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Making Sales Organizations More Cost-Effective in Lean Times February 2003 (Financial Executives International) Ted Briggs, national head of the sales and marketing practice at Sibson Consulting, talks about effective targeting and competing in a tough environment to FE Editor-in-Chief Jeffrey Marshall. Ted Briggs says that now, more than ever, financial executives are involved with sales operations -- especially under-performing ones in high-tech and telecommunications industries. "These days, the approval around a sales leadership model has frequently migrated to an operations person, even to a controller or another financial-control type," he says. "There is a need to ensure that costs and returns are in line with projections. The pressures are tremendous, which can lead to interesting decisions by organizations -- in some cases, this gets further and further away from the actual transactions."
Briggs believes most sales organizations are inefficient, but calls inefficiency "a relative term." Lack of skill and an inability to do proper targeting become more obvious in weak markets, he says, and "people are used to identifying opportunities for the fastest sale -- they may not be targeting the best sale. They may not be competing properly. As organizations reduce headcount, especially in sales, the existing sales force has to spend more time on busywork, determining who the contacts are, for instance, instead of negotiating deals and proving the value proposition. You have to prove that there is a return."
While most companies set some kind of a revenue goal, or a contribution or margin target, "We've found that many organizations in this market are still establishing growth objectives and profit objectives to appease analysts," Briggs says. "They end up with an over-allocation of quotas, aggressive pricing and margin targets. That impacts pay and motivation. The goals don't have to be impossible to produce that effect -- even a stretch of 5-10 percent" can be high enough to harm morale.
How can you sell effectively in a terrible environment? "You can't replace the concept of relationships," Briggs argues. "The best [answer] for those environments is customer needs identification, so you have the ability to [manage] the issues as they come up. Customers know when sellers are over a barrel. We're seeing a reassessment of financial decision-makers to see if the metrics they are using for performance and productivity are fitting in this environment."
In tough times, customers "can get pretty demanding." That suggests that companies need to work hard to earn their business, but too often, "they don't do research into customer requirements. When you have strong demand, that can mask the need to actually sell." When things turn down, Briggs says, organizations need better communication between marketing and sales.
Good salespeople need to be freed up from mundane administrative work, Briggs maintains. "The critical area is access to customer information. They know how to target [customers]. The ease of the transaction is also critical -- paperwork and credit clearance will be obstacles." Still, when the transaction is encountering issues at the point of closing, or collection has become a problem, the salesperson on the account may be required to step in.
It's critical in rough times to continue to build sales strength and not simply make cost containment the only goal, he argues. "You need to know where you are cutting costs -- if you're lopping off costs without understanding the impact, you might get rid of good talent in an under-performing unit. Organizations tend to consider past performance as the only indicator [of success], but they really should evaluate salespeople in relation to the organization's future competencies" and define the appropriate skill sets.
Too often, Briggs contends, the chosen role of finance executives is to exercise "cost-containment of the revenue producers. That can be damaging to top producers. When companies start to impose aggressive targets on things like minimum performance levels, that can start to impact top performers," who may elect to leave.
Subscribe to Financial Executive! The flagship publication of Financial Executives International (FEI), this premier magazine provides senior financial executives with financial, business and management news, trends and strategies to help them work better, faster and smarter. For more information about FEI, visit www.fei.org.
2003 Financial Executives International. Reprinted with permission.
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