Presales as a Profit Center

Presales is an exciting part of the revenue generating part of a technology company. The team usually sit inside the sales organization and provide value by helping sales reps sell quicker, sell cheaper and sell more than they would otherwise.

Therefore, it is important to treat your presales organization as a profit center, and fund it accordingly. 

Investopedia describes a profit center as: A profit center is a branch or division of a company that directly adds or is expected to add to the entire organization's bottom line. It is treated as a separate, standalone business, responsible for generating its revenues and earnings. Its profits and losses are calculated separately from other areas of the business. 
Peter Drucker coined the term "profit center" in 1945.

While you could argue that presales is a separate unit from the sales reps, I think it makes more sense to think of the two roles as a combined unit or sales team. Each team would perform less effectively without the other. To optimize sales team performance and composition, you need to look at the activities that each role performs, and how you can ensure you staff the roles so that you don't starve the business the ability to sell more due to resource allocation. 

You may need to cut activities that fall outside of the revenue generating focus, or have other parts of the organization that focus on those things. Presales teams often pick up additional tasks that limit their ability to achieve the primary mission, and make it harder to judge the staffing model effectively. 

Good sales teams work out which opportunities are the most effective, and focus on these. This is the reason we have high touch, low touch and tech touch segments to business, and sometimes split by industry, product area as well, to deliver a different level of service per line of business. This might affect the sales/presales ratio, the amount of travel allowed, the time spent on each opportunity or deal. In some cases, it might be more profitable to send in more presales to a type of opportunity, and in others, an automated demo or customer driven trial might be more efficient.

If your presales team is treated more like a cost center than a profit center, it would mean that the business finds it hard to relate the revenue back to presales effort. An organization like this finds it harder to invest more in presales, as it can't see how the investment helps with the sales effort. To treat this organization more as a part of the profit center, you need to find ways to demonstrate the value. Find ways to show the more effective presales work, the best collateral, the best demos and ways to leverage them more.

The benefit of being part of a profit center is that it helps management decisions on allocation of resource to focus on the profitability of each part of the business. As you demonstrate value, and the way that the activities performed relate to profit and revenue generation, you help build a model that leads to an optimal allocation of resources.



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