The slow down in the nation's economy is affecting the confidence levels of consumers, executives and employees. Don't be soft during these changing times; the right product, service and/or solution will sell in any economy.

A good place to start is to evaluate the performance of your sales force. It is easy for a sales force to look great in a booming economy and weak in a slowing one. Furthermore, since sales representatives are the most vulnerable to feeling the effects of the negativity and pessimism on the street, they need your support and leadership now more than ever.

Communicate with your sales people and let them know what you expect from them. You will soon recognize that efforts to support and improve your sales department will create a multiplier effect that will ripple success across your entire organization. This article focuses on how using a sales management audit can increase the efficiency and effectiveness of your sales organization through the most difficult of times.

Please send us your suggestions for future newsletters and seminars. If you would like to discuss this topic or give us feedback, please contact me at 781-449-8366.

Best Regards

Jeffrey S. Davis
Chairman & CEO

Increasing Revenue in and Slowing Economy

All too often sales people and management use a slowing economy as an excuse for their organization's failure to increase revenue and profitability. They justify below par performance by saying, "People are not buying like they used to...clients are putting off their decision...it takes us twice as many cold calls to make the same amount of sales as last year." This negative attitude will spread like a virus to everyone in your organization causing frustration and ultimately affecting interactions with clients and prospects and eventually overall sales.
Successful business leaders recognize that the changing economy presents an opportunity to increase market share and/or expand into new markets. Management succeeds if they show a leadership style that energizes their employees and emphasizes a commitment to growth and profitability that transcends the current economic environment. In a slowing economy, companies typically cut back on non-critical expenditures such as advertising, human resources and new technology, in an effort to reduce costs. Forward thinking managers recognize that they can negotiate better deals, build stronger brand awareness and use technology to optimize the effectiveness of their sales organizations during economic downturns.

Periodic Sales Audits

We tend to think of an audit in financial and accounting terms, but the concept can also be applied to the sales department of your organization. It is important to select a skilled sales auditor that is outside the sales department, since objectivity is needed for a fair and accurate assessment. Although hiring an outside independent consultant would be an additional expense, it is one that may quickly pay for itself through increased performance in sales. Furthermore, sales audits should be both preventative and corrective and should be performed on a regular basis as a way of creating continuous sales improvement.

Auditing sales force management involves examining every element of your sales department including the linkages with other departments within your organization. The areas of a successful audit include: sales management and leadership, the market factors, departmental integration, sales organizational structure, recruitment, retention, compensation, development, morale, planning, technology systems, reporting and sales forecasting.

Sales Management and Leadership

Don't always blame the Indians; it may be the Chief. The starting point of your audit must be leadership since making a fix here will make the most effective positive impact on your sales organization. Remember, good sales people are not necessarily good managers. Indicators of good sales managers are: they hold regular sales meetings. They structure these meetings so that their staff leaves not only with clear expectations but are also smarter, more focused and motivated to work harder. Sales managers should also understand that not all sales people are created equal. Some open doors, some close deals; others are great at writing and reporting. Sales managers can spend most of their time helping their people close deals, but they should also know what they have for talent, allocate work accordingly and be ready to step up to the plate to fill the void as needed.

Don't make the mistake of promoting your best sales people to a senior management position without assessing their management and leadership capabilities. Although well intentioned, shifting the talented salesperson from the marketplace to the back office prevents him/her from doing what he/she does best: selling.

Recruitment, Retention & Compensation

During the recruitment and selection process, a company must examine whether the present sales force is adequate in size, compensation and functionality. It is also important to consider whether the company has experienced a high turnover rate and if it does, are recruitment resources adequate and efficient.
Your employees cannot live on praise and promotion they need adequate compensation.

Compensation plans must be fair, flexible and easy to understand and administer. The best incentive plans are creative, motivating and reward both individual and team accomplishments. If your plan focuses too much on the individual, your sales people can work against each other. Likewise, having too much of a team focus can take away from individual incentives. This same delicate balance needs to be accomplished in determining the correct mix of base salary and commission. If your base is too high, your sales people won't stay hungry.

In addition this system of compensation must be supported with periodic performance reviews and a systematic approach to human resource management. Employees remain with their employer longer if they see and understand the link between their contribution to the company and their compensation and benefits package.

