Cutting Costs - Is Your Sales Staff The Area You Want to Cut?

Letting people go is not always the best way to cut costs &, sometimes, it can be the worst. At the company in this story, someone with an eye on the bottom line thought that the company was paying much in commissions & expenses. It appeared as if their sales people were taking up much of the budget with trade shows, schmoozing customers, trinkets, & travel. The decision was made to cut costs in the sales department by 50%. It looked like the simplest way to do that was to terminate half of the sales people & cut the budget for expenses in half.

The company kept all of their administrative people, lots of of whom provided support for the sales department at least part of their time. The company kept all of their Research & Design Engineers although the company did not make a custom product & not lots of design was being completed. They kept all of their Field Engineers, Customer Support, & Technical Support people. They kept all of their promotion people & continued to spend on an pricey promotion campaign that was already in place with contracts pricey to be broken. They kept all of their commitments for trade show booths & sent individuals who weren't as able to answer potential customers' questions. The whole operation was still hale & hearty behind the scenes, waiting for sales that had slowed to a trickle.

Beyond the company walls, the Sales people, now limited in what they could do to "make points" with the people they called on, struggled to maintain relationships with long-term contacts who had expectations for how they would be treated. The customers still wanted the nice lunches & the trinkets. The customers lost confidence in a company that appeared to visibly be "in trouble." At the trade shows, cost-cutting was visible. It furthered the fading confidence in the company.

 taking a look at the company expenses, cutting the largest expenses appeared like a logical choice to the decision makers when they made it but it hurt the company. Cutting people can always have a negative impact in lots of ways. Here, it reduced sales when the company had the staff it needed to handle increased sales. When you have decided it is inescapable, you need to double check your plan & pay close attention to the potential consequences. You cannot eliminate the individuals who sell your product & keep producing.