In talking to hundreds of sales managers, CFOs, CEOs and business owners over the years, I’ve encountered a somewhat disturbing trend. This trend is a behavior pattern that I’ve encountered when discussing my products and services. This pattern, while common, can be deadly.
The pattern I’m referring to centers around statistics and how these decision makers react to them. When statistics begin to go down, the first thing many of these decision makers do is cut back on expenses. The idea seems logical at first; if your sales and profit are down, you need to cut expenses to balance out the P&L statement. However, I believe it is a mistake, and sometimes a huge one. I’ve even seen many salesmen do this (and I have too in the past).
The first thing a company MUST do when facing a slight dip in sales or profit is PROMOTE. Economy is important, but you have to promote as a first action. If you fail to promote, your slump will either get worse or be prolonged. If you think about it, promotion makes the most sense. To promote means to make your business, product or service known and well thought of. If sales and profit are down, and you rein in your expenses and fail to promote, you rob yourself of the opportunity of garnering more sales and closing the deals that are close to completion. New customers who may only now be ready to buy or entertain presentations will not be able to find you easily. Old customers may not know what specials or other products you have. All of this means that the action that can directly add sales and profit on an immediate basis – PROMOTION – will not occur, and your business will continue to slump.
The same thought process works for individuals also. If your personal statistics are down slightly, you need to PROMOTE. Salesmen who experience lulls or dips in their sales need to promote and get their name and products out there. Work hard to get appointments, make more calls, send more emails, disseminate sales materials, etc. Other employees can get their statistics up by promoting and PRODUCING. Sometimes, if your job doesn’t directly relate to sales, the action step is to produce. For example, if the Accounts Receivable clerk has a responsibility to process invoices, send out invoices and receive payments from customers, each of these responsibilities can be measured in statistics. Then, if the number of invoices sent, checks in, etc., start dropping, she can Promote by calling people directly for payments, asking sales departments if there are any pending sales to invoice, etc. She can then Produce by getting those invoices out and checks in.
Promotion doesn’t always have to cost a lot of money.
It can be as simple as emailing your customers and prospects to let them know you’re there, or better, that you have a product or service that can really help them. Email blasts are good for broad contact, but you should also send personal, individual emails or messages that focus on a specific product or service for that customer. Make sure you tie in how that product will help that particular business or individual. Other forms of promotion are phone calls, cold calls (when done correctly), website ads, how-to You Tube videos, etc.
My company is positioned to help businesses in two ways: promotion and economy. We consult with customers and help them design one or more marketing pieces, such as flyers, postcards or promotional items. Our relationships with manufacturers helps us save money while promoting.
Our connections also help customers save time and money on their office supplies, toner and printer supplies, business forms and A/P checks. It is a good strategy to use cost savings on these items to pay for promotional actions.
If enough companies and business owners stopped complaining about the economy and just PROMOTED, we would go a long way toward turning our entire economy around, not to mention putting extra money in our pockets.
Nowadays, we are often so busy handling our business and putting out fires that the last thing we have time for is sifting through piles of offer letters or meeting with 15 salesmen every month, just to save a few pennies here and there.
However, it is a good idea every now and then to review your business transactions and audit your business. The information age makes it easier than ever to get competitive information about the products and services you use. If you don’t regularly look at what you’re paying, you could be wasting a lot of money.
I recommend a schedule to make sure you are staying on top of expenses:
1) Utilities such as Electricity, phone and internet service, etc.; once a year
2) Rent/leasing fees: once a year, or minimally every time your lease is due for renewal. Even if you aren’t planning on moving, if the leasing market is down when you are renewing, you may be able to leverage that fact to get a break on your next lease, or have the landlord include renovations or other bonuses.
3) Labor: Every 6 months. You should have a performance review with your immediate juniors twice a year. Let them know how they are doing, relative to your expectations. Use the opportunity to open a dialog about what challenges they are having. Not only will they get a better idea of what you want from them, but they may also give you vital information about ways to improve your business.
4) Cost of goods: Every quarter. This varies from business to business. I’ve seen owners check prices every day; while some almost never do. I personally believe if you have made sound relationships with your vendors and are doing a good job in marketing your business, every quarter should be enough.
5) Insurance: Every year. Health insurance is the biggest of these. Make sure you are on the right plan that strikes a good balance of benefit to your employees and your cost. Providing healthcare that is cheap for you but provides little or no benefit to your employees will actually cost you money, because none of your employees will use it.
If, after doing an audit on one of these points, you feel like you’re not getting the best deal, schedule half a day to meet with 2-3 salesmen who offer the product or service. Chances are, you’ve had several drop by your office in the time since your last audit. Include a salesman from your current vendor, unless it is blatantly obvious that they are really taking advantage of you, based on your initial research. The reason for this is that quite often, there are many variables at play. Cost, convenience, service, and payment arrangements can all play an important role in total cost of ownership. What good is it to save $30 per month on phone service if the system breaks down often, or you have to spend an hour on hold to get an issue resolved?
Good salesman will not just pitch their product or service. They will provide valuable insight into the details of what they’re offering, and important options to consider. A customer service rep in a call center often won’t have this information. Be sure to be clear when making the appointment that you’ll want this information.
I can’t tell you how many times I’ve called on a particular prospect who ignored my attempts to get a meeting with them, only to find out later that I could have saved them money and given them a higher level of service.
Doing this audit won’t always mean you wind up switching companies. Sometimes, you’ll find that the company you’re with has a different option that better suits your needs, and switching plans saves you money. This happened to me recently with my electric company. It also doesn’t mean that your relationship with your vendors will suffer. If your vendors have done a good job for you, they will welcome the opportunity to continue to serve you and have the conversation about your business and where it’s headed.