Times are tough,
maybe the toughest you have seen. Your employees are nervous, your suppliers
shaky, your customers flaky and your bankers in hiding. The big government bailout
truck drove right by your place without slowing down. Using the motto "too big
to fail," it is headed to reward management that behaved irrationally,
irresponsibly and insanely-in other words, just like Congress. Never mind that
it is you and your peers who provide the lion’s share of growth and jobs in
this country; you are clearly dispensable.
Tough times are
defined through higher levels of uncertainty in the business. For sake of this
discussion, let’s define this as your ability to predict behavior and outcomes.
And while some degree of confusion should be natural in the management of risk,
the current levels of uncertainty in business are well beyond what you have
ever experienced. What’s worse, you can’t necessarily trust the advice of
people whom you counted on in the past-your accountant, your lawyer, your
banker or your political representative. They are much too busy covering their
own sins of the past. You are in a place all too familiar-you are on your own.
Discussions in
periods of economic distress center on layoffs, cost cutting, resource
adjustment and the like. And while these may be the right issues to analyze and
debate, I propose that they are actually secondary in nature. Of course you
will do one or more of these things, if it means saving your business. The next
natural question is, "When and how much?" The better question is, "What
indicators are you to look at to know when to act and how?"
Go to the beginning
Here’s what I
suggest: If you don’t know where to start, go to the beginning. The beginning
is your ability to produce revenue-to sell your goods and services. After all,
that is truly the basis of your company’s existence. Everything else-capacity,
manpower, financing-is derived from the ability to generate top-line sales. I
don’t suggest lessening the importance of any of the other variables. If you
don’t sell, they are of little consequence. Of all measures, revenue is the
best candidate for a leading indicator.
There are, of
course, fundamentally different ways companies generate top line revenue. You
may rely on an outbound or inbound sales force, stationary selling assets, channels,
real or virtual traffic, or a combination of some or all of these to generate
sales. Selling methodology-in other words, "how you sell"-should always be
subject to review, especially in trying times. But we will leave this subject
for another time. For now, let’s take a broad look at the three main groups of
the revenue stream and discuss how to best tackle the underlying uncertainty of
each of them.
Flow business
The first group
of revenue we want to look at is your flow
business, your regular customers who buy based on contracts you have in
place, revenue based on a backlog which you are depleting, longstanding
relationships you enjoy, maintenance on previous sales or recurring revenue you
enjoy based on commercial and competitive benefits and conveniences. If you
think that you can count on this business to continue, you may or may not be in
for a nasty surprise. Better to make sure-and to make sure, make a plan.
If you have a
sales force, send them out to contact each and every customer now. If you rely
on inbound selling, devise a system to find out what’s on your customers’ minds.
Use customer satisfaction surveys and substitute some questions to find out
what your customers are thinking. If you catch people around your office not
doing anything terribly useful, give them a list of customers to call to thank
them for their business and find out how they are coping. Quantify whose
business you can count on tomorrow and who may not be around tomorrow. And best
of all, let your customers know that you care about them, much more than your
competition ever will.
Pipeline
Once you get a
better handle on your flow business, and with that, quantify the range of
expected deterioration, it is time to look at the second group: your pipeline
of deals and opportunities. For purposes of this discussion, let’s define pipeline here as the expected
incremental revenue based on deals with new or existing customers you are
working on, or expectations based on incremental capacity you have invested in.
Pipeline data, by its very nature, is less certain; you may have already
concluded in your firm that the information is devoid of any merit whatsoever.
The reason is simple-pipeline information is inherently biased. The capacity
expectations are most likely based on numbers produced to justify the
investment in the best of times, but devoid of any realistic market
observation. And, especially in tough times, the sales people’s funnel becomes
a tool to protect their respective jobs rather than a true picture of future
revenue expectations.
This calls for
an immediate and thorough vetting of the information. The key to this is to
establish what the buyers think about the opportunities, and not what your
sales representative may have invested in it. Many actions the sellers
undertake actually have little bearing on the outcome of a deal. At the same
time, we need to establish what our prospects think about the investment in new
capacity. Pipeline information needs to be challenged with a sound dose of
reality, and once it is, don’t be surprised to find it reduced to a fraction of
what you started with. It’s time to rework your budget and reset your
exceptions to a new reality. All else is just hope, and hope is not a
sustainable strategy.
New Business
The third
revenue group you want to address is the net new group of top-line, incremental
sales you will generate. Simply put, after all the cold showers you have
endured from analyzing your flow business and resetting your pipeline
expectations, ask yourself: "What am I going to do about it?" And what you will
do is go all out and sell to bring in new business. The most important tool you
need is a selling management structure that lets you drive and monitor your
selling process at every step of the way. How
are you doing at identifying new customers and markets? What approach are your
people using? Is it working or does it need revision? How are we engaging with
prospects and is our method meaningful and have an impact? How do we qualify
based on the buyer’s feedback and make sure that our efforts lead to a
transaction?
A disciplined,
thoughtful selling process will help greatly, but only if it is supported by a
selling management foundation which tells you what you need to do to drive
success long before the results get posted. Luckily for you, few of your
competitors have a disciplined selling process, and even fewer have a selling
management framework. Find out who they are and go after them with vengeance. iBi
Ulrich
Herter is co-author of the book On Selling Management, available at Amazon and in bookstores now. He can be reached at [email protected].
