The Perils of Accepting a Boom Bust Sales Cycle
8 November 2017 | 11:28 am
The best companies don’t tolerate boom and bust mentalities. The instead focus on how to create a perpetual sales boom. While this may be considered unconventional, my research and experience has shown that, left unaddressed, boom and bust cycles will negatively impact your company in seven distinct ways. These cycles are often accepted as “necessary evils,” but there is no circumstance under which a sales team can remain healthy with the following seven damaging symptoms
- Sales rep stress and exhaustion. If the team has been cramming, they will be exhausted and stressed. As a result, little work is done, or often even encouraged in the first week of the quarter. Vacation time is encouraged and many sales VPs give extra time off in the first few days of the quarter to ensure a team is well rested after a difficult period. Recently, I worked with an inside sales leader who gave his whole team a day off the first day back after an exceptional quarter ended. While this seems like a good reward, it put the team almost $25,000 in a revenue hole in one day due to their highly transactional nature. Of course, that revenue had to be made up at the end of the quarter, resulting in long hours, overtime and an exhausted sales team.
- Decreased client onboarding effectiveness. As customers get stacked up unevenly, it becomes nearly impossible to onboard them smoothly. They “stack up” like logs outside a mill, and often wind up on the same buzz saws.
- Emotional decision making. Desperate seller’s close desperate My first boss once said, “If you think they are awful to deal with now, just imagine what they will be like after they pay us!” All sellers have experienced the gut feeling of “I should not sell to this prospect” at least once in their career but choose to ignore it because they desperately need the business to hit their quota. It is impossible for a seller who is behind to walk away from the only potential buyer in their pipeline.
- Delayed buying decisions. When sellers are busting, deep discounts are given to clients to secure deals at the end of the quarter. As a result, these buyers know to wait until the end of the next quarter to buy again. You have trained them into this behavior. A vicious and self-inflicted cycle is created because the discounted price becomes the baseline price for that client in the future. If you offered them 20 percent off for buying now, when they reorder next quarter what do they expect? Exactly! Twenty percent off that 20 percent discount. You have just created an unprofitable customer.
- Management turnover and firings. Consistent revenue is critical to consistent profits and shareholder value. If the sales manager cannot provide this, they will be fired. My research shows that the average retention of sales management in North America is 16 months; you can be sure that senior leadership is scrutinizing every month of revenue to make sure the problem is not at the top. The most likely sales leaders to succeed are those who communicate a plan for consistent revenue, stick to that plan, and hit it with accuracy (or exceed it).
- Internecine conflict. When personal income is cut due to reduced commissions, the team becomes disheartened and frustrated. While they may know that their behavior and lack of activity is responsible for the reduction, they will blame the company first. Internecine conflict erupts when Sales blames Marketing for poor leads, Accounting for bad billing, Customer Services for angering clients, and Shipping for messing up orders. Once communication breaks down between departments, it can take months to rebuild profitability. At a large Canadian company, the marketing department shut off the flow of leads to an inside sales team due to the internecine conflict that started between a poor-performing sales team and a new marketing VP. It took five months, a structural reorganization, and a new sales manager to restart the sales lead lifeline.
Unlike roller coasters, successful sales don’t depend on deep troughs to build momentum to climb the next hill. You can generate speed, accelerate sales and achieve your targets consistently without taking dips.
Colleen Francis, Sales Expert, is the President of Engage Selling Solutions (www.engageselling.com), and an award winning keynote speaker and sales consultant on sales acceleration. She is the author of 2 books including the recently released Nonstop Sales Boom (AMACOM). Armed with skills developed from years of experience Colleen ensures customers realize immediate results, achieve lasting success and permanently raise their bottom line.