a product or service and a seller who tries to persuade them to buy it. Briefly, it can be described as a sequence of actions that leads to the conclusion of a transaction. From an accounting perspective, sales occur when an obligation is created for a buyer to provide money in exchange for what a company offers. Financially, total sales comprise the sum of all products sold multiplied by their prices.
Practically, sales departments exist in every commercial organization across all economic industries. Companies strive to create a product or service value that exceeds the cost of providing it. The more value an organization creates, the more profitable it is likely to be. When you provide more value to the customer, you build a competitive advantage.
For a company, it is vital to include only processes that create value greater than their costs. M. Porter described the value chain common to all businesses, consisting of the following primary activities:
-
Inbound logistics. Includes everything a company receives, stores, and distributes within the organization, but not externally.
-
Operations. Defined as the manufacturing process in which a product is made from raw materials.
-
Outbound logistics. Covers the distribution of products or services to the end-user or another business.
-
Marketing and sales. Includes all the methods a company employs to convince consumers to buy a product or service. Here, value is generated through the benefits a company offers via its products or services and the way it engages with customers.
-
Service. Refers to the actions a company takes to maintain the initial value of a product or service.
From a customer perspective, there are various types of value:
-
Convenience. A product or service saves time and simplifies life.
-
Usability. A product or service is enjoyable and easy to use.
-
Identity. A brand conveys quality and status.
-
Efficiency. Produces greater output per unit of input (e.g., an electric car that travels a greater distance per charge).
-
Customization. The ability to modify products or services to fit personal preferences.
-
Functionality. A product or service serves multiple purposes.
-
Experience. A consumer develops a habitual preference for a particular product or service (e.g., the taste of a favorite food).
