When more is less and better is best: Print 21 magazine article

Knowing which way to jump during a sales slump can sometimes be counter-intuitive. Peter Barnet outlines the right strategies for sales teams to be adopting when times are tough.

I am absolutely positive that this discussion has gone on in most businesses around Australia in the last six months. Yes, there is a WFC (World Financial Crisis) so sales are tougher and decisions need to be made. What can we do to improve our sales performance? Can we sell our way out of the situation? Match-fit sales leaders, in any industry, have a handful of choices to make and, as is often the case, doing the right things may be counter-intuitive to what you initially feel like doing.

The natural thing you may feel like doing right now is to do more of the following:

Reduce costs (more cost cutting): This is an obvious and understandable response when sales drop off. You may look to decrease sales expenses, defer sales recruiting, lower commission rates or reduce sales headcount. All of these things will have an immediate impact on the P&L, and in the short term may provide some relief. However, think about the problem you have created in 6-12 months time when things start growing again. Your sales team will be at the lowest ebb and motivation will also be low, recruiting will still be hard and your ability to take advantage of the bounce-back will be limited. Reducing sales costs is a necessity at times but this should only be done with a plan as to how your rebuilding will occur, and what will trigger the timing to re-invest. Severe caution is recommended.

Increase activity (more calls): Seeing more people is one possible solution but only if all the calls are of the right quality. The most common result from the ‘more calls’ solution is typically more activity at less quality. Salespeople tend to look for quicker and typically smaller opportunities at a reduced margin to the business.

Focus on price (more discounting): One of the easiest ways to improve sales in any market is to cut the price. Indeed lowering price may bring decisions forward. However, in a slow or recessed market, buyers tend to look for ‘stability’ from suppliers, not lower price. I am sure your CFO could tell you almost to the week when the doors will shut if you continue on the ‘more discounting’ solution.

Also worth considering is how you will get your prices back up when you need to and what it does to your value proposition. You become a ‘quote and hope’ supplier with a commodity product. Value-add is the only strategy for long term growth.

Management energy on closing (more pressure): This is a very common solution at the moment. Salespeople in corporate Australia are in daily meetings to find out how they can squeeze as much as they can out of the sales pipeline. This short term management focus on too few is counter productive to filling up the sales pipeline as there is a lack of attention on opening new opportunities. It also results in salespeople defaulting to the easiest course of action to close the sale which is generally the smallest and least profitable option. Or worse still, the discounted option.

There is a better way
Each of the above ‘more’ strategies are just a quick way to look for a spike and, if you are lucky or good enough to get one, chances are it will not last! So what is the counter-intuitive behaviour required? What do courageous companies do when things get tough? Rather than do ‘more’, they look to do things in a ‘better’ way.

Get your cost structure right (better spending): These are great times to recruit well. There are still good people out there and they may cost less! Your variable sales costs should be only on what you need; get your salespeople involved to help you stop spending on ‘nice to haves’. The final cost you need to get nailed is a better commission plan. Make sure you are rewarding the right things. You can’t bank sales, only profit, so why not reward profit instead of sales dollars?

Focused activity (better calls): More calls on their own are not the answer. Instead better calls to the customers you must keep will reap longer term benefits. Combine this with planned calls and strategies for where you may be vulnerable. And where you can add value to help the client and win new business.

Focus on improving your value proposition (better value): The focus of your sales process and activity needs to be around your Unique Selling Proposition (USP) and value adds. If you don’t know what your USP is then you need to work on it. It’s important to make sure your customers have not forgotten why they picked you in the first place.

Management energy on ‘opening’ (better pressure): You need to work with your salespeople or get a professional to coach and mentor them to open more opportunities with the right prospects.  Remember, the customer pond has not changed - you just have to work smarter, not harder to catch the right fish. Don’t forget the golden rule of ‘Review, Refine and Repeat’. Keep reviewing and adjusting your approach to prevent competitors getting inside your sales cycle.

When times are challenging, it is hard to do what is right rather than what seems to be the quickest fix. The slowdown will not last so take the time to get better and sharpen your sales effort. Although the next few months will be tough, you will rebound quickly as things improve, generate higher levels of market share and build a more sustainably profitable business than the one you had 12 months ago – it’s what great sales organisations do in good times and tough.