Picture the scene; Some eight months ago I was working with a client who had seen a decrease in sales revenues over the preceding 18 months, and having tried everything they could think off the Board had invited me in to have an informal chat about what they might look to do next, in order to scope out some ROI based options for them.
Collating basic historical sales and projected sales figures and reviewing what had happened over the last 18 months (this took about 4 hrs.) it became obvious that the sharpest decline in sales corresponded to the hardest pushes in new business development.
Yes…that’s right. The harder the company worked to generate new business and increase their client base and sales revenues, the greater their drop in sales figures. This didn’t just happen once. It happened 4 times over a relatively short period.
Keen to avoid the pointy finger of blame as the Board started to look for causes of such outcomes, I quickly moved the conversation on to ask about their level of complaints, queries, and account management practises during this same periods.
Again, we could see spikes in the number of queries and complaints during the periods of added focus on new business development.
What had happened here is the same thing that is happening all across the sales world every day…
Managers see a drop in sales and the knee jerk reaction can be one or all off the following:
- Increase the pressure on the sales team to get new business using sales team briefings, micro management, management by numbers, swift changes in direction from the long term strategy
- Reduce prices
- Bundle products to give the appearance of a value added sell
- Buy lists of target prospects to start selling to
- Go through the sales pipeline and use price reductions to bring work in early
- Launch a new commission package for the sales team that is heavily weighted towards new business development
- Start to manage by numbers only i.e. number of appointments sat, numbers of calls made, number of orders in
- Fire the worse performing sales person in an effort to increase the motivation of the other sales staff (yes really!!!)
These activities, whilst giving the appearance of moving the sales team towards being able to secure more business, will typically have a negative affect on sales…why?
- The sales team receive conflicting messages – usually with a hefty dose of panic, threat and a vague message to increase their activity. However, rarely does this come with hands on support or strategic intent. Many managers at this stage leave it to the individual sales person to ‘do what they know best’ so as to avoid the fall out if any collectively agreed sales plan fails to produce the results.
- Reducing prices is not the way to increase sales and invoicing….if your sales team think it is then maybe you should be looking for a new sales team.
- Value added is exactly that – the prospect has to feel it is a useful proposition for them to take up. Bundling and over complicating the sales proposition with reduce the sales conversion rate every time, as well as lengthening the sales process.
- Selling to cold lists when you want a short term return? It’s not going to help now. This activity should have started 12 months ago…
- Sabotaging your future sales pipeline to bring in business today may solve today’s problem but will destroy the longevity and profit that has been nurtured over a long period…and will give your competitors a field day.
- Commission structures geared strictly towards new business will rarely see steady or exponential sales growth…because as fast as new customers are recruited, then existing customers are abandoned…steady sales figures at best, at worst you will see major peaks and troughs.
- Managing by numbers? Never! Managing by productive outputs? Always.
- Firing the worst performer to motivate the rest of the sales staff? If you run your sales office like Tony Soprano then way to go…if not, maybe that’s not the route for you to take to get the best out of your sales team.
Collectively, even if there was a small spike in sales as a result of any or some of these initiatives, rarely is it long lasting; furthermore, the real issue is that few organisations look at the impact on operations of such new business drives.
Typically these sorts of sales drives will see sales teams bringing in new clients on special deals, non-core products or services, potentially not hand holding the new client for as long as they would ordinarily. All these issues will be handled post sales by the operation team or the customer service team…typically teams set up to deal with existing clients and a steady trickle of new clients.This environment is usually run at near to full capacity, changes in workload can rarely be accommodated long term.
Checking resources and spare capacity and capability is a must before any new sales drive to try and avoid your new business sales efforts leading to a real decrease in sales revenues.
For more information about the quickest route to sustainable sales growth for your organisation call Carol on 0779 002 1885 or email firstname.lastname@example.org