Even in good times, life in a sales organization is filled with short-term deadlines and pressures: sales per quarter, sales per rep, did she or didn’t she meet quota. As a sales manager once said to me, “In this job, if you don’t survive the short term, you don’t need to worry about the long term.”
So, it’s not surprising that, in the current crisis, sales managers daily receive advice about the short term: “3 Steps to Survive the Downturn . . . 4 Ways to Embrace Your Customer . . . 5 Ways to Do Online Events,” and so on. These suggestions are relevant: survival is at stake for many businesses. But eventually the pandemic will abate, and you must live with the resource decisions you make now.
Sales managers’ responsibilities extend beyond keeping the lights on. Their leadership makes a difference across the business because, for better or worse, selling activities always affect core drivers of enterprise value. The current frightening hiatus from business-as-usual is an example. In thinking about how to restart business, sales managers—whatever else they do—should pay attention to the following:
Cash and Selling Cycles. The crisis has demonstrated, painfully, the importance of cash. As the song in the musical Oliver puts it: “Money in the bank, that’s what counts / Money in the bank in large amounts.” The selling cycle is usually the biggest driver of cash out and cash in. Accounts payable accrue during selling, and accounts receivable are mainly determined by what’s sold at what price and how fast.
In surviving and recovering from a crisis, increasing close rates, the efficiency of a sales model and its segment focus are vital activities. Consider: what’s the impact on your company from shortening selling cycles and accelerating time-to-cash by 1 week, 2 weeks, or more? Who are the customers and segments where that is more likely? If you don’t know, now is the time to find out. It’s also the time to work on better customer onboarding and training practices that can accelerate time-to-productivity for your sales team and company after the crisis.
Scope and Customer Selection. “Scope” is the strategy term for the choices companies make about where to play. Every firm is always making it easier or harder for different types of customers to do business with it. In practice, scope is not determined by senior executives sitting in a room and discussing the market: that’s brainstorming. Scope is determined by the daily call patterns of the sales organization: where that time, effort, and selling expenses are or are not allocated.
No company sells to a market. It sells to specific customers. In crisis situations, you can’t do everything and must set priorities. Make sure that key customers are aware of supply disruptions or other problems. Don’t assume that, in a pandemic, “everyone knows”: they are absorbed with their own business issues. Big accounts drive a disproportionate amount of revenue at most firms (the 80:20 rule), and reliance on large customers has grown. Publicly traded U.S. companies must disclose any customers that account for more than 10% of their revenues. A recent study found that, in many industries, these buyers were 20 – 25% of sales by 2015, up from less than 10% two decades earlier. In other words, even before the pandemic, there was a big change in the customer portfolio of many companies.
Your salespeople must send consistent messages to customers, not ad hoc responses. Don’t leave this aspect of crisis management to emails about your “commitment” to customers, or telling reps to “stay focused and take care of customers.” That’s an invitation for fragmented responses, multiple promises, and longer-term costs to the brand and strategy. Managers must manage. In an extended disruption, it may even be in your long-term interest to find supply alternatives for a customer.
Data and Process: To do the above, you need good customer data: the profitability of different accounts, your cost-to-serve customer A versus customer B, who at accounts are the buyers and influencers with whom we must stay connected, and so on. My experience on Boards is that visioning discussions are fun, and quarterly financial results are tracked closely. But the customer information required to survive and then restart the business after a downturn is often lacking. One reason is that in many firms that data is effectively the “property” of the individual rep, not the company, making it difficult to set segment and customer priorities.
Use the current time to get this data and establish a process for keeping that front-line information flowing and timely. A key process is performance reviews, because much of the relevant information is at the account level. When sales managers do sloppy reviews, they perpetuate a culture of underperformance and inhibit the flow of this information. Then, during and after a crisis, “customer focus” remains a slogan, not organizational reality.
Let me be clear: my message here is not a version of “chin-up: every crisis is an opportunity.” Maybe, maybe not. My message is that because customer acquisition and retention are the lifeblood of a company, sales managers establish foundational conditions for a business. When much of the world economy is shut for weeks and possibly months, cascading bankruptcies and high debt loads mean a tightening of purchasing decisions, cap-ex and other expenditures in most markets. Your sales efforts will need to be more focused and productive after the crisis. Stay healthy and start now.