Internal Resources Constraints

Internal Resources Constraints

Once again, just as customers and prospects have been charged with minimizing costs to maximize profit, so too has the sales organization. Downsizing, cost cutting, increasing span of control, and expecting more output with fewer resources are just a sampling of the internal challenges echoed by the organizations we studied. Said one manager, “A 15 percent market downturn causes us to lay off 20 percent of our staff.” Another told us that “now I have 20 direct reports as a result of reorganizing and it’s getting hard to have direct contact with each.” Other internal performance and cost hurdles impacting sales organizations, not only in our study but across many industries, include:

  • The “raising of the bar,” as there is greater demand that salespeople acquire profitable business with revenue quotas increasing every year

  • Increasing overall revenues expected as the size of the sales force decreases

  • Bigger territories resulting from downsizing the sales organization

  • Reduction of support staff as a means of lessening the organization’s payroll, thus placing more administrative duties in the hands of salespeople who need to be on the street

  • Cutbacks in incentives and recognition programs partly to minimize expenses and achieve higher margins but also to reward only top-tier performers

  • Sales staff turnover, both voluntary and involuntary

  • Increased span of control, whereby managers must lead much larger teams than in the past

These internal challenges place considerable pressure on everyday sales activities and can impact the ability of the salesperson to execute strategies in the field. In fact, these challenges impact the performance of strategies in other areas, including the adoption of sales technologies, segmenting the sales force, and creating a strong and influential sales culture. While the organizations we interviewed were experiencing internal cutbacks and cost constraints to varying degrees, all seemed to be negatively affected in one way or another compared to the more favorable business environment of the late 1990s.

Overcoming Challenges with Strategies that Win Sales

We emphasize the significance of these challenges because they are internal and external factors that precipitate change and action in the corporation. Sales organizations are particularly vulnerable to many of these challenges and as such address them through various strategic plans. These challenges are real issues for many organizations beyond just those that participated in our study. Other research demonstrates the widespread impact that these issues have on organizations across industries and regions. For example, a recent study of 1,300 sales executives (Dickie and Trailer, 2004) found the following:

  • Sales executives reported that their top three business objectives for the year were: increase revenues, increase sales effectiveness, and increase market share.

  • On average, just less than half of their sales representatives were able to meet or exceed their quota for the past year—the lowest level since the survey was first conducted ten years ago.

  • One-third believed that the administrative burden on sales representatives is increasing.

  • More than half, or 54 percent, reported that forecasted sales are lost to competitors or to no decision.

  • Fifty-three percent reported they had implemented a CRM system, yet only 26 percent of those same organizations said they were achieving significant improvements in performance.

  • More than half, or 58 percent, surveyed said they do not have a formal selling methodology.

While this book explores a number of strategies to successfully meet many of the challenges reviewed in this chapter, the central theme is that for the contemporary sales organization to be successful in the face of more—more demand, more competition, more customer expectations—it has to be flexible with all its processes, structures, and resources, including human and technological. An effective and winning sales organization is one that is able and willing to be flexible, to reinvent itself, and to redeploy resources accordingly. It also has to have the right strategies in place—those strategies that will create sales opportunities out of business challenges in the marketplace.

As any successful sales professional knows, organizations don’t generally grow by sitting on the sidelines or by staying immersed in yesterday’s crises. Organizations grow by always looking forward. We interviewed a number of organizations that constantly look ahead and have developed adaptable sales strategies to meet changing needs. We hope you will find some of their stories viable for your own sales organization.

New opportunities are out there—even in the face of all of these challenges. Organizations are trying to figure out how to proactively identify and pursue these opportunities. While at present the common operating model seems to be more reactive, the need for a more strategic approach to business development is a critical requirement for winning sales.