How Poor Strategic Capabilities Cripple Sales

Having poor strategic planning for sales

Table of Contents

In 2008 the greatest recession since 1929 slammed into the world with full force, which we have come to know as the Global Financial Crisis.

Since then we have seen companies fail, many job losses, and a general tightening of the economy. As a product of this, customers have been able to slash costs by demanding even lower prices from suppliers – and suppliers, to survive, have slugged it out with lower prices just to compete.

The now long-term nature of this new economic climate is referred to as, “The New Normal”.

So, much has changed, but the question is – has your business changed your sales process and models to meet these challenges?

A company operating in the ‘New Normal’ must have strong strategic capability, so what do we mean by that?

Here is an example based on two suppliers, one was happy and the other one was sad.

The story

Desperate to win business, the sad supplier quoted on every opportunity they possibly could hoping to win any business they could find.

They spread all of their resources responding to every request for proposal (RFP) and in so doing, produced average responses. What were their results?

The cost of resources was about $4,000 to respond to each RFP and their conversion rate was one in twelve. The cost of sale was a huge $48,000! With margins of four per cent, their selling model was unsustainable.

So why was the happy supplier happy?

They actually declined many opportunities and carefully chose only those that were winnable.

With fewer RFPs to respond to they were able to throw all of their resources around these to create a highly professional response. What were their results? They won one in two bids!

Company revenue actually dropped (initially), freaking their estimators out, but net profit grew.

So what do our two stories illustrate?

  • Its vital to operate strategically rather than re-actively. There are many facets of strategic capability, and our story illustrated just one.
  • Pre­-tender strategies, targeting of vertical markets, pre-emptive strategies, creation of a strong unique value proposition (UVP), and development of a best practice company sales process are other examples of world class strategic management.

So as a sales organisation operating in the ‘New Normal’, do you possess strong strategic capability?

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