Why poor company performance reviews get it wrong and what to do about it

CSO Insights, in its World Class Selling Practices (2017), found that ‘profit rates are dropping even further below the 50% mark’. When sales are well below forecasts, many companies turn to poorly planned or executed damage control.

Sales consultants often witness one or more of the following reactions:

• Savagely reduce expenses to the point of paralyzing daily operations

• Replace the sales manager / sales director

• Reduce the number of sellers. One company we know laid off the entire sales team and then expected the branch managers to play the additional role

• Discounts on products and services with the false belief that they will generate sales. Customers are skeptical of deep discounts as they feel there must be something wrong with this company’s products, or they infer that the supplier is in trouble and might not be around to endorse their product.

• ‘Fix the sales’ by sending salespeople to a sales training course or use the internal learning and development manager to facilitate a sales course.

In all the cases we have come across, the above approaches have a short-lived impact, but are not sustainable.

The results of these inappropriate tactics are:

• The end result seems better in the short term, because costs are drastically reduced

• Morale drops to an all-time low

• Good people start looking for alternative employment.

• Employees feel cautious in what they say; and do the bare minimum necessary to keep their jobs. In fact, activity levels tend to increase, but productivity decreases.

• Creativity and innovation are replaced by aversion to risk.

• Competitors begin to increase their market share.

If you can relate to some of the above results, you have experienced what happens when poor strategies are implemented.

The real risk is that the company is left in a weaker position, opening itself up to takeover by a stronger competitor or, frankly, bankrupt.

So what is the answer?

First of all, don’t panic. Closely aligned with this priority is not to oversimplify what could be a complex problem by blaming solely the sales team. The current situation occurred for a reason or reasons and as for CEOs who may be reading this, there were earlier signs to act, but these were ignored. Once the situation becomes unsustainable, companies are forced to act, but in a pressure situation, decision-making can drive reactive survival behaviors such as those listed above.

While each business situation will vary and may not necessarily require all of the action items below, these provide possible answers:

• Take this opportunity, as painful as it may be, as a learning experience. If it’s painful enough, you won’t make the same mistakes in the future

• Take this opportunity to review the entire company. What are we doing well in all departments; Where can we operate more efficiently and in doing so reduce costs?

• Objectively evaluate all areas of income generation. Where does most of the income come from and why? Can this be done better? Similarly, evaluate where the profits are coming from. Focus on those products first

• Are our vendors below or on par with the competition of competing vendors? What can we do to improve and measurably operate at a high level of sales competition? Resulting in an increase in new and account-based sales.

• Review the business structure. Is there a better business model that we can use?

• Develop a new vision and business plan; improve processes and generate acceptance by communicating and reinforcing the positive direction towards which the company is heading, as well as the reason and importance of all to achieve it.

A key recommendation is to hire a reputable consulting firm that you can work collaboratively with. Do you have a history that when the going gets tough you’re “shoulder to shoulder”? Can they work with all levels of management and employees?

Using the right consultant will help keep the entire process on target, minimize disruption, and at the same time maximize improvement and create the buy-in necessary for the future success of the organization.