As the economic outlook continues to be murky, many companies are cutting back. But you can’t cut your way to prosperity. There are often overlooked opportunities to grow the top line – big and fast, even in the face of a down market – with a set of tactical actions designed to improve sales and margins. . The authors found that companies that use difficult times to increase their bang for the buck in sales and marketing are able to increase revenues by tens or even hundreds of millions of dollars within one to two years. quarter. They are also the companies that emerged stronger than before as the markets turned around. The authors present some quick-impact opportunities in three areas: improving commercial effectiveness, increasing marketing ROI, and optimizing revenue from your customers.
Faced with a tough economy – declining demand, rising interest rates, disruption and uncertainty everywhere – companies are cutting back. A survey of 3,000 global executives carried out by the consultancy AlixPartners, where we work, revealed that 20% have already carried out layoffs, 20% are expected, and 25% have imposed hiring freezes. In addition, 33% said they are building cash reserves, and 36% have started cost reduction programs. This is the usual – and often necessary – playbook.
But you can’t cut your way to prosperity. Our experience shows that the recession toolkit requires more than sharp knives. There are often overlooked opportunities to grow the top line – big and fast, even in the face of a down market – with a set of tactical actions designed to improve sales and margins. . These are not strategic initiatives such as identifying new markets or staking a new market position, and are not intended to replace long-term strategies. Instead, these are activities that improve the focus and effectiveness of the things you are doing now.
They may be tactical, but it doesn’t matter. We have found that companies that use difficult times to increase their strength for their money in sales and marketing are able to increase revenues by tens or even hundreds of millions of dollars within one to two quarters. They are also the companies that emerged stronger than before as the markets turned around.
How do they do it? By identifying a set of high-impact opportunities in three areas:
Improving Commercial Effectiveness
Frequent commercial functions remain unchanged in the face of stunted growth, on the theory that the company cannot afford to disrupt its revenue-generating activities. When leadership is considering difficult decisions, the first phrase often uttered is, “Leave my organization to sales.” The result can be a sales force that is overwhelmed by legacy structures or out of alignment with a changed strategy. Even during a cost optimization effort, sales leadership can continue in these ways to improve:
Optimizing market intelligence, segmentation, and sales coverage models.
We are always looking for hidden opportunities to refine the sales scope and account management to bring it better in line with changing market conditions or segments. For example, a leading media company reconfigured its global revenue organization to focus its resources on the largest and most profitable customer segments in each market. And a medical device company moved its sales coverage model from territories to channels after analysis showed that the latter would be more efficient. The result of actions like this is an injection of energy and drive into a sales force that can continue to grow more effectively.
Improve sales pipeline visibility.
In many companies, sales pipeline reviews are often back-to-back. Since the agenda is about what is happening, the team finds itself in a reactive stance to market conditions. We’ve had significant success implementing AI tools that provide full visibility into sales-rep productivity and engagement, accounts at risk, and other areas where proactive action can be taken. In one case, we helped a telecom client increase business customer revenue by more than $50 million within three quarters by integrating AI into their sales reviews so they could ask the right questions questions in their pipeline sessions.
Increase Marketing ROI
If your organization is facing disruption and uncertainty, now is the best time to re-evaluate your marketing spend and channelize investments in the most effective ways to grow:
Marketing campaign cost optimization.
It’s healthy to reevaluate campaign spending from time to time to break old habits and reinvest in the right places. How well are you tracking campaign results back on investment? What are your top priority areas right now? For example, given the changing conditions on the ground, should you emphasize brand awareness, product launches, or targeted campaigns? We’ve seen organizations take a “clean sheet” approach to marketing campaign spending and build strategy from the bottom up in four weeks to generate 15 to 20% cost improvements.
Convert marketing qualified leads (MQL) to sales qualified leads (SQL).
Optimizing lead management can have the same effect. We work with a digital-services company that converts less than 40% of its leads because it doesn’t have an integrated lead management process. We worked with them to integrate AI-based lead scoring, end-to-end status visibility, and follow-up accountability. The result: Lead conversion rates increased to 87% in just two quarters, and revenue increased by $20 million.
Enhancing Customer Success, Defending an Existing Customer Base, and Enhancing Loyalty
Given the uncertain economic climate, optimizing revenue from your existing customers is a great way to quickly improve topline performance while strengthening your customers’ loyalty. Here are three ways to quickly achieve meaningful results:
Focus on retention and reduce churn (net retention revenue).
Start an initiative that pays more attention to customer retention. A coordinated and programmatic approach to customer success includes goals, measurements, incentives, training, and communication plans, and each business unit leader must be accountable for key change initiatives. . We’ve seen initiatives like this drive retention rates in excess of 90%, in one case resulting in $100 million in accretive change revenue within a year.
Improve the wallet feature.
Organizations are most likely to succeed when they include a coordinated effort to train, align, and reward their teams to cross-sell and up-sell, especially with new launches. product or segment their target customers.
Improve customer lifetime value (CLV).
Reorienting the team to optimize CLV can be a game-changer, especially when combined with incentives. In one instance, a B2C client organization realized $450 million in improved revenues in the first year after segmenting high-value customers and reorienting product offerings and programs. of loyalty to increase the income from them.
What is Required
We arrange this approach working on acquisitions, in the course of detailed operational and commercial due diligence and subsequent post-merger integration. It might be easier to dig into these areas and make a change during a rough time when a deal is closing, but there’s no reason why the same approach wouldn’t work in any situation. This requires three things:
- Industry experience to know which levers are likely to produce the greatest results – that is, knowing where to look.
- The ability to enter deep data – for example, to analyze the number of sales and profits by product, region, channel, even the sales rep – and to bring the same granularity to sales activities and customer experience.
- The determination to carry out the identified specific actions.
A critical part of turning insight into action is making sure that sales and marketing leadership see themselves as allies of the financial team. Both functions can be confusing in finance. In downturns, marketers expect the CFO to come with a hatchet, not a helping hand, and the sales and finance teams have a long history of suspicion of each other. A cross-functional “revenue win room” – something we often advise in post-merger integration work – can identify and resolve failures that harm both organizations by improving data reliability and increasing in back-office support for sales. Above all, the revenue-winning rooms unite all the commercial teams, which helps them to act faster and helps the executive management to set and drive priorities. Practical actions like this help create a climate of trust on both sides.
That’s not to say that initiatives like this aren’t without pain. Marketing and sales must shoulder their share of the burden of recession readiness. But the same mindset that finds places to weed the garden can also find places to plant. A program like this can be especially welcome today, because it is a way to protect – even grow – the top line in a down market.
In fact, these tactics are more effective in a single trend than in a single trend. It’s a different way. That’s partly because it can easily overcome organizational inertia when revenue and profit forecasts are dire. But this toolkit became especially valuable in tough times as many other companies turned to retrenchment. They cut marketing, not make it more effective; they count pennies on customer service, without focusing on ways to reduce customer churn. There is no better time to move forward than when the other guy is pulling back.