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From Sales Cost Management to Consequence Management

by Dave Egloff  |  May 26, 2020  |  1 Comment

Earlier this month, I covered the “Three Questions CSOs Should Ask Before Cost Cutting.” Since then, many CSOs are still being forced to urgently reduce the costs of sales due to the coronavirus pandemic and lingering economic uncertainties. 

Most CSOs have enjoyed the growth and optimism resulting from over a decade of macro-economic expansion.  Correspondingly, many leaders now find themselves in a difficult and unfamiliar position of trying to more optimally deploy investments and resources.  Additional pressures come from CFOs who are likely clamping down to cut, contain and avoid expenses.

How can CSOs maintain their budgets and political capital?  Savvy CSOs are taking the following 3 actions:

Action #1 – Shift internal narrative from cost management to consequence management

Cutting costs today are often viewed through the lens of financial savings, like the immediacy of benefit and amount saved.  However, cutting expenses too deeply leads to negative consequences especially for CSOs serving customers and contending with partner and seller disruption. 

For many CSOs, the anticipated time to recover and rebuild after deep cost-cutting is longer than hoped.  Gartner observes that new-seller time to productivity has increased by 20% from 2007 to 2013.  Note, most CSOs state that the time to full seller productivity is 7-12 months. 

Unlike other executives, CSOs have a unique challenge in periods of cost-cutting and uncertainty.  If the sales function recovers slower than either the economy or their direct competitors, they run the risk of losing market share.  CSOs need to work with their CFOs to ensure that today’s savings minimally impact tomorrow’s growth.

Action #2 – Listen to the market and focus on segment analytics

CSOs need to continually listen to their customers and partners to maintain an updated sense of market conditions.  However, to truly gain an objective perspective, sales analytics are key. 

Top-down sales metrics are commonly leveraged but may not unlock all hidden insights.  CSOs recognize that during this post-pandemic reset each customer segment is responding a little uniquely.  Whereas one customer segment may be reeling due to decreased demand, others may be starting to strengthen.  CSOs must take a bottom-up approach to better forecast demand.

Action #3 – Squeeze costs and redeploy resources

For many, sales cost optimization is an always-on strategy that helps balance costs with realized benefits.  CSOs that leverage a multifaceted strategy to cost optimization reduce the chances of more dramatic and disruptive cost-cutting methods that jeopardize continued success. 

Undoubtedly, this pandemic has challenged nearly all sales organizations regardless of their effectiveness and efficiency.  CSOs should continue to take a holistic approach and leverage objective data to diagnose under-performance and predict areas of greater opportunity.  CSOs armed with these insights are enabled to remediate issues by exploring where to invest, divest and redeploy sales resources.

These are certainly uncertain times.  However, CSOs taking a proactive approach to their post-pandemic reset strategy will be more prepared when the recovery phase builds momentum.

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Dave Egloff
Senior Director
1 years at Gartner
20 years IT Industry

Dave Egloff is a Senior Director, Analyst in the Gartner for Sales Leaders practice. His current work focuses on key initiatives in sales strategy, sales operations and sales compensation. Read Full Bio

Thoughts on From Sales Cost Management to Consequence Management

  1. How about real estate? This theory of yours works well for most of the sectors. Most of the constructions are stopped due to lack of funds and labour force. Hope you could suggest best tips!

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