Skill Development and Motivation

It is often tempting to cut down on the amount of skill development being done during slow economic times. If anything, you should increase development since your sales people need a higher level of skill if they are going to sell more in a market with fewer active buyers. Furthermore, since sale representatives are the most vulnerable to feel the effects of the negativity and pessimism on the street, they need your support and leadership now more than ever. You will soon recognize that skill development can be a powerful confidence enhancer and motivating force for the entire company.

Consider for a moment the offensive front line of the Denver Broncos that recently lead their team through two consecutive super bowl victories. Not one of these athletes was a top recruit coming out of college. Yet their success is attributed to a system of skill development that can turn average players into top performers. Your sales people require this same level of development if you want your business to succeed.

Skill development should be creative and fun, and it should include selling as well as negotiating skills. Programs need to have specific targeted goals and little wasted time.

Departmental Integration

Internal factors involve linkages of sales with other departments in your organization and the firm's marketing mix. What is the organizational structure of the firm (who reports to whom)? Are there good communications and relations between the sales department and other departments in the organization? What is the role of personal selling in your marketing mix? These interdepartmental linkages are all crucial in understanding the existing system and how it accomplishes your company's mission.

Sales Organizational Structure

The Auditor needs to determine whether your organizational structure is appropriate for your specific business needs. Does this organization adequately service the needs of your customers? For example, in terms of sales territories, a company must evaluate whether existing territories are meeting their objectives, and whether the routes for these territories are used efficiently.

Determining the optimal organizational structure takes more than just looking at the company's organizational chart. It requires looking at and evaluating both the formal and informal roles and responsibilities of your employees.

Sales Planning

When auditors review the sales management planning system, they look at the sales department objectives, program and its implementation. Are the objectives clearly stated, measurable and realistic? Is the program appropriate given the firm's resources and opportunities? The firm's marketing and communications campaign must be closely linked and coordinated with sales efforts such that they are always working together and/or in complement. In addition, the operations unit must be involved in planning such that they are prepared to increase capacity during marketing campaigns and sales promotional activities. All of these considerations should be addressed in the company's annual marketing plan, and sales management should play an active role in its development.

Technology, Reporting and Forecasting

If your sales organization still uses antiquated methods of collecting sales and competitive data on new prospects and customers, such as 3 x 5 index cards and a Rolodex with hundreds of business cards of your contacts, it is time to open your eyes and recognize the advantages of using contact management systems. You can bet that your competitors are using state-of-the-art systems and contact management software to control and manage their sales processes, reporting and marketing data. However, purchasing the software for your company is not enough. To get positive results your organization must show a commitment to the consistent and correct usage of the software across the board.

Sales forecasting and analysis are critical factors to the success of any organization. If management does not have access to reliable forecasts, it should not attempt to make decisions on staffing levels and/or financing for growth. This is a typical area of weakness for most entrepreneurs. They either have no system of forecasting or they use gut estimates and guessing games. Companies should have a firm grasp on not only these results but also how to apply them to the existing cost structure of the organization. Issues with forecasting can be resolved either by investing in software management tools or hiring sales managers who have a firm grasp on statistics and probability analysis.

Don't be soft during these changing times; the right product, service and/or solution will sell in any economy. Use the slowdown to your competitive advantage. Realize that an independent skilled sales auditor will uncover issues that are holding your company hostage and preventing healthy sales growth. Investing in a sales force audit will allow your company to increase sales and profits in any economy.

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MAGE's Breakfast Seminar Series
"INCREASING SALES IN A SLOWING ECONOMY"
on Wednesday, May 2nd, 2001
7:30 - 9:30 AM
Newton Marriott, Newton, MA
Presented by:
Jeffrey Davis, CEO and Chairman. MAGE, LLC.
Steve Kotler, Senior Consultant, MAGE, LLC.
Anne Wallace, Senior Consultant, Mage. LLC
For information or reservations visit us on the web at:
www.mageusa.com or call us at 1-800-USA-MAGE
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Announcements

Please join us in congratulating senior associates Matthew Levy and Dana Schneider for their recent promotions to Principal at Mage, LLC. They have proven to be invaluable assets to our organization.

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