When times are tough, businesses that haven't been able to reach their revenue targets start reducing expenses. So where do they cut?
Typically, companies large and small look to cut "non-crucial" expenditures like marketing. Funds for travel, marketing campaigns and events start to shrink at the end of every quarter. And what does that mean for sales? It means that pipelines are going to start shrinking. The flow of activity that drives sales opportunities suddenly turns into a trickle. Without travel funds, teams start to be disconnected, customers start to lose touch with their salesperson and deals become harder to win. What happens as a result is that marketing strategies put into place at the beginning of the year get disrupted and activities become a jumble of disconnected campaigns.
Teams learn to execute early in the year and become accustomed to managing decreasing budgets. Sales begin to dwindle in the quarter following the cuts, and it is not until 6 months into the new year that the activity can be regenerated. By then it is time for a cycle of new budget reductions and more creative marketing.
So how does the sales department deal with the reduction in their pipeline? See sales discounts, below.
The problem is that declining revenues are a long term issue. Usually the revenue problem is related to product strategy, to aligning with customer needs, to identifying a unique angle and executing well. Trying to fix a problem like that by reducing a short term expenditure is like trying to run a skii resort using only man made snow. You might be okay for a few days, but eventually you're gonna be skiing on dirt.