Ask SCORE: Increase sales
How to do it using a new tool designed for small business
By Richard Walton
Assistant District Director for SCORE
If you want to increase sales, the chances are you have tried most if not all the conventional methods. In sales work this might be making more calls, offering price discounts, reaching out to find new customers, and/or using some creative promotional tools such as social media. For the most part these efforts do not work, primarily because they are stop gap measures that fail to address the underlying problem or problems. The real problem is focus. Focus upon outputs (sales) completely misses the need to focus on inputs (expenses, methods) in order to bring about change.
What is needed is a total process view of the functions involved in effective and efficient business management and marketing. This is not piece meal price cutting and attempted cost reduction. It is a disciplined approach to viewing the function as a system, in which the function utilizes a structure to carry out a process, after which the outcomes are analyzed and finally renewed. We call this system SPAR, which stands for structure, process, analysis, and renewal. Here are some examples of how it works.
SALES EFFORTS VIEWED THROUGH THE SPAR LENS
Sales efforts are carried out within a structure, consisting of products and services made available for sale, promoted through efforts such as field sales representatives supported by advertising, all of which effort is coordinated by a sales or marketing manager.
The sales process is implemented by calling on customers and prospects and asking for orders, or taking incoming orders by phone, website (e-commerce), or in person. There may or may not be sales training, quotas, some form of evaluation, and record keeping of customer's purchases, inquiries, complaints, etc.
The analysis of sales efforts usually measures current performance against a previous period as well as goal achievement. Ratios of calls versus orders received, number of new customers gained, profit per orders, and many other measures could be utilized.
The renewal process is rarely used to its fullest potential, since renewal is a clearly different concept from merely pressing forward by 'doing what we have always done'.
INCREASING SALES USING THE SPAR METHOD
We should never assume that our structure is fixed and cannot be changed. Structure is a design variable in organizational management. How we sell is just as important as what we sell and how we promote our products should be based more on what benefits they provide to users as opposed to the features built in to the product. The only feature that really matters is the latest, which should be the outcome of a continuous attempt at improving it. Use creative structure to build sales.
Process is how we do what we do. Whether selling through conventional outlets or through the web we need to maximize results while reducing effort. Every process improvement should be tracked as to its impact on revenue and cost. Building revenue without reducing cost is only a half win. We need to win on both revenue increase and simultaneous cost reduction. The key is doing whatever we do better, and that will build sales.
No sales effort should ever go without some form of analysis. The relationship of effort to results is key. We know that the so called 80X20 rule tells us that 80% of the results are typically produced by 20% of the effort. If we can learn which efforts make up the 20% of effort and replicate them we can have a profound impact on sales. When you merely total up sales for the period and compare it to a previous period, you are not taking a close enough look at results from the standpoint of effort. It is effort that we control in pursuit of sales. And focus upon what efforts produce results is crucial.
Renewal means ending one period with a resolve to improve outcomes in the next period. It is a brand new opportunity, not a continuation of the past. Everyone involved in selling should look at the new day as a chance to make new inroads in any previous records, overcome yesterday's problems, and capitalize upon tomorrow's potential. Renewal is actually the re birth of destiny.
We should view our efforts at building sales through a lens that enables us to take a systems view of the process. This is what the SPAR program does. SPAR, when carried out correctly, results is a complete view of how the firm operates in its sales or even its cost reduction efforts. Knowledge of what we are doing, and a disciplined analysis of the contribution of each element of effort to ultimate results is crucial, and SPAR is the system that enables that to be done.
Mr. Walton teaches Financial Management, Operations Management, Corporation Finance, and Entrepreneurial Finance at Frostburg State University. He is also Assistant District Director for SCORE, Western Maryland, and the President of ERMACORP, a Hagerstown based Management Consulting Firm. He may be reached at 301-462-9850, or by email to Richard@ermacorp.com.