Times are tough, maybe the toughest you have seen. Your employees are nervous, your suppliers shaky, your customers flaky and your bankers in hiding. The big government bailout truck drove right by your place without slowing down. Using the motto "too big to fail," it is headed to reward management that behaved irrationally, irresponsibly and insanely-in other words, just like Congress. Never mind that it is you and your peers who provide the lion's share of growth and jobs in this country; you are clearly dispensable.
Tough times are defined through higher levels of uncertainty in the business. For sake of this discussion, let's define this as your ability to predict behavior and outcomes. And while some degree of confusion should be natural in the management of risk, the current levels of uncertainty in business are well beyond what you have ever experienced. What's worse, you can't necessarily trust the advice of people whom you counted on in the past-your accountant, your lawyer, your banker or your political representative. They are much too busy covering their own sins of the past. You are in a place all too familiar-you are on your own.
Discussions in periods of economic distress center on layoffs, cost cutting, resource adjustment and the like. And while these may be the right issues to analyze and debate, I propose that they are actually secondary in nature. Of course you will do one or more of these things, if it means saving your business. The next natural question is, "When and how much?" The better question is, "What indicators are you to look at to know when to act and how?"
Go to the beginning
Here's what I suggest: If you don't know where to start, go to the beginning. The beginning is your ability to produce revenue-to sell your goods and services. After all, that is truly the basis of your company's existence. Everything else-capacity, manpower, financing-is derived from the ability to generate top-line sales. I don't suggest lessening the importance of any of the other variables. If you don't sell, they are of little consequence. Of all measures, revenue is the best candidate for a leading indicator.
There are, of course, fundamentally different ways companies generate top line revenue. You may rely on an outbound or inbound sales force, stationary selling assets, channels, real or virtual traffic, or a combination of some or all of these to generate sales. Selling methodology-in other words, "how you sell"-should always be subject to review, especially in trying times. But we will leave this subject for another time. For now, let's take a broad look at the three main groups of the revenue stream and discuss how to best tackle the underlying uncertainty of each of them.
Flow business
The first group of revenue we want to look at is your flow business, your regular customers who buy based on contracts you have in place, revenue based on a backlog which you are depleting, longstanding relationships you enjoy, maintenance on previous sales or recurring revenue you enjoy based on commercial and competitive benefits and conveniences. If you think that you can count on this business to continue, you may or may not be in for a nasty surprise. Better to make sure-and to make sure, make a plan.
If you have a sales force, send them out to contact each and every customer now. If you rely on inbound selling, devise a system to find out what's on your customers' minds. Use customer satisfaction surveys and substitute some questions to find out what your customers are thinking. If you catch people around your office not doing anything terribly useful, give them a list of customers to call to thank them for their business and find out how they are coping. Quantify whose business you can count on tomorrow and who may not be around tomorrow. And best of all, let your customers know that you care about them, much more than your competition ever will.
Pipeline
Once you get a better handle on your flow business, and with that, quantify the range of expected deterioration, it is time to look at the second group: your pipeline of deals and opportunities. For purposes of this discussion, let's define pipeline here as the expected incremental revenue based on deals with new or existing customers you are working on, or expectations based on incremental capacity you have invested in. Pipeline data, by its very nature, is less certain; you may have already concluded in your firm that the information is devoid of any merit whatsoever. The reason is simple-pipeline information is inherently biased. The capacity expectations are most likely based on numbers produced to justify the investment in the best of times, but devoid of any realistic market observation. And, especially in tough times, the sales people's funnel becomes a tool to protect their respective jobs rather than a true picture of future revenue expectations.
This calls for an immediate and thorough vetting of the information. The key to this is to establish what the buyers think about the opportunities, and not what your sales representative may have invested in it. Many actions the sellers undertake actually have little bearing on the outcome of a deal. At the same time, we need to establish what our prospects think about the investment in new capacity. Pipeline information needs to be challenged with a sound dose of reality, and once it is, don't be surprised to find it reduced to a fraction of what you started with. It's time to rework your budget and reset your exceptions to a new reality. All else is just hope, and hope is not a sustainable strategy.
New Business
The third revenue group you want to address is the net new group of top-line, incremental sales you will generate. Simply put, after all the cold showers you have endured from analyzing your flow business and resetting your pipeline expectations, ask yourself: "What am I going to do about it?" And what you will do is go all out and sell to bring in new business. The most important tool you need is a selling management structure that lets you drive and monitor your selling process at every step of the way. How are you doing at identifying new customers and markets? What approach are your people using? Is it working or does it need revision? How are we engaging with prospects and is our method meaningful and have an impact? How do we qualify based on the buyer's feedback and make sure that our efforts lead to a transaction?
A disciplined, thoughtful selling process will help greatly, but only if it is supported by a selling management foundation which tells you what you need to do to drive success long before the results get posted. Luckily for you, few of your competitors have a disciplined selling process, and even fewer have a selling management framework. Find out who they are and go after them with vengeance. iBi
Ulrich Herter is co-author of the book On Selling Management, available at Amazon and in bookstores now. He can be reached at uherter@thepartnersllc.com.
