Why Your Company Should Do Everything to Avoid the Boom-Bust Cycle

Many companies accept the boom and bust periods as a necessary part of the business cycle. However, nothing is more wrong than that; boom-bust cycle is detrimental both to your business and your employees. Listed are seven main reasons why your company should do everything to maintain a consistent business inflow throughout the year:

  1. Employee stress and efficiency.

Remember the time when you were a student, cramming all night for an exam? Sleep-deprived, tired and stressed, you would promise to yourself not to do this ever again (until the next exam, anyway). You did not have the time to cover everything, let alone go over more important points several times. You would skip some parts and learn others by heart because you did not have enough time nor energy to devote yourself to mastering them properly.

Compare the knowledge you accumulated from pulling several all-nighters before an exam with the knowledge you gained from courses for which you studied regularly and consistently, every day a little bit. Which knowledge did stay with you longer? Which of the two courses gave you the impression that you have really mastered it?

Now, contrast your college cramming times to what your employees are going through during boom-bust periods. Your sales reps too will feel worn out and stressed – just like you did in college. This will affect their performance and the likelihood of mistakes and sloppy work will be significantly higher.

After big sales wins, many managers immediately make the focus on ‘the next deal’ without a proper review of the positive actions that contributed to the successful outcome. Although this may seem like an optimal way to close more business, sales reps will lose out on valuable educational time and confidence building, thus, repeating the negative cycle of events.

  1. Client onboarding process suffers.

Client onboarding is one of the most critical processes your sales reps need to execute because it will have a direct influence on client experience and your relationship with them, which, in turn, will affect profits.

During frantic periods, client onboarding time starts to suffer. When bandwidth appears limited client’s needs may not be vetted carefully and thoroughly. And if a client notices this, you could easily end up losing them.

  1. Ignoring intuition

During desperate times, sales reps resort to desperate measures. One of these measures is ignoring hunches. Proven, time-tested sales reps know what buttons to push and most importantly, when and how much. However, desperate sales reps cannot afford to say no. They know they will regret closing the sale, but they still need it to meet their quotas.

Working with clients we do not like is not the only problem – during desperate times we also end up doing types of jobs we do not like and would normally avoid. When your sales reps are doing the jobs they do not like with a person they do not like, disagreements and conflicts are likely to happen, especially during low periods.

For this reason constant prospecting is the key. When your sales reps have a lot of options to choose from, they will not have to turn to desperate measures. Even during the biggest of booms, you and your sales reps should not get too relaxed and settled.

  1. Creating unprofitable clients

Another measure that desperate sales reps use in order to ensure meeting their quotas by the end of the quarter is giving deep discounts. Why is this a bad idea?

Because your clients will know that if they wait until the end of the next quarter, they will get the same discount. Why buy now if you can wait for sales? And what used to be a discounted price, for them becomes a baseline price. Once they get anchored on that price, it becomes almost impossible to get them to revert to the regular price. And if you try to bribe them by offering a 10% discount for buying now instead of waiting for the end of the quarter, every next time they want to make a purchase, they will expect the same discount. You have just created a vicious and unprofitable circle.

  1. Faster turnover time

How much time and money do you spend on onboarding new sales reps? How often are you willing to invest these resources? During bust periods, sales reps are more likely not to meet their quotas. Consequently, as the profits become lower, the turnover rate becomes higher. Sales managers are no exception. Research shows that in North America sales management turnover happens every 16 months on average.

To avoid this danger, sales managers should have a solid plan for generating consistent sales and income, be able to communicate that plan to their sales reps and have them stick to it.

  1. Internal disagreements

H.E. Luccock, former Yale professor, said once: “No one can whistle a symphony. It takes a whole orchestra to play it.” However, this becomes difficult in times of hardship when income is on the line and employees feel frustrated and stressed. They start blaming the company and, of course, each other. Before long, it starts to feel like each department is whistling their own tune; sales blame marketing for creating poor content, customer service for not handling clients, shipping for mixing up orders, and the list goes on. It will take months to restore the balance among them, which means that profitability will suffer.

To sum up…

It is in times of prosperity that you should think about the rainy days. Do not let your sales reps get too relaxed. To get consistent results, they need to be consistent with their work. By having them prospect regularly and sticking to the plan for generating profits, the lows of the year can be avoided.

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