Let’s talk about the elephant in the room- cutting costs does not lead to growth when you follow old thinking.
For many companies that rely on operational mindsets, they 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 that typically is 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 with the intent of making 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 to 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 the way in which unsold inventory is reported. Your company is not seeing or acting upon the early warning signs that are 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 that they often make is the fact 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 the business drivers of sales and marketing that predict the future accurately. One that has sales and marketing aligned and a runway that shows where the business is heading and the risk is being 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 that has been touched by Lean thinking; the emphasis is on increased production and reduction of wastage and costs. Your sales and marketing should not be devoid of such thinking too.
Sales and marketing managers directed to improve performance need to adopt a type of lean thinking, as it supports the need for increased revenue and the company requirement of lower costs. Most companies are carrying excessive costs in sales and marketing and with contemporary thinking on how they operate, exponential sales growth can occur while reducing the direct and indirect costs.
This is achieved primarily by introducing an element of 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’ does 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 the improvements can be made in the sales and marketing business through an intensive review process. The output being the establishment of the action points for your sales and marketing executive to deliver on. A measureable set of improvements that address growth drivers and cost cutting.
The review both educates and enables the fresh thinking and contemporary processes required to drive a high performing sales and marketing organisation.
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© 2016 Adele Crane. All Rights Reserved.