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.