Blog

There is a certain predictability to business reactions in tough times. One characteristic business response in most recessions – including this severe one – is an intense focus on the sales team. In many organizations, the sales team’s efforts are absolutely vital to success, so what could be wrong with paying more attention to this area. The answer is – nothing – as long as you aren’t sacrificing your brand, mission and marketing efforts to pursue an aggressive sales program.

The intentions to improve business with a major sales initiative may seem warranted, but there are four reasons this could hurt your company’s performance rather than enhance it:

1) Sales is a subset of marketing. In the 4 Ps of Marketing, personal selling is just one subset under the Promotion P of marketing. For many companies, this personal selling component of marketing is a major one, but nonetheless it is still only one component. In a recession, a company’s competitors are also feeling the pain. They are sure to be turning up their sales efforts also. However, in a recession, is precisely when other marketing mix elements might be the most crucial to success.

What about the Price P component? What needs to be done with pricing to move lethargic customers to action? What needs to be done with the Product P to enhance product or service value? What needs to be done with Place (Distribution) P to make the product easier to find and buy? And what else needs to be done with other elements in the Promotion P including wonderful new media tools that can create action and buzz about a product or company in a relatively short amount of time?

Incidentally, this same argument applies if you subscribe to the more contemporary 4 Cs approach to the marketing mix.

Sales has to have something good to sell, otherwise precious company resources will be wasted with inefficient efforts to create revenue and new customers. Part of marketing’s job is to utilize the 4 Ps (or 4 Cs) marketing mix to create something that is differentiable and compelling. Putting time and effort into selling with an insufficient marketing mix message will be counterproductive. It was the renowned author and business consultant Peter Drucker who said:

“Because the purpose of business is to create a customer, the business enterprise has two—and only two—basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

Drucker was not a marketer, but he clearly understood its role. He didn’t say sales and innovation. He didn’t say finance and innovation. He understood that for sales to work, companies have to distinguish themselves from the competition. Marketing and innovation remain two absolutely critical functions to do just that. Unfortunately, when times are tough, some companies become near-sighted and focus their attention too intently on sales, which is near the end of a long marketing value chain.

2) An aggressive focus on sales can create substantial problems later on if the company’s mission and vision are being sacrificed for short term results. Companies simply wounded in a recession can later develop more serious issues if they are taking on business they would normally disregard in a more buoyant business environment. Sales might achieve its objectives, but the rest of the company could end up reeling from business that is a poor business fit, a poor credit risk, an inordinately high-maintenance customer, or all of the above.

3) There are only so many resources at any company. The more of these resources that need to be harnessed to close and service new business, the more these resources are pulled from working for the company’s present customers. This isn’t as much an issue where business development is handled almost exclusively by the sales force. However, at many companies, other company resources need to be called in to land and onboard new business. That often results on betting on the bird in the bush, rather than the bird in the hand. In some cases, it can lead to eventually losing more business than is gained.

I am not saying don’t pursue new business, but I am saying don’t do it unless other departments of the company are deeply involved to make sure the net results of a sales effort are positive rather than negative. Ultimately, sales efforts have to be measured on net new business. It may be fun to brag about how much business sales brought in the door, but if, as a result, a lot of good business went out the door, or is about to, it is simply a churn and burn strategy which is a poor choice for almost any respectable business.

4) New business may create immediate sales, but often the cost of acquiring new business is high. It is not uncommon for new business acquisition to be associated with write-offs, non-billable expenses, and lower profitability. If that is the case, an aggressive sales campaign may have only a marginal effect on a company’s financial health. It is management’s job to ensure that the cost of acquiring new business is a wise investment in future growth, rather than a further drain on revenues and profits.

Sales can serve a powerful role in helping many companies through tough times. However, in order for the benefits of increased sales to benefit the whole organization it needs to be closely aligned with marketing, the brand, and the company’s vision and mission. Sales initiatives also need to be careful not to hurt customer service for present clientele. This simply takes a conscious effort to plan aggressive sales efforts with the close coordination of other functions in the company. Planning a major sales effort isolated from these other functions is a recipe for disaster, not success.