A Zero Based Budget
This time last year you reminded your department VPs that they needed to get you forecasts.
You knew roughly what they'd be before you saw them- last year +3% for expenses / +10% for sales.
And now, looking back, you feel a bit silly that you ever accepted such outrageous travel and trade show budgets.
Don't be embarrassed. Every single other industrial manufacturing exec is having the same internal dialog in Q4 2020.
The question is what to do about it.
You don't know when travel will get back to normal, when your reps with immediate family members with impaired immunity will be willing to travel, or when customers and prospects will travel to events or be back in their offices and willing to let your folks in.
That makes budgeting a crap shoot.
But here's a recommendation.
Don't try to extrapolate what will happen, from what has. Rather, determine what needs to happen, and budget for that.
Easy to say. Hard to do.
You're going to be wrong.
But here's how you might start.
Solve for the Buyer
You've heard it before. Buyer habits, behaviors and expectations are changing.
You know the stats - because you know how you buy - you start online. You probably try to finish online if possible. You're skeptical to talk to reps because most are simply peddlers that won't add any value to your analysis. And you're loathe to offer up all of your contact information for some download that turns out to be a vapid piece of crap.
Guess what - your prospects are too.
And the tough truth is that many of your reps probably appear to your prospects to be about as helpful as a chicken wire canoe.
Being in a prospect's office in person doesn't change that.
Neither does a fancy trade show booth.
Going forward you need:
- different people - folks that not only can sell, but will. Who understand business, leverage technology artfully, qualify ruthlessly, and expect to make a lot of money. Folks that you can differentiate with Dave Kurlan's Objective Management Screening for instance.
- improved technology - CRM, marketing automation, customer success, conversational marketing, ticketing, knowledge-base, target account management, email, etc. If you don't know what system you're using for each and why (or if your CMO/VP of marketing couldn't answer the question in a succinct Slack message for you) then you're not doing enough.
- tiered inside sales - field sales is inefficient, but who says inside sales means rookie? Why not have superstars and industry veterans as high paid inside sales? And give each an allowance to hire their own BDR (business development rep / prospecting) for whom you'll provide metrics and training, but hold the reps accountable for?
- a step-change in digital marketing - your marketing now must do prospecting, lead generation, project creation, qualification and more. It's responsible for much of the sales process, but your company might not have figured that out yet. You need target account, new logo sales (called account-based marketing or ABM), nurturing for prospects, fluid transfers from marketing to sales and back, and more.
Bottom line is you probably need a major revenue growth overhaul. New sales people, new sales models, vastly expanded and improved marketing, and probably some new collaboration models - maybe even revenue growth "pods."
Don't Reflexively Replace in Person with Virtual
When looking particularly at trade show and travel costs it's easy to think of them in a binary way. You might assume that you're selling the same way - either in person, or virtually.
So you use the same model, same sales process, sign up for the same trade shows, etc.
Selling virtually is different.
For instance, how many of your sales people are comfortable, much less facile, with new sales video tools? With scheduling meetings on the fly? With live chat with a target prospect who's live on your site now?
And what do you buy when you agree to spend thousands on a trade show booth? Hint - it's not floor space! You're buying attendance and captive audience, and early indications are that this years virtual trade shows aren't delivering much of either.
In other words, it's not enough to just shift.
You have to redesign your systems, and staff and resource them properly.
That means budgeting for technology, recruiting, salaries, outside consultants and more.
Good thing you've got some funds available from other line items!
Put Travel and Trade Show (and other) Savings Where They'll Matter
Travel and trade shows are big expense items directly related to sales. And you're going to have other savings too; on office furniture, cleaning, office supplies, and more - maybe even lease expense.
Should you eliminate travel and trade shows? Probably not, but much of it.
Should you trim all expenses? Perhaps.
But you should certainly take a radical approach to at least exploring what a different revenue growth model might look like with the right approach supported by reallocated travel and trade show funds. It sucks to be in the middle of it - but maybe it's the opportunity to make changes that were coming anyway.
COVID isn't actually the cause for much of it - it's actually just a catalyst that's accelerated it.
If you're genuinely open to considering a reengineered revenue growth function, I'm happy to spend some time kicking around ideas. At the very least, we'll probably have an interesting and energizing conversation. At most, maybe we'll find a basis to have another call.
Interested? Let's chat. No charge for a few calls as we figure out if there's something worth digging into. We can start with an efficient 20 min.