From over 30 years of sales management consulting and training experience in the Australian market – across many industry types and market sectors, the concept of ‘sales strategy’ – either thought, taught or applied is weak or non – existent. This is often due to the relative disconnect between the academic and philosophical world’s understanding of the concept of ‘strategy’, when applied to the real world of selling.
For example, much of the strategic and marketing thinking in modern MBA programs is developed based on assumptions gained from fast moving consumer good markets and bear little or no correlation to business – to – business, or business to channel sales and marketing.
This naïve thinking can severely disrupt sales plans, and the ‘off – balance sheet costs’ can be astronomical!
Here are some of the costs of using a weak sales strategy for your business:
1. High Turnover Of Quality Sales People, Caused By Lack Of Or Inconsistent Direction
The high cost of sales attrition is primarily caused by conflicting expectations between company leaders, managers and the sellers and the market dynamic.
Often sales people are asked to spend more time on the road, with little or no strategic sales plan, direction or suitable training; whilst trying to constantly keep up to speed with their boss’ expectations for call reports, record keeping and database entry management into the company’s latest, ‘new’ sales CRM – supposed to be ‘customer relationship management’ but in essence ends up as ‘customer records management’, with no one in the company with any idea how to use this a strategic sales enabler or marketing tool.
Many sales tools used in this way are costing the company. Even when sellers have some spare time, it’s often taken up with more, unproductive administration—not with more sales. For natural sales converters this might appear ok, but many others ‘mediocre’ sellers stuck in the 2nd and 3rd quartile of the bell curve with little strategic input or direction, it can be very costly for them and the company.
The inability of many sales managers to translate the company’s business or marketing plan into a coherent short, medium and long term sales plan compounds this situation even more.
2. Lost Customers
Should my account managers be ‘hunting’ or ‘farming’?
We have found that many sales people are confused when it comes to how much time they should direct to prospecting for new customers versus looking after the ones they already have. This is especially acute when the company leaders start barking for ‘instant orders’, when there is a temporary blockage in the sales pipeline (aka weak order intake)
They are told to go out and get new business from the ‘x’ market, only to find the market has suddenly dried up, so then are told to try and maximise as many sales as they can from their existing customers. When they finally go back to these customers they find that they have defected to the competition. When asked why, the customer says: “well I haven’t seen anyone from your company for quite some time, so I took up the next best offer”. So not only did the sales person lose a customer, but seemingly to an inferior competitor – just because they failed to spend enough time with them or care enough to keep the marriage alive.
In simplistic terms, they were miss-directed by their leaders because they didn’t have or communicate effectively enough their sales strategy.
3. Weak Sales Growth and Margins
Often when sales people aren’t given enough direction or a consistent sales strategy that is linked to the well-engineered marketing strategy, they end up just selling to their comfort zone – promoting familiar products to their customer buddies.
Unknowingly, they haven’t realised – or been shown, that the products they are selling are legacy and outdated with weak customer demand and/or they are trying to sell these products and services into a declining or static market.
This causes pressure on sales volumes which due to increased competitor activity from competitors in these markets, produces a downwards price pressure which impacts on sales margins.
Did you know that if your sales people dropped their sales prices on average by just 10% with a gross sales margin of 20% they would have to find another 10% more sales volume to provide the equivalent gross contribution – not easy to find this volume in depressed markets!
So if a manager has not communicated and followed through on their pricing strategy, then weak growth and margins could result.
4. Massive Sales Productivity Decline Caused by ‘Disruptive Digital Technology’ and Meetings
For sales teams today, there is a lot of ‘unintended distractions that take the focus away from the important tasks that a successful key account manager has to do to grow the account.
Sales people and account managers are simply flooded with too much unnecessary and distractive data, and sales tools – most of which they don’t know how to use properly to enable them to construct meaningful and consistent growth strategies with their accounts
They are also confused with inconsistent direction from their leaders. One minute they are told to increase product penetration of x, y, z products with dedicated sales promotions, and then told to focus on customer satisfaction surveys of their top 20 accounts.
Here is another ‘distraction’ that I am sure does not happen in your business – where account managers are often asked to drop everything at a moment’s notice and line up a series of meeting with the key players of their key accounts, as their overseas vice presidents will be in town shortly and they want to meet these very important customers.
Interestingly, many of these managers just happen to be in Australia during their winter months, and then leave afterwards back to their home lands, without any follow up. What a waste of time and money!
After all of this the account manager is expected to pick up the rhythm again where he left off a month earlier and get back to implementing what he was doing before the disruption.
Overall, whether due to disruptive digital technology, misdirection from the higher-ups, or lack of consistent goal, having a poor sales strategy can cost much more than just money. Keep updated because in our next blog post, we will divulge the solutions that will enable account managers to address these issues, and ultimately implement a strategic sales strategy for the business.
To learn more about the leading Sales and Negotiation Training program in Australia, contact us today at 1300-833-574 or email us at firstname.lastname@example.org