Operating expenses, or OPEX, is something all sales managers must optimize for. Even more so in the wake of the global pandemic. Unfortunately, many sales teams are being squeezed as demand has dried up for many industries.
Some sales teams have been inundated with opportunity as decision-makers are stuck inside with the time to hear a good sales pitch. There are opportunities to discuss how an innovative solution can help them achieve their goals: faster, cheaper, better.
In this article, we aim to help you achieve those same goals (faster, cheaper, better) in the performance management of your sales team. During times of crisis, a healthy balance sheet is essential.
We think it’s vital for sales leaders to use what best-selling author Nassim Nicholas Taleb deems, slow thinking. We will use an analytical approach to breaking down a few high-level line items that may be weighing down your balance sheet’s liabilities section. Additionally, we’ll provide tips for dealing with operating expenses effectively.
1) Identify Your Assets and Challenge Them
Widespread layoffs are an unfortunate byproduct of economic downturns, but in sales, the top performers will shine in any economy. Laying off your star account executives or SDRs with everyone else is like throwing the baby out with the bathwater, figuratively speaking.
Instead of layoffs, consider alternative compensation structures that can limit the company’s expenses, but maintain a healthy pipeline. One strategy could be to reduce the team’s base salaries and offer a higher commission. This will incentivize your top performers to push harder while naturally eliminating the weakest links in the chain.
Your company’s goals and guidance numbers will likely need to be recalibrated for the new normal, which in the realm of sound generally accepted accounting principles (GAAP) is important. In the eyes of a sales manager, however, now is not the time to set expectations any lower. In fact, we advocate you set even more audacious goals.
Parkinson’s Law states that work will expand to fill the time available for its completion. We believe this applies to sales goals as well. Sales goals are reached according to the local maximum, not the true potential or global maximum. Sales reps that barely achieve their goals every period would also likely just barely achieve their goals if they were slightly higher. Set audacious goals for your sales team, and let them battle it out to achieve them.
2) Let Quarantine Test Your Ability to Build a Remote Sales Team
If your sales team has been able to adapt to the order to work from home, then consider this a government-mandated experiment into whether your salesforce can effectively operate remotely. It’s likely best to measure productivity instead of results to be realistic about the effectiveness of your remote salesforce during this time, as the greater economy could be impacting your team’s results.
Many sales managers will likely reconsider the need to sign off on those expensive business trips and even maintain that sprawling office space for their sales teams. Even after the quarantine period is lifted, the risk of business trips and crowded office buildings will need to be weighed.
Perhaps you re-evaluate your sales process. Try leveraging remote tools for the early conversations with new prospects, moving them down the pipeline. You can then dispatch a closer to travel and close the deal.
3) Reconsider Your Toolkit
Perhaps you adopted that fancy CRM for a killer new feature, but with it comes a ton of baggage in the form of features that go completely unused. Consider how much that annual expense for that SaaS product weighs on your balance sheet. Ask if it could be replaced by a lightweight tool that accomplishes the same end result.
Another potential strategy to reduce your expenses on bloated SaaS tools is to renegotiate your pricing model to only pay for what you use. Perhaps the company would be willing to charge you a discounted price limiting access to features your team actually uses.
Sales teams were able to thrive before any fancy software products were on the market. And even though the products certainly have a positive impact on productivity and organization, it’s good to know they could be eliminated from your balance sheet entirely if your finances are in dire straits.
4) Leverage High ROI Strategies
In times of crisis, you must leverage what works best in terms of return on investment (ROI). Often times, companies refer to these expenses as one line item, sales and marketing. In times like this, however, it’s more like sales or marketing.
Some companies overreact and start slashing their sales and marketing budget down to its bare bones. As a diligent director of the company, however, you should dig deeper into the actual results of your various sales and marketing campaigns to cherry-pick those that work.
For example, if you determine the ROI of your sales team is significantly higher than social media marketing, suspend your social media spending. Leverage your sales team’s ability to achieve higher ROI. Even in times of economic expansion, you should be reallocating your budget to be more heavily weighted in what works well.
Operating Efficiencies, Not Operating Expenses
When you analyze the balance sheet of your business, you are like a doctor taking a patient’s vitals.
You must understand how each metric is interconnected, and what can be done to boost or suppress each one. For example, if your social media marketing expenses are driving qualified leads to your sales team, cutting your expenditures from this channel would likely impact the performance of your sales team.
In fact, every decision you make should be discussed with your board, checked, and double-checked before any execution. This will ensure you are operating with the highest level of efficiency, and not simply the highest level of operating expenses.
Check out the full visual below from Embroker, they cover 16 business expenses that companies waste the most money on.
This is a guest contribution by Drew Page for Embroker. Interested in contributing to the CloserIQ blog? Check out our guidelines here.
If you are looking for job opportunities in tech, click here.