By Christopher Thompson
Published Sunday November 23rd, 2008 – Union Leader NH Sunday News
All across the country, companies are searching for ways to reduce costs, improve efficiencies and get the best return on every dollar they spend. Due to the economic turmoil, many businesses have been forced to reduce their workforce, decrease marketing programs and reduce budgets in almost every department. Almost every company I have worked with or spoken to in the last several months is facing the same challenges.
Naturally, companies are quick to cut budgets and reduce staff in departments where there is minimal impact to top line revenue. We have all witnessed companies reduce staff that may not have a direct impact to revenue, but are critical to the operations and management of the organization.
There is one commonality I have seen amongst companies engaged in reducing budgets and cutting costs. The sales department is often immune to reductions of any kind.
I completely understand the fear many executives have with reducing sales budgets and having a negative impact to sales. During this period of time, every dollar counts and sales leaders are demanding their budgets and departments be left alone. And they have a very good reason to do so. I wouldn’t want to be the person who makes a decision that results in decreased revenue or negatively impacts the performance of a sales team.
Although it makes a lot of sense to shield the sales team from budget cuts and other reductions, I strongly believe that sales teams can step up, evaluate their costs and look for ways to reduce their expenses. The trick of course, is not to have your reductions result in decreased revenue. Here are a few suggestions:
Reduce Travel
If you have an outside sales force, travel costs make up a large portion of your budget. We all know there are obvious advantages to physically meeting with a prospect or customer, however there are many things that can be done without being there in person. Companies should scrutinize travel and implement new travel policies that crack down on unnecessary customer visits. In today’s world of email, online meetings and Internet, most sales can be done without being physically present. For many, it will be a major sales culture shift, but even if you asked your outside sales force to spend one day a week in the office making calls instead of visits, you would see a cost reduction.
Reduce Mailings and “Sending Information”
Not only is mailing literature to customers and prospects extremely expensive, it can also be equally ineffective. Most seasoned sales professionals know that when a prospect tells you to “send some info in the mail”, it is often nice way of saying no and the prospects will likely never read the information. I have also observed many sales teams sending large amounts of literature and packages filled with unnecessary documents that will never be reviewed by anyone. Remember, if it can be mailed, it can also be emailed!
Reduce Entertainment Costs
For sales teams that wine, dine and schmooze prospects and customers, reducing entertainment costs can have a major impact to your budget. Companies with an outside sales force often encourage sales executives to spend their allotted entertainment budget. I challenge entertainment costs and encourage sales leaders to look for ways to develop an “only if necessary” policy and develop specific criteria that must be used before entertainment events are approved.
Trim Back the Promotions and Contests
I am a major proponent of recognizing and rewarding performance and paying sales professionals handsomely for their accomplishments. Recognition and rewards are critical to effectively managing a sales team. Many companies have lush reward and recognition budgets and now is the time to take a hard look at all of the dollars being spent to evaluate their effectiveness. You’d be surprised how often I have seen sales people win something and they don’t even know how they won it.
Ask Your Sales Team For Help
Regardless of the topic, there is nothing more powerful than a group of people sharing ideas and brainstorming. Pull your sales team together and present the challenge. You need to reduce sales costs without impacting performance. It is highly likely your team will generate creative ways to reduce costs and most importantly, it will provide the opportunity for them to be part of the solution. You will naturally have greater buy in and acceptance if the ideas they come up with are implemented.
I know this is a very difficult topic for sales leaders and sales professionals to address and evaluate. Trust me, it is not something I like to do or discuss. Before any major decisions are made, be sure to look for ways to ensure the changes or reductions do not negatively impact sales performance. It is not easy to do, but there are many things we as sales professionals can do to tighten our belts and help our company weather the challenging economic times. It all comes down to looking for creative ways to do more with less.