Top Reasons for Unexpectedly Lower Sales

When running any business, your cash flow projections will likely rely on forecasted money coming in. There’s only one problem with that – it’s forecasted. Unless you have pre-orders, you will only be using past data and extrapolation to have an idea of how much you will make in the next few months and, therefore, how much you should spend. There’s only one problem with that – what happens when your sales are lower than expected? The simple answer is to identify why and then make the necessary changes to get the company back on track, hoping that it doesn’t cause long-term damage in the process. If you’re looking to brainstorm the causes for lower than expected sales in any quarter (not including obvious causes like changes due to COVID), look at the following common reasons for a drop in sales; hopefully, something will become obvious.

1. Poor or inadequate Compensation

You will compensate your sales team, but the plan that you use to do so might no longer be as effective as it could be. It could be a bit old-fashioned (keep in mind that due to smartphones, social media, and Amazon, people now prefer more instantaneous rewards), or it could just be confusing for people, difficult for them to make the most of your compensation plan. The outcome of an inadequate or confusing compensation plan directly impacts your staff’s motivation and the potential corrosion of your company culture (which can have very detrimental impacts in the long term). If you’re looking for motivation ideas, consider gamifying your sales system.

2. Inefficient Paperwork

With every sale comes paperwork – sorting work orders, tracking assignments, scheduling, billing, costing, and more. The excess of paperwork means that, unless you have incredibly simple and streamlined paperwork flows, there will be a lot of room for human error. This human error can cause accountancy problems and lower your profitability when they lead to order fulfillment mistakes. Any mistakes in order fulfillment can impact sales in the long run by impacting customer satisfaction and therefore churn. Solutions include automation: you can use work order software to reduce human error, lessen the need for employee admin labor, and more.

3. Poor Lead Management

Your salespeople should have a good idea of your customer conversion map. How do you guide customers down the funnel, capturing interest, turning them into leads, and then nurturing those leads into customers? Suppose your employees don’t know your customer journey. In that case, they will probably have difficulty identifying which actions lead to maximum efficiency in ushering the customer down the funnel and towards a sale. They could be too pushy early on or too hands-off later on. When customers aren’t given the right amount of attention for their level of interest, the result can be lower sales.

4. Inadequate Competitor Analysis

If you’ve suddenly noticed a sharp decline in sales and it’s stumped you, have a look at your competitors and what they’re offering. If they have released an innovation that makes your offering seem less valuable than theirs, you will have to pivot or play catch-up. That’s why it’s always so important to have your finger on the pulse of your industry. If you don’t pay attention to your competitor’s announcements, you put yourself in the vulnerable position of potentially being months behind them. If you fall too far behind, you might not have the cash to invest in improving your service accordingly, especially if your sales decline – so don’t fall into this trap.

5. Change in Company Structure

If you have had changes in structure or any staff changes, you should have a closer look to see if that could be what’s impacting your lower sales. If you have a new change in senior management, it’s normal for there to be a dip in sales, even with a lag of a few months – if that’s the case then you might just have to wait for the problem to go away. If you have recently made some new sales hires, there could be deeper problems that are the issue.

Recruitment is always difficult, but you need to have quality reps to do all necessary actions in the conversion funnel, including negotiating and closing. Make sure you have a probation period, so your new staff feel especially motivated to perform. You might also have a problem with onboarding – you might underestimate how different your corporate environment is, so make sure you give every employee thorough training so that their freshness doesn’t impact sales.