Cutting costs can be the first step to capping a company’s growth when you follow old thinking and target the wrong areas. Marketing and Sales are often easily justified cost-cutting areas, as they are poorly measured, poorly understood and frequently carry large cost centres. But this can be a mistake, exposing the company to growth by association, higher competitive forces and downward price pressure.
Many companies that rely on operational mindsets harbour the thinking that cost control will lead to growth, but what they are doing is fundamentally relying on customers growing, not your company driving growth.
It is a method of thinking typically devoid of new business acquisition through sales efforts. There is an over-emphasis on the financial report and an under-emphasis on business drivers and sales force contribution. It is a culture that stifles the future of organisations. Getting the balance right is critical.
In a cost-cutting culture, managers and CEOs anxiously await financial reports and then pore over them to make effective decisions for building the company’s profitability. Recommendations for cost-cutting fly around the room, and the focus of such conversations is always improving profitability.
The vulnerability of CEOs lies in relying too heavily on those financial reports to measure sales performance since this financial information can be dangerously misleading. When your company is seeing a decline—or worse yet, a significant drop—in sales, traditional financial statements can understate the seriousness of the situation because of how unsold inventory is reported. Your company is not seeing or acting upon the early warning signs vital to driving growth. In such situations, conversations with sales become tedious and pressured, and you start looking to finance, not sales, for answers.
In many of our initial discussions with CEOs, a common point they often make is that they did not realise how deep the issues were within sales. The CEOs have typically waited longer than they should have to make decisions since they were overly reliant on a combination of financial reports and sales leader representations.
To successfully grow a company, CEOs require a wider view of sales and marketing business drivers that accurately predict the future. One with sales and marketing aligned and a runway showing where the business is heading and the risk is appropriately managed.
Importantly, there needs to be a healthy balance of cost management and growth management.
Much like the production or operational areas of a company touched by Lean thinking, the emphasis is on increased production and reduced wastage and costs. Your sales and marketing should not be devoid of such thinking, too.
Sales and marketing managers directed to improve performance must adopt lean thinking, as it supports the need for increased revenue and the company’s requirement for lower costs. Most companies carry excessive costs in sales and marketing, and with contemporary thinking on how they operate, exponential sales growth can occur while reducing direct and indirect costs.
This is achieved primarily by introducing process thinking and understanding to sales and marketing teams. Process thinking is typically not part of the vocabulary of sales and marketing managers. They perhaps consider it as confining and restrictive, stifling the creativity required in their work. However, it can be argued that top-performing teams adopting lean thinking and ‘managing by fact and predictive analytics’ assist in creative thinking and defining direction. It narrows the focus to the most productive and highest return on effort.
Lean Sales Growth is about identifying and understanding where improvements can be made in the sales and marketing business through an intensive review process. A methodology of aligning marketing with sales to establish ROI on marketing spend and maximise the effectiveness of sales. The output establishes action points for your sales and marketing executive to deliver. A measurable set of improvements that address growth drivers and cost-cutting.
The review educates and enables the fresh thinking and contemporary processes required to drive a high-performing sales and marketing organisation.
Click on the image to download more in-depth information about Lean Sales Growth and how it can be implemented in your business.
If you are interested in learning more, you reach out to us to co-ordinate a thirty-minute conversation with Adele Crane.
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You may also be interested in reading:
- Cost Cutting Without Curbing Your Growth
- 12 Pricing Mistakes That Can Undermine Sales Outcomes
- How to Achieve Consistent Profitable Growth
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