Selling in a Recession Professor Lynette Ryals February, 2009 SM As the going gets tough, then it is particularly important that companies get the most from their sales people. In the studio today, with me, is Professor Lynette Ryals. Now Lynette, I know that you have got some well thought out views on sales development and how to make selling more effective. Let’s start off with picking one of those ideas. I know we have got a lot of background, a lot of research and so on, but let’s hear your views. LR OK – I think this is a really interesting time at the moment, obviously a lot of companies are under pressure. One of the things that we have got to recognise is that a sales force is a very expensive resource. It’s a very expensive way to do business. But on the other hand we know it is vital, particularly in a business to business context. So obviously we have got to bring in the revenue and keep the sales flowing in difficult times. One of the key messages that we are sending out to sales directors is to say you need to alert your sales force not to chase every opportunity. So I think there are some key things here that we need to understand: Firstly, not all customers are profitable. So sales people need to understand that not all business is good business. Secondly, even within a major customer you don’t necessarily want all of their business – a 100% share of spend is not necessarily the right way to go. So sales directors have got to get a lot smarter about thinking about the cost of making a sales call and saying ‘Is there an opportunity at the end of this sales call that justifies the cost of making it?’ And that brings in techniques like using expected monetary value to understand is this opportunity worth chasing. SM So you have decided which is the best opportunity here, but I think there are some things that it is worth thinking about in relation to making the most of those opportunities? LR That is so true. We have recently done a big research study and one of the things that we found is that pre meeting preparation and planning is critically strongly linked to sales success. SM So do your homework basically? LR Do your homework and do your planning and I think in a broader context, when we are thinking about the effectiveness of the sales force, it’s things like: Make sure you identify your key accounts – so which are the most strategically important customers to you? Secondly, for every key account make sure there is a key account plan. Let’s have some proper objectives and strategies to deal with each of those customers, and indeed, of course, each of our major market segments in the most efficient way. SM So where do we go from here? The odds are people are getting pretty wound up at the moment; if I am a sales director and my numbers are going down then I am likely to have a lot of pressure on me and it is very easy for me to transmit that pressure down to the sales people. LR We understand those pressures and we are sympathetic to them. I think that we would still say that you have got to think about not just the top line, but the bottom line. Far too many sales people are still measured in terms of the top line, rather than the bottom line ie, the contribution or margin of the business that they are bringing in. I think in tough times there is a terrible temptation to continue to measure sales people on volume or top line revenues, and also allow them to give discounts. The more discounts you give, the more volume you need to compensate for that. And you could have a sales force who are being what we might call ‘busy fools’. So they are rushing around selling loads of stuff and bringing in large amounts of unprofitable business. And that could be very dangerous recipe for a lot of businesses. SM So the message is be very thoughtful about your whole sales approach? LR Absolutely. SM Lynette, thank you.