Sales Management Debt: The Trade Offs That Managers Will Pay Back – With Interest

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Borrow by taking a quick and easy loan and you get things you want now, no waiting. You pay the loan back — with interest. Often that is good decision making.

It’s a trade-off with a price. Sales managers (and sales representatives self-managing) have the option of borrowing to get something now, and pay the price later. But sales leaders and those who wish to be top producers must acknowledge the trade-off and what must be paid back.

Sales managers can run into serious trouble by borrowing too much.
There is a price to be paid in the future. Too much “sales debt” is not good. It cripples sales performance within an organization.

A sales team racks up sales debt, when a strategy is chosen or management decision made, that is advantageous in the short term, yet has a costly long term effect.

It can be OK to borrow, but be careful.
When you take out a loan to get something now, you plan to pay it back with interest. If sales managers don’t properly acknowledge the sales debt being incurred and how it will be paid back, two bad things can occur.

1. The sales organization is financially crippled if not bankrupt.
The consequences of short-term thinking and borrowing against the future come due.

2. The sales team becomes a slave to the sales debt monster.
Reasonable pursuits that are more profitable, yet take time, are shelved. The sole focus is finding business quick to meet the monthly nut.

Why sales executives must resist taking on too much “Sales Debt.”

1. Top talent will flee
When organizations take on too much sales debt they start to do stupid stuff. The short-term considerations are king. Well, top producers and those that could develop into top producers flee these environments. If a sales organization can’t properly pursue profitable opportunities or sales reps must waste sales time with stupid tasks they will go somewhere else. Top talent gets frustrated when they are not properly trained or must sell very inefficiently due to lack of proper systems. The mediocre and bottom of the barrel have fewer options; they will stay.

2. The best most profitable accounts go to others.
Better accounts usually have longer sales cycles. Proper systems are necessary to be at the table when a buy decision is being made. It takes sales talent and a proper sales skillset to manage these opportunities to close. Those opportunities are not realistic for sales organizations with too much debt, as they don’t have the time, systems or talent to win them.

3. The cost of sales go up
Those accounts with shorter sales cycles. It sure feels good closing them. They may not be a perfect fit, the price concession pinched a bit and they tend to be a little on the smaller side… but it’s a close and new account on the board. But too much focus on short term wins come with a debt to be paid. Higher cost of sale.

4. Too much sales debt is a treadmill to nowhere or a greased chute to hell.
Debt is crippling. Whether it is an individual or a sales organization, too much debt can overwhelm you, narrow your choices with no end in sight. Just like the song that never ends, you will work hard on the sales treadmill to nowhere if you don’t pay down your debt. Too much sales debt also puts you closer to the line of disaster. You have little room for error, market condition changes or losing a key account. A stiff breeze could put you out of your misery.

The More Common Types of Sales Debt

Choosing sales behaviors that tend to deliver short-term results.
These are lower-volume, small margin accounts with shorter sales cycles. The quick is chosen over the right and a price will be paid.

Lack of clear focus on targets most likely to deliver great accounts.
Sales managers incur a huge debt of sales team inefficiency when they fail to spend time prioritizing target groups for best results. I have taken a lot of sales 911 calls and the #1 reason for the emergency is lack of focus on the most probable buyers; by far. Managers incur a huge debt of inefficiency when they borrow time for quick closes by failing to keep their team focused on the highest probability targets.

Lack of sales performance standards and training.
There is a method to the madness. There are behaviors more likely to work and behaviors less likely to work. Tracking indicators that lead to results. The right way to prospect. Scripts that communicate value and get meetings. First meetings that lead to 2nd and 3rd interactions and a close. Sales pipeline management methods that lead to a close. If an organization lacks those standards or proper training or sales coaching is not done, time and money may be saved in the short run, but you pay the price of lower sales performance.

Sales Managers Can Pay Back a Lot of Sales Debt with Coaching Up-Front.
This is a biggie. Managers most influence the quality and quantity of accounts closed in the beginning of the process. Are they calling on the right people? Are they prospecting correctly? Are they likely to conduct a first meeting with a solid prospect well enough? Do sales reps manage their pipelines well? If managers do the proper coaching up-front they can be assured that the reps are doing the right things. That pays off in closing ratios and account quality. But skip this step or take it for granted that the right things are being done and you lose control. You borrowed some saved time but the organization will pay a huge price in lower sales performance.

Summary: Sales Managers Must Avoid the Burden of Excessive Sales Debt

As a sales rep or manager, you are free of sales “debt” when you have taken the time to learn and hone the craft of sales, when you setup the proper systems to operate at maximum productivity and profit, when you have invested time and money to be able to compete and win the best accounts out there. You are selling with no debt. You have the freedom to think longer term and every week reap the benefits of the systems you put in place and training you did. You are operating debt free. Sweet.

Others have taken some short cuts and incurred sales “debt.”
Maybe the suspects selected were poorly chosen so there is a price to be paid in low call efficiency and wasted time. Maybe the scripts and verbiage used has not been properly prepared so there is a price to be paid in fewer conversations and meetings set. Maybe developing sales skills and your craft has been neglected, so your sales bucket has holes in it and you pay the price of lower closing percentages. These are debts that must be paid. They are paid every week and every month.

When the sales debt piles too high you become a slave to your debt.
Your sole focus becomes meeting your monthly nut. So, short term thinking starts to dictate your actions. Your sales debt burden can be bone crushing.

If you have sales debt to pay, contact me. Maybe we can work a plan to pay it down and improve the financial strength of your organization.

Scott Channell sales scripts & appointment setting