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Cutting sales costs, not revenues

Courageous companies can use the downturn to make their sales operations not only less expensive but also more effective.

Cutting sales costs, not revenues article, cost cutting sales, Organization

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There’s a reason companies fear experimenting with the sales force: it is the engine that drives revenue. No matter how patched up or spluttering that engine may be, the thought of overhauling it fills senior executives with dread. To keep sales flowing, companies will make piecemeal ongoing repairs as long as they can.

Yet extraordinary economic times force companies to take every opportunity to cut costs and arrest declining revenues and margins. Unfortunately, fear and the belief that it isn’t possible to be both fast and precise often result in two common mistakes: trimming only back-office staff and functions or instituting across-the-board cost cuts that include frontline sales reps. While both mistakes are understandable, they’re likely to yield disappointing results.

Reducing back-office sales staff and functions in the belief that this will hurt revenues less than reducing the number of frontline sales reps may have worked in the past, but greater complexity has made support functions essential to effectiveness. Also, not all sales efforts are equal, especially in a downturn. It’s crucial to determine where cuts will hurt customer perceptions and adversely affect their buying behavior; otherwise, important investments will be eliminated while low-value ones survive.

To avoid these mistakes,...

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