How to downsize your sales force

This article was first published on Apr. 12, 2018 on the Harvard Business Review website.

Many industries have had to downsize sales forces. There are several reasons for recent sales force job cuts: Shifting market dynamics are one cause, including changing customer needs, customer consolidation, new buying channels, and slowing market growth. Merck recently publicized that it planned to lay off about 1,800 U.S. sales reps following an industry-wide downsizing trend. The trend is attributed to the growth of digital communication channels and reduced access to physicians, who increasingly prefer to get product information online.

Changing company strategies is another, including new strategic product/market priorities and shifts to e-commerce. Microsoft recently reported it was cutting up to 4,000 global sales and marketing jobs and refocusing field sales effort on specialized growing markets in cloud computing, data analytics and artificial intelligence. At the same time, sales of simpler products were moving to lower-cost channels.

The desire for productivity improvement is a third reason, which includes eliminating inefficiencies and nonproductive sales time and reducing the cost of sales. Recently, Anheuser-Busch announced it would eliminate 300 U.S. sales jobs from its high-end craft beer division. The goal was to simplify the sales organization following multiple acquisitions and to give customers a single point of contact.

No matter the reason for cutting sales staff, a sales force downsizing is stressful and emotionally draining. Unfortunately, too often sales forces downsize for the wrong reasons or implement the downsizing poorly. The result is a loss of key customers and good salespeople and a substantial drop in sales performance.

Here’s how to avoid five of the most critical sales force downsizing errors:

To avoid excessive downsizing, link sales force size to customer coverage needs. Avoid excessive cuts by estimating costs and revenues over a minimum three-year time horizon.

The solution: Recognize that when you downsize the sales force, you downsize your sales, too.

The solution: Measure twice, cut once.

It isn’t realistic to expect fewer salespeople to work harder and smarter and to accomplish the same work the larger sales team performed. Meeting customer needs with a smaller sales team requires redefining how work gets done. Perhaps responsibility for smaller customers and simpler sales tasks can move to inside and digital sales. In that case, the downsized sales team could focus on major customers and activities for which salespeople add significant value. Defining a sales strategy up front greatly increases a company’s odds of emerging from a sales force downsizing well-positioned to defend strategic business sectors and realize key growth opportunities.

The solution: Do less with more focus.

The solution: Focus on your customers, or your competitors will.

The solution: Communicate that it is not the strongest who will survive, but those who can change.

By using a purposeful and strategic process for implementing a sales staff reduction, and by avoiding some common errors, you can emerge from a downsizing stronger and better positioned for future growth.

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