Consultant Focused Series: Cycles & Patterns

Hey, it's Michelle Segret, Sales Globe. And today we're going to talk about cycles and patterns. For those of you that do not know, I happen to read a lot of Ray Dalio and he talks about economic cycles. He talks about patterns that continue to repeat themselves. And today I have a very special guest that I asked to talk to me about this. One of our senior directors here at Sales Globe, Michael Bullock. So, Michael, thank you for talking to everyone here today about some things that we're seeing with the current economic environment, cycles, patterns, and how that pertains to a sales organization.

I'm happy to be here. Thanks for having me.

Yeah. So you and I were discussing that typically what happens. Let's talk about where we are today. And we know that, right? We've had a lot of economic headwinds and some challenges out there and that we see. You and I have a lot of discussions about the different things that we see. And I get frustrated sometimes. So I'm like, okay, always. These things seem to happen. And the two things that are really prevalent from my perspective is headcount reductions. And we know they've been all over the news again, and conservation of cash sometimes or at the expense of everything. And we believe that both of those can actually be a short term view or solution to a bigger problem.

You're exactly right. And it's, you know, we can't ignore the fact of how mainstream those two particular actions are and how convenient they are in times, as you mentioned, of economic headwinds or economic downturn, but they do come at a cost. And two, you know, the topic that we're talking about in terms of patterns and cycles, we do know that there will be a rebound. And so one of the things that I've observed over my career were that there were, I would say, smart companies who took this opportunity to introduce change and prepare for that rebound. Because what we do know is when, you know, there's mass headcount reductions announced or cost cutting measures, it does have an impact on employee morale, on employee focus and engagement, and particularly in the sales organization. I would say that they're somewhat unique in terms of the role that they play. You know, they are, you know, solely responsible for revenue generation. And so, you know, I would propose that companies sort of almost look at those two actions as a last resort. And so for those companies that are able to, you know, if they already have an attrition plan in place that eliminates low performers, you know, that's a great way that it's not as Disruptive where you ought, you know, sort of naturally tread out your low sales performers and maybe you don't backfill certain roles or you might rearrange your sales territories. At this time of economic headwinds, you know, there's an opportunity to sort of move things around because there is probably a little bandwidth or slack where folks aren't at particularly again and the sales organization, while sales are down, they might not be at capacity. And so there's an opportunity. How do you re optimize your territories? How do you introduce maybe new sales processes again in anticipation and preparation for that eventual economic rebound?

Okay, so there's a lot to unpack there. I want to take a couple of things that you said one at a time. Okay, so let's deal with the attrition thing first. Because one thing that we have talked about is sales has their voluntary and their involuntary attrition. And what we know is that a lot of times in our work we do notice that there isn't a really great way of managing out low performers and low performers. So talk a little bit about how companies could do a better job of that. When times are good. When times are, it just becomes I think a part of the culture and the fiber of the company. But tell me how you've seen that work.

Yeah, that's a great question. So you know, when we talk about sales organizations, ideally, you know, you want to describe yourself as a high performing sales organization and so you know where folks are or it is expected of them to achieve their targets and quotas on a fairly normal basis. And so what I've seen work really well is a very objective sort of scientific approach to managing out low performers. And so what that looks like might be, you know, if you fall into the lowest 20th percentile and sales performance which can be measured by percentage of goal attainment for three consecutive months. Right. Or if there is another sales based activity where you're expected to talk to X number of clients within 30 days or whatever, you know that whatever that goal is, again, if you are in the bottom, you know, defined percentile for any amount of time, again that would put you on the list for a written performance plan. And then if you know there isn't a change in your performance, then you would be let go. But this, I've seen this, or this is very effective because it's objective right there. It's not a lot of hands on processing from an administration standpoint by the sales leader or by the sales operations team. Now obviously there'd be coaching you Know, from the sales leader to those individuals or to those low performers. But ultimately it's on them to perform and improve so that, you know, they fall out of whatever that, you know, bottom performance category is that they, that they're currently in. And again, that's a healthy approach because you always want to inject new sales talent into your sales organization. And so again, to help accommodate that, you want to make sure that you're letting go of your low performers.

