Hopefully, your business has been getting better, and you are reporting increased sales. Why? Who deserves the credit?  What is your sales force saying?

Like Captain “Sully” Sullenberger, does your sales team humbly acknowledge the whole company did the right things and luck had something to do with it.

Or, are they more like Libyan rebels victoriously firing their guns skyward celebrating their victory over Gadhafi regardless of NATO’s “shock and awe”?

What is your sales force’s self awareness, and more importantly what is the truth?

Despite your sales group’s humility or hubris, no one can control changes in your buyer’s behavior or marketplace forces.

Here are the three ways to gain insight:

1. How did your customers learn about your firm? Call the decision-making buyers and ask them why they decided to buy now. What did the customer initially want and what did your rep say that finally made them buy? If the buyer refers you to other influencers or don’t mention your sales rep, then their buying process has changed and you need to understand why and how.

2. How did your firm learn about these new customers? It takes 12 “contacts” or “touches” to close a new client including your advertising, traditional and electronic mail, referrals, reference checks and internet research. How did your company connect to the decision maker?

3. What did your sales rep do to prospect, qualify, develop and close his or her new customer? Was he or she a former, dormant customer or a brand new one? Was the decision made by the same buyer, department, and using the same criteria as before? Did it change during the selling cycle?    

As Bob Dylan once sang, the times they are a changing, it’s highly likely that understanding and reconfirming changes in the customer’s buying process is critical. Here are four questions to answer.

• Has the buyer, reasons or criteria changed?
• Has the distribution changed?
• Does the product need to be repriced, turned into a service or unbundled?
• Has the target market changed, moved or disappeared? 

There may never be a substitute for personal face-to-face selling in your business. Or is there a major change in how important and when it is the right thing? In the era of young people texting, internet and voice mail, you don’t want to be the last to know that you have a Willy Loman-style, “Death of a Sales Force”,  holding your company back.

Your gross margins are to blame

If a customer is not profitable, then selling more just like them may not help!

Quite often, decisions to sell to a given group of customers or prospects are made by analyzing the “S” of SG&A (Sales, General and Administrative) on a company’s P&L statement. Rarely are the direct costs of creating a product or service broken down by customer segment.

Instead, a go/no go decision is often determined solely on the project’s cost of sales. Unfortunately, this implies that the direct cost of creating every customer’s purchase is equal and fixed.

In many cases the direct cost of producing a product or service can vary by marketplace, customer needs or usage. This hidden cost data may not be captured through traditional cost accounting practices. To assure that your gross margins are maximized within different customer segments, it is critical to:

1. Account for the time it takes to create a product or service for key customer segments.
2. Distinguish between the cost of creating the first customer order versus repeating the process for ongoing reorders.
3. Understand the varying levels of direct overhead (or overtime) that are required by different market segments.
4. Identify the differences in returns or rework among major customer groups.

A close look in this area may generate a clear opportunity or problem area.

If we accept the 80/20 rule as a sacrament of doing business; which pockets of your business are contributing and which are being subsidized?

While financial gamers, schemes and scams have enabled many companies to avoid either profitable growth or a sale for years…

… ultimately one of these options is inevitable.

• A company that is profitably growing is controlled by passionately committed owners and investors.
  Their firm is financially and operationally self-sufficient. There is no need to merge or look for investors. Its leaders can reduce its credit line and pay down outstanding loans. The company has customers who are happy to pay for its valuable products or services. Over time, the company will build up retained earnings and become a creator of wealth. As long as its owners are confident and passionate they should never think of giving up their independence in running it or cashing out. Life is good!

Your company either profitably grows or is sold says small business growth consultant Andy Birol.

• A company that is not growing profitably has flat or declining sales.
  Its costs and expenses are fixed or rising and it starts to lose money. The company begins to consume more cash than it generates. Owner, banks or investors have to subsidize the company through credit or by tapping any retained earnings. These leaders lose passion for their business as it is no longer self-sufficient. Clearly, its customers cannot or will not pay enough for the firm to delivery its products and services. First, the company runs out of cash, then out of credit and finally must be sold.

There are only two buyers for a company that is not profitably growing:

1. New owners and investors with ideas, cash and passion to return the company to profitable growth.
2. Bankruptcy trustees who sell the company for whatever they can to pay creditors pennies on the dollar.

So companies either profitably grow or they are sold.

What’s it going to be for your company? Do you agree or disagree?