Cutting Expenses to Manage Revenue Makes Very Little Sense

It's not that I have never had to cut expenses. Hard to be a Chief anything and not face that plight. In the oh-so many turn-around challenges I have faced over the years revenue generation, or lack of revenue generation, always seemed to be the reason someone wanted to talk. And it was usually the same story - sales were down, so as a result, leads were down (usually expense related, not marketing issues), turnover was high, managers were perplexed, etc., etc. Usually somewhere in the next 30 minutes expense reductions were the catch-all cure in their minds. Now, on a few occasions, I mentioned that they likely did not need me to help with that, they had plenty of number crunchers perched on the bough to handle it, but asked why so many obstacles in revenue generation? I was usually told "Sales People, they were the issue," did not matter much what company, schools, retail, Toys-R-Us, usually sales were down because of sales people unwillingness to go the extra mile, or work the leads, or customer service neglect, or when that didn't cover it, they usually threw in marketing wasn't good, and usually it was everything other than facing the real truth - sales were down because leadership was operationally ineffective. And in the cases where I saw that I also saw leadership wasn't effective sales types, yet they all believed they were Zig Ziglar. They were great talkers, great smiles, many looked like TV weather men and women, all dressed trendy, all had great academic credentials, but they all lacked the one thing that that was required and essential - empathy for the sales people - actually some of them even said to me on many occasions "we wouldn't be in this mess if the sales people did their jobs". Now if I needed the job bad enough, I would just listen and nod. They saw sales people as a means to the end in lieu of the road to the end. And leadership kept looking for someone who they could hire in their own image, but one who would, or could sell too, in the way "they" though it should be done. I have actually met many leaders who disliked salespeople overall and in general. And again, likely a miss. Some survived with that model, but generally never grew the company. So what is the answer, glad you ask:

1. If sales are down and leads are flat or a little up or down. Hit the brake. I made an acquisition a while back with a company that believed the market was the whole problem, a failed group, I bought three schools, 600 students give or take. The Chairman likely thought I was the dumbest guy because I said "sure, let's move forward". Sales were down, people were down, leads sucked, leadership was down, this guy must have thought he was the greatest salesperson on planet earth. But here's what I saw, yes lots of issues, but all correctable (no matter what he thought). The stark reality was leads did not suck at all, they validated the premise that they sucked at the executive level, in real life, even the school directors were fine, all three of them, actually all stayed with me 5+ more years. The most important thing to me was simply the market had not lost interest or faith. Leads were flat or a bit better. CPL was within the margins. To me that was the most important thing, the market had not lost neither faith or interest. It took me a few visits to convince the equity guys this was going to work out, but they took a leap of faith. I did a few novenas and off we went. 7 locations later, 70 million in revenue, 22% margin, 5000+ students - all because the real problem disappeared and the motivated sales teams did what they were meant to do - sell with pride, dignity, no abuse, and compliance integrity. I as the CEO recognized that I was either going to be an extended problem or a solution. I chose the latter. The teams, same guys for the most part always had it in them but just lost the drive to show it as they were constantly being told they were the problem. Note to file: They probably were not the problem, look a little deeper and a bit closer to home.
2. As a leader try to step out of the picture for a moment and pretend you are the consultant they just hired to fix the low revenue issue. You don't know anybody, all you have is the individual sales performance with no names, just the number. What do you think you might do next? You're correct, you would ask whatever power that may be the obvious question "what's going on with person on Line 18?"? Good place to start. Ask better questions, usually, get better answers. You see, for me, I don't care who the person is, oh that doesn't mean I don't care about people, it means for this exercise it isn't an initial factor. Next thing is to rank them - high to low works, and then let's look for answers, questions like "is it a skill or will issue you think?" of course they will say "I don't know because I don't know who we are talking about", and fair enough, but, "what do you think?" How many low producers are just not skilled enough to do the job, and/or how many of the people appear to not really care about doing the job or doing better? That every manager has to have a thought about. Actually in a smaller group they know who actually belongs to what number. That sometimes really shocks me when 50% or more are below expectation. I always ask "why is that you think?"
3. Now time to earn the big money they pay you - how do you fix it? The ah-ha moment. For starters you likey won't fix it if you currently own it. You'll keep kicking the can down the street until all that is left is the dead-end curb. I am pretty comfortable in saying that if you could fix it you would have by now. So for the moment, you need to step aside emotionally or physically, or best case, both. Change has the be in the new plan and you may not be buying that as the change ;could likely be you. But for now, no big deal, it's just a story. But if it's you then we need to quickly turn over a few tombstones. Let's say you have 10 salespeople to keep the math easy. They each have a budget of 10. They have all been on the payroll for a while. So we can leave the newbee story out of the equation. 1 hits 10, 1 hits 9, 2 hit 7, 1 hits 6, 4 hit 5, and 1 hits below 5. So we have 60 sales from the group. 10 sales people average 6, and again for simple math, 60% and that in any school will get you a "C" or put another way, "average". Put it in bit of a worse light - missed budget by 40%.
4. We begin with "what - a "C" - no way - these guys are better than that" - possibly. Maybe as the manager you may be a bit over your head. So we start with a look inside the issue. Simply - we do an old school SWOT on each of them. We take an honest and objective look at each one of their Strengths, Weaknesses, Opportunities, and Threats. Why is it 40% of your sales force drives most of your business, a business that is off 40% to budget? We need to get the answers. So we figure it out. Name by name. We first identify what makes the best the best and the average the average and the worse the worse? We should not go on memory or instinct on this, remember, they are missing the boat already - so it should be pretty obvious you don't honestly know why (or I have to assume you would have fixed it). And also, take a month period of time to evaluate not just a day or week. By the way, let's say that all your people did 7, again average, but 70 is better than 60, and again, let's say they did 8 each, that's 80, or a "B". Now that's the plan - "B" players. In the end your 9 guy will do better because the 8 guy is getting too close, and the 10 guy will do better for the same reason, so guess what - you're likely now at 90% + of budget - and - likely in the bonus zone (Sweet!). So we start with a conversation, in person or Zoom, won't matter much - devote 1/2 hour - yes 1/2 hour and with SWOT on each individual one of them. When over it becomes a game of Chess not Checkers. Your goal fix the problem for the next 3 plays (budgets). Hold people accountable or release them. Coach them to success, lead by lead, call by call, day by day. No easy fix. That's the job, you wanted it, you got it, now make it work and don't blame someone else or make an excuse. You break it you fix it. Take care