At the most basic level, businesses should be concerned about 3 specific issues:
1. Increasing Revenues
2. Decreasing Expenditures
3. Managing Risk
There is certainly a focus on decreasing expenditure and managing risk in the current environment, yet most businesses get into trouble because of a lack of focus in all 3 of these areas.
When businesses start to experience cash flow difficulties, what do they do? Probably a combination of:
- Cut obvious costs such as travel, sponsorship and bonus payments.
- Cut ‘easy’ costs such as training and advertising, which whilst easy to cut in the short term, can be damaging to the business in the medium to long term.
- Look to lay off staff.
- Pressure their salespeople to sell more, probably by calling all their clients, offering discounts and the like.
We’d like to focus on the last issue, i.e. that of increasing revenue. Let’s be clear, we believe that…
- Canvassing customers to buy your products, when they are probably under pressure themselves,
- Calling them just to peddle your product range, particularly when you’ve not previously adopted a regular calling programme, and
- Offering discounts to entice them to buy your products.
… is absolutely the wrong way to go about it!
Indeed, by offering discounts you devalue your product offering and intimate that it was overpriced to begin with.
One of the false impressions that developed during the boom conditions that we’ve enjoyed over the past decade or so is that of the strength of the sales culture in businesses. When boom conditions exist, business often flows in and our salespeople take the credit for it.
This is all well and good, but it papers over cracks in what may be a reactive and dormant salesforce. This can lead to difficulties when things get tough and the salespeople don’t have the proactive, customer-focussed sales skills required to succeed.
In a Boom
- Salespeople become order-takers
- They wait for the phone to ring
- They don’t bother to take the time to uncover the real needs of the client.
- Relationship building becomes secondary (to order taking)
- They manage to write new business and are rewarded for the wrong behaviours.
In a Recession
- The phones stop ringing.
- Your clients are also looking at reducing their expenditure.
- Clients look more critically at the value of your products and services to their businesses. Do they satisfy real needs?
- Clients gravitate to those providers that they trust and who have taken the time to build strong, long-term relationships with them.
- As sales revenues fall salespeople become more desperate and push products even harder.
So what’s the answer?
As we know, clients respond to businesses who:
- Endeavour to build long-term relationships with them.
- Take the time to uncover real needs, and develop solutions to meet these needs.
- Fully understand the clients’ business.
- Partner with them to help them develop their business.
The difficulty is that all salespeople will say that they do this. In our experience most don’t, particularly when the pressure’s on.
The answer lies with your sales managers and how they manage the salesforce. It is essential that sales managers:
- Observe the game where it’s being played. That is, observe the salespeople with their clients, give them feedback and plan long-term strategies with them.
- Clearly communicate to the salespeople what’s expected of them.
- Expect them to complete the activities to which they’ve committed.
- Hold salespeople accountable and ask them to justify their actions.
- Ensure there’s a consequence for both positive and negative performance.
And the sales managers need to be held accountable by their managers, and so on up the chain. You either focus on sound sales management practices or you can get used to looking for more expenditure to cut.
Again, most sales managers will say they do these things but, again, our experience tells us that most don’t.
There’s a great line in one of the Dirty Harry movies when Harry, having been reprimanded, says to his boss ‘I never give much credence to advice from people whose butt is the same shape as their chairs’.
Your sales managers need to get out of their offices and see first hand what’s going on. And then lead, manage, coach and mentor your salespeople to high performance.
As we said to open, sales revenue is just one leg of the stool that businesses are focussing on at the moment. The big danger is that businesses pound the ‘Results, results, results’, ‘Revenue, revenue, revenue’ bandwagon. This will drive the wrong behaviours in salespeople and make your situation worse.
Likewise, a sole focus on reducing expenditure will often lead to a downward spiral to oblivion.
We’d love to help you to develop your sales culture, and with the right will it’s probably easier than you imagine. Give us a call if you’d like to have an obligation-free chat!