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Thursday, November 24, 2011

Although I didn't realise it at the time, I took my first "consulting" role over 10 years ago when I joined a company to turnaround declining revenues within their service division.

What I thought was simply a sales management role was actually a challenging change management project as I had to increase revenues through transforming the structure of both the team and the service proposition.

The first thing I did when I started was really dig into the figures to see what was happening. Whilst everyone I spoke with thought that the problem was simply down to poor sales performance, in fact it actually due to the fundamental structure of the division and it's service offering.

Without going into the details, the service division was structured in such a way that it's people were compensated contrary to increasing revenue. Plus, instead of working in conjunction with the capital equipment division (which had traditionally sold the equipment maintained by the service division) they had completely opposed sales structures leading to new equipment being sold that was actually serviced by another company at a cheaper price than their own service division.

Believe me, you could not make it up.

Once this was realised, the changes I put in place quickly reversed revenues which had been declining for over 5 years.

Over the next 3 years, in a company that was struggling and constantly striving for performance gains post-MBO, I found myself sat around the boardroom with the CEO looking at other "projects" to generate sales growth and revenue improvement. The common theme was that these were all projects which aimed to unlock hidden revenue within the business.

Handing them to the Sales Director or one of their team wouldn't work. Either they were too close to the issue or they simply couldn't afford to turn their attention from hitting sales targets. What the CEO needed was a business consultant. In a larger corporate it would have been a business analyst or someone in the CEO's strategy team. But this was a 250 employee SME... so it was me.

Often the projects ran across different divisions, and required a more holistic approach unencumbered by company politics.

Examples of where hidden revenue can be found within a business include:
  • cross division offerings - you can unlock significant revenue opportunities by combining service offerings from two autonomous business units. One company I worked with had separate consumable and equipment divisions who never combined their offerings because of internal structures, leaving money on the table which their competitors exploited.
  • cross territory sales - a common problem in companies with fixed sales territories is that they're often not aligned with customer decision making. I worked with a company that had no-one looking at national accounts. The sales team were focused on their own little area meaning that they never looked for the larger opportunities. Salesperson X could be dealing with a division of a national company with offices around the UK but since they "weren't on his patch" they were left untouched. Wouldn't the salesperson just tell their colleagues to follow up these opportunities? Not when they're competing with each other for the president's club and holiday to Hawaii!
It's true that the problems of silo's usually occur within larger businesses (both the examples and the original company I mentioned were companies with between 220-500 employees) but there are also examples of hidden revenue within smaller businesses, which include:
  • Failing to cross-sell to existing customers - do they buy every product or service that you offer? Have you ever walked into a customer and seen or heard about a competitor's product or service. Did they say "I didn't know you did that"?
  • Not exploiting all opportunities within existing accounts - do you know which customers are part of larger groups? Are you in contact with all potential buyers within the same account? For example, if you sell training services and you only deal with HR what happens if the Sales Director buys a training programme elsewhere? Are you sure you will always be asked? Most decisions in larger companies involve more than one person, often 4 or 5; are you in contact with all of them? Do you even know them all?
  • Not catching up with dormant accounts - if you're a project based business, are you keeping up with every account? If your contacts move on, are you following them, and are you in front of their replacement? This is a common problem for business owners who are focused on delivery and let accounts go cold. It's not your customer's responsibility to tell you; it's no good moaning that old so-and-so never called you - you need to call them (or at least get one of your business development team to give them a regular nudge).
Consider everything within you business as an asset. That's your people, your existing customers, your lapsed customers, your prospect database, your accounts history... everything. Ask yourself, are you really leveraging every asset in your business?

If you look a little deeper, and often with a fresh, outsider's perspective, you may find that significant revenue opportunities are right in front of you.

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Posted by: David Regler @ 7:47 pm |   | Links to this post  

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