All right, so that also helps as a side note with a challenge that we know companies have faced, which is they do that, you know, they try to use. Some people will do just a blanket lay off, others use some level of rationale. And the only thing they do that is objective or the objective way is the last person in is the first one out. And you know, lipo, exactly, that old accounting term. And the thing about that is we get so many complaints or sadness, right, that they let go really high potential people. But anyway, yeah, yeah.

And it goes back to your earlier point where it's a really short term move that really has lasting consequences. And so to your point, you know, you could have just onboarded some really great talent that could make some potentially great contributions to your organization. And you know, they've only been let go because, you know, of their tenure. Again, I would say that, you know, I know we just recently or we just talked about identifying and letting go of low performers in the sales organization. But I think it's beneficial for the organization to have an objective sort of structure process to identify or to rank employees based on performance so that there's a more structured approach to layoffs if again, that's necessary, such that they aren't sort of costly in terms of losing ultimately great talent.

So across the entire organization, you can apply this principle.

And companies, you know, I've seen things like nine box, right, where they used to, you know, and so, you know, companies have their various tools available at their disposal. And I would advise if companies currently do not use a system such as a nine book nine box to sort of identify high performers or, you know, to identify low performers, it might be worth investing in because again, at times where if you do need to make the tough choice to reduce headcount, you can go about it, like we said, in a way that isn't ultimately disruptive to the future health of the organization.

All right, so now let's talk about the part that's really interesting to me, which is what they can be doing. And so now, you know, economic headwinds and what we're suggesting is it's a great time to look at change, innovation. You had a really interesting idea and I have that I started to build off of as well. But you were talking about it's a great time to look at the structure and the right sizing of that to get you through all types of economic cycles. So talk a little bit about how a company might approach that and where they would start.

Yeah. So you know, one of the things that we've talked about a lot at Sales Globe is the future of sales. And so, you know, we talk about how buyers are different, you know, how the sales process has or needs to change to cater to the, you know, sort of the new or changing needs of buyers. And so if your sales organization hasn't really made those changes yet, now is a great time to investigate, you know, what options are there. So specifically, one of the things we talk about in terms of changes to buyer behavior is how do they or how can you help accommodate and facilitate their sort of self discovery journey? Right. Where we know that buyers are much more comfortable and much more adept at doing their own research. And typically I think there's research that shows that, you know, they don't need sellers to do the traditional job of, you know, sort of educating them. Not that those needs are completely gone, but it's definitely gotten smaller. So how do you, you know, again, adapt your sales process to the needs your buyer, how do you adapt your go to market strategy? You know, how do your buyers buy now? How do you reach them? We, you know, we've recently talked to a client about how they need to become more prescriptive and smarter about targeting potential customers. And so again, if your sales organization really hasn't taken steps to I'd say modernize the sales process or really to adapt to those buyer preference behaviors that again, take the time during this, I'd say down period to make those changes. Where we know that change, there will be a bit of disruption associated with it. But it's better to maybe have that disruption occur at a time where you know, you're already being disrupted again. So that way when we do know the economy will rebound, that your sales organization is primed to sort of take full advantage of it while your competitors who didn't take the time to optimize, you know, they're going to be a step or two behind.

One of the other things that we hear about is the time that salespeople spend selling. And you know, everybody here, anybody in sales knows that on average it's like 48%. It's less than 50% of the time that they're actually selling. We've been with consulting with companies that the number is even significantly less. So some people listening may say, well, you know, times are tough. Why do I want to focus on efficiencies? Well, why do they want to focus on efficiencies now?

Well, one of the things that efficiency allows you to do and you know, and how you realize those efficiencies is that it allows you to better scale to market opportunities. So where your organization is sort of right sized and processor optimized. So that way instead of having to immediately cut heads, you've already sort of designed your sales organization and optimized processes where it can more, I'd say comfortably expand and contract to a certain extent much better than what you could have before you put in place these optimized processes and systems. So what you're talking about, Michelle, with sales capacity. Right. If we, if we look at a sales organization, let's just say that has 30% of their time or we'll keep the math simple, 25% of their sales time or time devoted to sales activities. If you're able to, you know, meaningfully increase that, well, that you know, is equivalent to adding headcount essentially without the additional cost. And so there's a real opportunity to optimize the sales process and really to look at the entire sales process and extract even more efficiency so that you can increase the available time sellers have to actually sell.

