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Revving Up Sales ROI for a Downturn
Executive Summary
  • With a downturn underway, companies must secure the current revenue base and selectively play offense to set up medium-term growth.
  • Leading companies are addressing four aspects of their commercial base: better match the cost of sales to the market opportunity; raise individual sales representatives’ productivity; aggressively manage gross margins; and optimize the sales structure and mix of resources.
  • The goal is to structurally reset the commercial cost base and position a company to gain market share during the recovery, while avoiding cost actions that hamper the recovery and are difficult to unwind.

The breadth of risk and uncertainty due to the Covid-19 pandemic ranges from health threats and financial hits for households to the stresses of new working environments at home. All companies face management challenges, but this downturn has different characteristics, and the effects vary across departments and functions.

Commercial organizations, especially in business-to-business markets, face a dual challenge of a sputtering economy and less contact with clients than before the pandemic. Each week brings more canceled orders, departed customers, dried-up pipelines, demands for immediate price concessions, and pressure to reduce commercial costs.

The magnitude and type of response required will vary by industry, region and the severity of the company’s situation. Yet companies must take care to avoid two harmful tacks with their commercial teams in a downturn. One tack involves sweeping, uniform cuts to all sales and administrative functions. This hits commercial teams in the form of cuts to variable compensation, slashed travel and expense budgets, or indiscriminate layoffs born out of desperation. The other, equally dangerous tack follows the opposite impulse: doing nothing out of fear of unintended consequences to revenue.

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A more effective approach consists of securing the current revenue base, selectively playing offense to set up medium-term growth, defending profit margin, and optimizing the commercial cost base in a surgical, systematic and often transformational manner. This will shore up the return on investment (ROI) for sales operations. But before a company can execute the right moves, it must define specific goals for the evolving situation.

Leading commercial organizations plan scenarios based on a deep understanding of what drives customer lifetime value and ultimately shareholder value. They ask: What affects valuation more, profit margin or revenue growth? The answer guides how companies make smarter trade-offs as cost pressures increase.

This exercise enables commercial leaders to develop a clear strategy on where to cut and where to invest in a downturn. The strategy also informs how to adjust as liquidity and cost pressures evolve. Based on the overarching strategy, companies then address four aspects of their commercial organization to improve both efficiency and effectiveness, setting themselves up to gain share during and coming out of a downturn:

  • Better match the cost of sales to the market opportunity;
  • raise individual sales representatives’ productivity;
  • aggressively manage gross margins; and
  • optimize the sales structure and mix of resources.

Companies that excel in all of these areas can meaningfully improve their commercial return on investment (see Figure 1), both with near-term cost actions and long-term revenue growth that stems from better resource allocation.

Figure 1

How one industrial company improved its commercial return on investment

How one industrial company improved its commercial return on investment

In each area, there are moves to act on now and medium-term moves to plan now. The goal is to structurally reset and realign the commercial cost base and position a company to gain market share, while avoiding maneuvers that would be difficult to unwind when the economy eventually recovers.

Act now for results this month 

  • Cost of sales. Because the break-even points for the optimal routes to market often change during a downturn, you should shift select customer segments and activities to inside sales teams, self-serve digital channels or an indirect channel. Then align selling capacity in each channel for the current market reality and customer priorities.

  • Rep productivity. Zero-base sales calendars and eliminate time sinks, such as unnecessary internal meetings, to free up more time with customers. Reinforce basic disciplines. Make sure you understand what drives rep performance, then remove the low-potential low performers to improve costs while limiting the net effective reduction in sales capacity.

  • Gross margins. Plug margin leakage, institute stricter discounting controls and maintain list-price integrity in alignment with your strategy for each customer segment. At the same time, look for ways to cultivate key customers without cutting prices. Small gestures in difficult situations can permanently change the nature of customer relationships, and customers will remember these well after the crisis.

  • Structure and resource mix. Quickly shift activity away from low-margin or unprofitable segments, as well as high-churn or transactional business, and toward current customers with opportunities in renewals, cross-selling and upselling.

Plan now for the coming quarters

  • Cost of sales. Set up or expand an inside-sales operation to cover more accounts and new activities, such as lead generation. Accelerate investments in fully digital sales channels to replace higher-cost channels and better support high-priority customers.

    Improve the efficacy of pay-for-performance variable compensation by making quotas more accurate, steepening incentive curves and raising compensation ceilings to attract the right people and allow your selling cost base to naturally adjust with the cycle.

    One manufacturer, for instance, shifted capacity to the fastest-growing customer segments, then streamlined coverage, capacity and compensation in the slow-growth segments with a disproportionately high sales cost. This cut total selling costs by 10%, with no reduction in revenue growth.

  • Rep productivity. Expand time spent with customers by changing who does what, and investing in process automation and digital tools that can eliminate manual work. Ensure that reps focus on the right accounts by refreshing segmentation based on account-level total addressable market, share of wallet, modeling of prospects that resemble current customers and predictive win rates.

    Codify winning sales behaviors and profiles of the best sellers to guide training and recruiting. At a major technology hardware company, A-quality reps were 30% more productive than B-quality reps. Detailed analysis showed the difference stemmed largely from three factors: the manager’s total coaching time, consistent precall planning and the range of products reps tried to sell. Armed with this data, the company could confidently put initiatives in place to close productivity gaps.

  • Gross margins. Develop and roll out sales plays that shift the focus to the highest-value customers and segments, and use account planning to upgrade the product mix within accounts. Use dynamic deal guidance to improve the efficacy of discounts, while maintaining win rates through data-driven analytics.

    At a leading software company, better discounting discipline alone reduced negotiated discounts by three or four percentage points, all of which fell to the bottom line.

  • Structure and resource mix. Shift the mix of resources to a higher share of frontline “quota carrying” reps and other critical roles. At the same time, break down silos within the commercial organization, clarify roles, and adjust the breadth of the product portfolio that sellers are allowed and trained to sell.

    At one diversified industrial company, the combination of these tactics led to a 15% reduction in total selling costs, while increasing the organization’s effectiveness due to a simpler customer interaction model and enhanced cross-selling.

Efficient sales without undue risk

Like all economic disruptions, today’s crisis will ease off at some point. In any scenario, the right playbook allows companies to meet their immediate needs by increasing their commercial teams’ efficiency without undue risk to revenue, employees and customer relationships, and with an eye to gaining market share throughout the economic cycle.

That playbook hinges on measuring and growing sales ROI in each customer segment, each channel and each industry. This tool kit offers companies design options for improving sales ROI based on their unique situations. At one extreme, companies can use the playbook primarily to take cost out of commercial functions and reduce the denominator. At the other extreme, they can reinvest all of the savings into the highest-return areas to increase the numerator. Most companies should land somewhere in between, reinvesting some of the savings in high-potential areas of growth.

Related Insights


The global Covid-19 pandemic has extracted a terrible human toll and spurred sweeping changes in the world economy. Across industries, executives have begun reassessing their strategies and repositioning their companies to thrive now and in the world beyond coronavirus.

David Burns, David Schottland, Justin Murphy and Tom Whiteley are partners with Bain & Company’s Customer Strategy & Marketing practice. They are based, respectively, in Chicago, New York, San Francisco and London.


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