:: Words of sales test wisdom from those who know ::

In sales and marketing, when it comes to growing revenue and cutting costs, we usually separate our thinking. Either we do one . . . or we do the other.

But not both. Right?

But why not both?

This concept of simultaneous cost-cutting and revenue growth requires us to stretch our minds a bit and to understand the dynamic that drives corporate-level decision-making with regard to a firm’s sales force.

The McKinsey Quarterly research report of March 17th 2009 contends that companies fear experimenting with the sales force for one big reason – your sales force is the engine that drives revenue. The thought of overhauling that engine fills senior executives with dread, even if the engine barely chugs along. Rather than take the bold step of restructuring, companies make patchwork repairs as often and for as long as they can.

But times have changed extraordinarily. And extraordinary times demand extraordinary measures to cut costs and to stop declining revenues and margins, and that cost-cutting includes the sales force.

Often, the decision process is driven by fear and disbelief. Surely you can’t be both fast and precise. McKinsey notes that fear and disbelief results in two common mistakes: trimming only back-office staff and functions or sledgehammering cost cuts that deplete the frontline sales team.

Both actions will likely yield disappointing results.

So companies engage in precisely the wrong kind of behavior at a critical time in the business cycle. They are common self-destructive errors, and the decisions are logically arrived-at. And that’s the paradox.

But it’s possible to short-circuit this cycle of corporate self-mutilation. It takes boldness, fresh thinking, and the proper perspective with regard to the meshing of the company’s strategy, process, and people. Strategy, Process, and People constitute the triad of Sales Effectiveness:

1. Strategy. McKinsey rightly proposes that companies do more research to identify the most suitable and most profitable customers and craft their strategy to attract, service, and retain these best customers.

2. Process. Even top tier companies don’t all need or want the same service levels. Some may be satisfied with telesales engagement; another may want face-to-face. Some may want technical engagement, others not. So McKinsey proposes that companies set out their process for engagement based on the needs of each customer segment. They say this approach alone has been shown to reduce sales costs by between 10 and 30 percent – with no negative impact on revenue. And these savings are sustainable.

3. People. Beyond a vague goal of reducing costs, companies often cut staff without really understanding who they should cut or why they should cut them. And without a clear understanding that cuts will transform the company’s very structure. This leads to three problems: 1) Do you know enough about how your customers want to be serviced to know who to cut; 2) Having decided to cut, do you know who to keep; and 3) Do you know what you want your company to look like after your cuts, with regard to new structure, new role requirements, and new sales functions?

We know that having top performers in all the right roles delivers 67 percent more revenue than having average performers, so when making these major transformational changes in the midst of harsh economic times, it’s crucial to get it right. (McKinsey 2000)

Getting it right means “Focus resources where they make a difference . . . Small changes can have large unintended consequences, so companies must walk a fine line between reducing expenses and maintaining resources sufficient to protect current revenue and future growth.”

SalesAssessment.com’s Fit-4 Reports ensure that you focus your human capital – your sales people – where they make a difference. You put the right people in the right roles. This means that once you have your strategy and process design defined, you can now be certain that you have the right people available to perform each of your roles to maximum effectiveness.

The result? You either increase revenue for no additional fixed costs; or you reduce fixed costs for no reduction in revenue.

The benefits can be huge – 10-30 percent cost savings for better customer engagement processes; 10-30 percent savings for employing top performers in the right role (or 67 percent revenue growth per head). You get the same return when you develop existing staff into top performers, provided that they are capable of filling the role.

So you can cut costs and grow revenue simultaneously. It’s a matter of embracing change.

McKinsey sums it nicely: “Sales teams typically resist change; they not only worry that it will imperil relationships with clients and revenue but also wonder why a company would risk tinkering with a sales force that gets the job done, even imperfectly.

“These teams fear the unknown rather than change itself. And the unknown is particularly frightening today: the order books of many sales reps are drying up, and their bonuses – and sometimes jobs – are on the line.

“What if sales teams knew that change would improve customer satisfaction and retention or that profit margin would widen, sales costs fall, and compensation increase?”

Simultaneous cost-cutting and revenue growth is attainable. It requires the ability to motivate sales teams to embrace change. It also means recognizing that the last great frontier of cost-cutting and revenue enhancement resides in the human capital segment of your value chain. It requires equal parts boldness, creativity, and vision to mesh strategy, processes, and people to achieve Sales Effectiveness. And when you do, you improve your customer satisfaction, your top performer selection and retention, and your profit margin.

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