Predictable Mistakes
A global recession is underway. Organizations everywhere want to know the
answer to one question: "How can we sell our way out of trouble?" Doing more of what you've
always done isn't going to help. What works in good times may actually be counterproductive in
hard times.
There are four predictable mistakes that all companies are tempted to make:
1. Wait and See
Inaction is a sure-fire strategy for failure, but many substantial companies have gone down this
path because they predicted that the recession couldn't last. As one CEO said, "For some of us,
the light at the other end of the tunnel was a train coming the other way." Inaction is a bad
strategy for good times, and in a recession it's suicidal.
2. Price Reductions
The second strategy to avoid is price-cutting. Less sophisticated
companies assume that by cutting prices, volume will increase. It's
not that simple. Many organizations have found too late that the
extra volume generated by price reduction doesn't compensate for
the reduced margins.
In a recession, strange things happen to the price/volume relationship.
In tough times, paradoxically, people often choose to pay more for products and services than
they would normally. That is because in a recession, risk becomes a bigger concern than price.
Mistakes are costly in good times, but in a recession, they can be fatal. If customers are willing to
pay a premium for safety, cutting your prices won't necessarily increase your sales volume.
3. Advertising
Under the right conditions, advertising can be an effective strategy for countering recession.
With cheaper consumer products, well-designed and sustained advertising campaigns do bring
results. But beware of attempting to contain costs by reducing either the coverage or the
duration of a campaign. Half a campaign doesn't bring half the results. Advertise selectively by
all means, but don't advertise partially.
4. Activity Management
There's an assumption among sales and marketing
management that a direct link exists between sales
activity and success. More calls equal more orders. After
all, if someone can make 10 sales calls and bring in two orders, then by increasing their activity
level to 15 calls, their order rate should increase to three ... right?
Wrong. For business-to-business sales where the products are costly, the customers are
sophisticated, or the selling cycle is several calls long, activity level is a poor predictor of success.
The strategy of increasing activity levels brings with it some counterintuitive penalties and side
effects.
These include:
Unproductive Reporting Systems
In order to increase activity and check that the increase is maintained, management demands a
detailed call-reporting system. Salespeople and managers spend considerable time documenting
the new activities. As the recession worsens, work patterns change to the point where the time
spent on reporting eats into selling time.
Focusing on the Wrong End of the Cycle
One consequence of falling sales volume is that managers become desperate for business and give
most of their attention to those accounts that are nearest to closing. Activity becomes
concentrated on the calls late in the selling cycle where a decision is imminent. The other end of
the pipeline receives much less attention. Yet the early calls of the selling cycle offer the greatest
potential for minimizing the effect of recession.
Consider this: If the first part of the selling cycle
is handled badly, there is no closing part. And, with any pipeline process, what you get out at the
end ultimately depends on what you put in at the start.
Selling Not Coaching
The worst consequence of the drive for increased activity is that managers try to become super
sellers and spend their time trying to close business rather than developing and coaching their
sales teams. In a recession, most organizations spend significantly less time in coaching and
development activities. But the sales managers who are able to keep their numbers up during a
recession are the ones who invest effort in coaching their people-not the ones who go out
selling.
In hard times, sales and marketing organizations that refuse to change find that change is forced
on them. A business-as-usual approach won't work in a world where the market refuses to
behave as usual. In every recession in history, some companies have failed and others have
prospered.
Copyright © 2009. The Huthwaite. All Rights Reserved.
About Huthwaite
Huthwaite is the world's leading sales performance improvement organization. Founded on
scientifically validated behavioral research, our methodologies which include the internationally
renowned SPIN® Selling, guarantee sales success. Huthwaite assesses your organization's needs
and develops customized sales performance improvement and coaching programs that drive real
business results.
Huthwaite…Creators of SPIN® Selling.
For more information about SPIN® Selling and other Huthwaite products, go to www.Huthwaite.com
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