by Justin Roff-Marsh, author of The Machine.
Scroll down on their website to read the thought process to this theory.
Salespeople won’t like this!
If you make revenue the responsibility of your sales department, you will handicap the growth of your organization. If you want your organization to grow, operations should be responsible for revenue and your sales department should focus exclusively on new business.
Revenue: The Responsibility of Operations
If your organization is typical, it’s likely that more than 70% of your revenue in any given year comes from existing customers. You could think of the transactions that make up this 70% as yours-to-lose. You don’t need to win these transactions; you just need to do a good job of processing them.
The quality of your relationship with existing customers is almost certainly a function of how good a job you do of processing these yours-to-lose transactions. We know this because the most common reasons why customers defect are (in descending order): poor on-time delivery performance, uncompetitive pricing, and poor product performance.
It’s not a big stretch, then, to argue that operations should be responsible for revenue — and, consequently, for the transactions that generate that revenue. Your sales department cannot directly influence on-time delivery performance, pricing, or product performance so it makes no sense for revenue to be its responsibility.