I love that. Okay, so last thing we'll talk about is when companies are looking at conserving cash. Right. So often what we know, we know that travel and expenses, T and E, travel and entertainment typically gets cut. We also know, so you're a sales operations guy, you, I mean one of the big values that one of the big things that you bring to clients is the ability to give them solutions that they can actually operationalize. Right, Right. But we were talking about how sales operations as well as sales and other roles as well get impacted through that cost cutting to things that again, a short term conservation that may create a longer term issue. So let's talk a little bit about that.

Yeah. And you know, like everything, you know, I think decisions should be made with maybe a little more intent. Meaning instead of, we just talked about making headcount reductions without regard to the individual or the individual's contribution to the organization. And so when we talk about cost cutting, you don't want to cut such that it, again, it'll make it more difficult for you to be in a position to take advantage of the opportunities when the economy rebounds. So we know that sales is all about relationships and expense dollars aren't the same. And so while I fully appreciate why travel budgets and things like that might be caught in, if it comes at the, let's say, for example, at the detriment of your relationship with the client, for example. Right. Is it, you know, is it worth it to make that cut and prevent sellers from, you know, reaching those, your clients or potential clients, you know, what is the lost opportunity as a result of that? So I think we just have to sort of maybe expand that formula in terms of, instead of looking at just the cost savings, what are the opportunity costs that we're paying as a result of some of these costs? And just, you know, look at, look at that formula, I guess, a little differently to make sure that the return is still, is still worth it.

So if you were to give three pieces of advice to a sales leader today that's facing the economic headwinds and we're going to make an assumption that they're going to do the follow the typical traditional pattern of we're going to cut heads and we are going to conserve cash, that's our plan. But Michael, what would be three things you would ask them to think about before pulling those two triggers or levers, if you will?

Yeah, so I would say before making any, you know, large scale decision that would have the impact that, you know, extreme cost cutting or large cost cutting exercises have, or large headcounts and reductions have, is to have a clear communication plan in place. And that's one of the things that, you know, at Sales Go, we talk a lot to our clients about on all of our engagements is the communication and the change management piece. Ultimately, they're critical to the success of the decision that you're making. And so I would advise them to have a clear communication plan that outlines why you're making the change, to acknowledge the possibility or how disruptive or how it might make the organization feel and then ultimately what the plan is for the future beyond the cuts.

So even if you don't know the full thing, they should communicate something. Sometimes I feel like sometimes leaders and managers even will hold off if they don't know the full picture. But that can even create more issue.

And it's. And it's fine to not have the full picture. Right. Because you can say, you know, here's what we know, here's what we don't know. Because what I've learned is in the absence of a communication plan, people are left to create their, the, the narrative, their narratives on their own or as they see fit. And as we know, typically they are the worst case scenario. And that's what leads to whispers and rumors and, you know, the type of distraction that you, you do not want to have. And so, you know, we always promote transparency. And again, if you don't know everything, it's fine to say, you know, again, here's what we know. As we know more, you'll know more.

Yeah.

And always, always proceed with transparency in mind.

Okay, good. Communication plan. Number two.

Number two is to think about your sales strategy, to think about the needs of your customers, not only what their needs are currently, but again, when the economy does rebound, not only was that, what does that mean for you, but what does that mean for your customers? And so when we talk about optimizing and when we talk about, you know, designing our sales strategy, we're not designing for the present. We're trying to anticipate what the future needs are and build towards that.

Take a long term view.

Exactly.

And number three.

Number three, lastly is to break the pattern and really optimize your business such that it doesn't require these, I would say, knee jerk reactions to cut heads or add heads every couple of years and really identify what's the size your organization needs to be under, you know, different market circumstances.

All right, well, that sounds great. Thank you for the advice today, Michael.

Happy to join you.

Yeah, it's wonderful having you here and you're welcome back anytime.

Thank you. Take care.