The causes of underperformance in sales are many and varied. In fact, no two companies share the same problem set and the issue doesn’t always sit squarely with the Sales team.
But if low sales are not exclusively a Sales Team problem, what could be the cause?
Here are six possible contributing factors, among many:
1. Loss of sustainable competitive advantage
Your business may be producing the same high-quality products or services as always, but competitors have found ways to change the value proposition of their products to deliver more value for the given cost. Product bundling, better quality control, credible third-party endorsements and increased communication are all ways to change the value proposition and eat away at your competitive advantage.
2. Emerging substitutes
It may be that your entire industry category is under pressure from the emergence of a substitute product or service. Cab companies were not challenged by a rival taxi service but an entirely new definition of private transport when Uber came along. Blockbuster was killed by the emergence of a superior substitute in subscription television, which has gone on to challenge free-to-air television and threaten established advertising revenue models.
3. Changing market preferences
We find it surprising that only around 56% of businesses (link to COVID report blog article) have conducted formal research into whether their products and services match what their market wants in the last 12 months OR EVER! It is entirely possible that sales potential for your current products and services has peaked or is in decline.
4. Price competition
New competitors, or those facing the same declining sales problem may have chosen to adopt a price reduction tactic to outcompete rivals. Providing that margins are high enough to sustain the tactic long enough to weaken competitors, it may be a long-term strategic success, but in practice it is normally a losing tactic as competitors innovate and diversify to cope, rather than engaging head-to-head in the same loss-making action.
5. Poor product quality or poor service delivery
Selling new products or services to existing clients is made difficult if the value proposition described by the sales team is not delivered. There are only so many first-time clients to bring on board. Is your reputation turning sour?
6. Bad strategy
Pursuing diminishing markets, failing to adapt to market changes and being overly committed to driving returns from past investments are just some of the strategic decisions that can impact sales performance. Such strategy choices place the Sales team in a difficult position.
Over the last 20 years of consulting, we have seen combinations of all these causes and more. So, how do you know for sure what is causing underperformance in your business?
You can find the answer with a three-part investigation.
Sales Team assessment: A structured, four-step assessment to thoroughly examine and tease out any underlying issues within the sales team, its processes and collateral.
Market intelligence: A detailed examination of your current, lost and potential customers, why they buy or have ceased buying from you, their values and the degree of alignment of your products or services with those values.
Competitive intelligence: A review of the competitive pressures in your industry, national and/or international trends, competitor, substitute, client and supplier strengths and weaknesses.
Combining the insight from all three initiatives will strongly indicate the cause of underperformance in sales and point the way to resolution. In fact, if you undertake all three investigations you will find multiple benefits flowing well beyond a performance improvement in the sales team. You will be well-positioned to improve profitability in your business.
Would you like to know what is causing your underperformance? Call us for a detailed discussion on 1300 36 20 27 or fill in this form.
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