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Heating up sales in a downturn

Heating up sales in a downturn

One powerful method to boost both revenue and margins is to raise the productivity of your sales force.

  • min read


Heating up sales in a downturn

When business conditions turn harsh, companies need every dollar of revenue they can find. But is there any way to rev up sales without giving away the store?

One powerful method to boost both revenue and margins is to raise the productivity of your sales force. In good times, increasing sales force effectiveness helps companies grow faster; in a downturn, a scientific approach that puts systems around the art of selling can be critical to keep revenue flowing without cutting margins.

The first step is to develop a data-driven "heat map" of accounts and prospects. Every company has its best customers, those that are the most profitable and typically the most loyal. Sales executives usually identify them by analysing win rates, revenue, relative market share and profitability among customer segments.

But a downturn like this one demands an even sharper focus. Managers and sales representatives need to know exactly which customers will continue buying. Which have strong cash positions, good access to credit, or both? Which companies or individuals should be your best customers?

In a down market, many companies are re-evaluating their suppliers. That creates opportunities to steal share from a distracted competitor.

All these high-potential customers are the hot spots in an otherwise cooling economy. Once you have a sense of who they are, you can draw a heat map of the market to guide your sales efforts.

Managers can screen out the opportunities that don't fit the map and focus reps' efforts on those that do. With the longer sales cycles of a downturn, companies' selling resources are stretched across more accounts, and managers have to make certain they are aimed at the right targets.

A few months ago, for example, a broadcasting company refocused its advertising sales team on a few hot segments. One was health-care providers, which appeared to be less affected by the downturn. Another was speciality retailers, which desperately needed advertising to counter declines in consumer spending.

After just two months, sales in the broadcaster's two test regions were up 90% and 450%.

The heat map also helps to reassess territories and quotas. Do territories correspond appropriately to the map? Are quotas realistic in light of the new conditions?

One mid-size network equipment company we studied had been pursuing 15 different industry segments. But its heat map showed that just five of those segments accounted for most of its revenue and profits. So it redesigned territories and reset quotas accordingly.

With longer sales cycles, managers need to ensure that reps have realistic assessments of when they expect sales to close. The key here is careful forecasting, tracking, and discussion of major opportunities.

Even if elapsed time increases, the company should have internal benchmarks on conversion rates from one stage to the next, and historical win rates relative to major competitors—and should apply those benchmarks rigorously.

Some companies create a "deal war room", with the heat map on the wall, to ensure that this kind of discipline is applied consistently.

Sales managers face two other challenges in a down market. One is to maximise the time that reps spend in front of the high-potential customers highlighted by the map.

You may want to measure the time that reps are with customers compared with total time. If it is less than what you think it should be, or less than benchmarks for your industry, consider channelling some of the reps' administrative functions to support staff or simplifying the systems that the reps are expected to deal with.

A few years ago, Cisco Systems streamlined its sales reps' administrative chores and freed up a few hours of additional selling time in each rep's week.

The other challenge is controlling costs, which may entail streamlining and rationalising the sales force.

Most companies use a variety of sales channels: enterprise or other direct sales, telephone sales, dealers or value-added resellers, and the Internet.

Detailed information about the behaviour and profitability of customer segments and microsegments from the heat map, as well as data about the productivity of existing selling efforts allow sales executives to decide how best to deploy these different resources.

To keep costs low, for instance, a company may decide to beef up its telesales operation and replace underperforming in-fielnd reps.

No downturn lasts forever. When the recession thaws, your sales organisation should be positioned to capitalise on pent-up demand.

Companies that win during turbulence often recruit top sales talent from competitors, or may even pursue acquisitions and integrate the acquired company's best sales reps with their own.

A heat map helps show the way to that future.

Satish Shankar is the leader of business consulting firm Bain & Co's Southeast Asia consumer products practice. Dianne Ledingham is a leader of Bain & Co's sales force effectiveness group, within the firm's customer strategy and marketing practice area. Adapted from Bain & Co's forthcoming book, Winning in Turbulence, published by Harvard Business Press.

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Winning in Turbulence

Learn more about how companies can navigate through turbulent times and succeed as the economy improves.


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