By mid-year on your six-month sales cycle, you know. You’re going to hit the number and nothing has to change. Or you’re going to miss the number and you probably have to reduce staff.
Being at plan means success, and success means celebration. It’s that second situation we need to talk about. Do you really have to lower headcount? If so, how much? And how will you know whom to let go?
Reducing staff to save money can look attractive. But you can cut too deeply, and that might come with costs later. Solve for the present but plan for the future.
Where do you go from here? Let’s take a look.
Cutting sales headcount may be necessary but don’t cut too deeply.
Grade Your Reps:
Take a clear-eyed look at your salespeople. Evaluate them via stack ranking.
For an ABC approach that clarifies A-player sales qualities, see Topgrading for Sales. This book, co-authored by SBI CEO Greg Alexander, can help reps and managers alike.
Look not only at reps’ performance, but beyond it.
Use our A-Player Traits and Scorecard to conduct an objective review of your sales rep. The scorecard will guide your evaluation of your rep’s performance. The checklists will help you identify traits your organization is missing. Download the A-Player Traits and Scorecard here.
Analyze the Rep in Context of the Territory:
Assess how your team members are selling compared to the potential in their territories. It falls under best practices to be able to gauge performance. You need to know who is doing well and who isn’t.
Imagine two sales reps in two territories. The first territory has a potential value of $10 million. The rep is bringing in $2 million. The second territory also has a potential value of $10 million. The rep there is bringing in $6 million.
Conclusions here would seem fairly clear-cut: Rep one is struggling compared to rep two. But it’s still important to know the territories. How big are they? What about company sizes, types of industries and their numbers of employees? We call this “firmographics.”
Consider Behavior in the Analysis:
Territory analysis should also include business relationships. What associations and marketing interactions does your organization have with companies there?
Territory potential can have many parts. For a true view, make sure you see them all.
Put Performance on a Graph:
Your analysis might reveal some gray areas. But a 4×4 table can put things in black and white.
Use one axis for sales rep performance. Gradings are simple: high or low. Use the other axis for territory potential: high or low
Assign your reps to their appropriate places on the grid.
High Performance / Low Potential
Shift: You have an A-Player delivering a heroic effort in a bad territory. Take this opportunity to reward the rep and shift this pro into a high potential territory.
Low Performance/Low Potential
Review: It seems to make sense to cut the rep in this scenario. Before you cut, remember that the rep is operating in a low potential territory. Consider moving the rep to a better territory and doing a follow-up evaluation.
High Potential/Low Performance
Cut: These reps are failing to make the number in a profitable territory. You are leaving money on the table and giving away business. Cut these reps and reassign the territory to A-Players.
High Performance/High Potential
Keep: You have a great rep squeezing the maximum value from a high-potential territory. Keep this rep in place to maintain revenue. Take the time to analyze this rep’s performance to identify best practices for the entire team
Put the right people in the right places, then get ready for the recovery.
Manage the Risks:
Whatever situation has led you to reduce staff, be prepared for demand to rebound. You’ll need a team you can put in the game quickly as fortunes improve.
Don’t cut too deeply. Be wary of any move that might unsettle recurring, regular revenue. That’s important to your year and hard to make up if you disturb it.
With a pickup in business, you may hire new reps. But onboarding them can take time and cost revenue growth. Is your onboarding process effective and efficient? This is the time to build your virtual bench of sales pros.
No one likes staff reductions. Get the necessary information. Make the best possible business decisions. Keep the performers. They’re your foundation for the future.