Logistics business owners and sales leaders constantly search for that golden rule or moment when their sales efforts yield the best results. Amidst economic fluctuations and shifting customer demands, finding this opportune time can seem daunting. Many logistics industry employees blame poor sales performance on external factors such as a sluggish economy or unpredictable customer behavior. However, a closer examination often reveals a different story. Contrary to popular belief, the primary reasons for bad sales results frequently originate within the company’s internal operations and strategy. In this article, we will uncover some causes of sales underperformance during challenging times and offer advice on areas for improvement.
The Real Reasons for Sluggish Sales Results
Some might secretly think that giving sales advice instead of selling is easy. We promise it’s not the case. It’s important to acknowledge that the situation is complex, and freight prices are a concern for Logistics Service Providers (LSPs). However, having worked with numerous logistics service providers, we’ve observed that some are doing better than others, regardless of the economic climate. This success can be attributed to the changes these organizations have implemented within their sales strategies and tactics.
To build a resilient sales strategy, the first step is to analyze the existing sales process and identify areas of improvement. Below are some of the most common mistakes we’ve encountered.
No Real Strategy for New Business Development
Many logistics companies mistakenly believe they are well-prepared for new business development simply because they offer commissions. However, this often does not reflect reality. We frequently observe logistics organizations struggling to grow their revenues year over year, with growth attributed to increased freight or service prices being unsustainable. Additionally, the value derived from existing customers tends to deteriorate over time. This decline is often due to sales teams becoming complacent with current customers and neglecting new business development. Furthermore, there’s a dangerous assumption that customers are guaranteed and won’t switch to other service providers. When businesses become too comfortable with their customer relationships, they are hit harder by challenging times than those actively seeking new opportunities and valuing their current customers.
Warning Signs of Inadequate New Business Development Efforts:
- Lack of dedicated personnel for new business development.
- The absence of a motivational system that favors new business development over serving existing customers.
- General monthly sales targets without separating new business development.
- No sales enablement process exists, meaning there’s no way to ensure tasks are completed if they can’t be measured.
Wrong Belief That the Logistics Company is King
Another common mistake observed from 2020 to 2022 was overconfidence among some logistics service providers. This period, characterized by a booming logistics service providers market, has led some companies to neglect existing customers in favor of more profitable accounts. While customer rationalization can be beneficial for improving margins, we’ve seen many cases where logistics companies lost valuable relationships and struggled to re-establish them when market conditions worsened for them. This indicates a need for better account management and market research processes.
Lack of Diversification
Poor customer diversification is another significant reason for diminished results during economic downturns. Achieving a balance of customer verticals, lanes, and services acts as a risk hedge, as some sectors may remain stable, grow, or decline during tough economic times.
Overreliance on the Spot Market
Particularly in the European road freight market, an excessive dependence on the spot market has been problematic recently. While leveraging load boards for spot market loads was a successful strategy for many years, the market has shifted, leaving those overly reliant on it at a disadvantage. Companies with a balanced approach between spot and contract markets are now winners. Considering the changing market, the only spot market approach will also become riskier in the future.
Sales Reps Lack Necessary Skills
The sales capabilities of personnel are another critical issue. In recent years, generating sales in the logistics industry has been relatively straightforward due to the high demand for various services. However, the current economic recession demands that sales teams develop new skills quickly or revisit essential sales process stages to achieve desired results.
What to Do Next?
To thrive in today’s dynamic marketplace, logistics companies must recognize that optimal sales timing is determined not by external factors but by their internal capabilities and strategic planning. Investing in sales skill refinement, seizing opportunities in favorable conditions, and ensuring alignment across departments can unlock the full potential of sales efforts, leading to sustained success in the logistics sector.
The next step involves identifying shortcomings, eliminating them, and establishing new processes for success. Simply informing the team of necessary changes without implementing new processes is ineffective. Transforming activities into habits requires the creation of new processes, which can be challenging due to organizational differences.
In conclusion, initiating changes, particularly those related to sales tactics and strategies, is challenging. Often, seeking external assistance is the most effective way to achieve faster results. If your organization wants to accelerate new business development but is still deciding where to start, or if you wish to implement changes quickly and avoid potential pitfalls, we would like to invite you to contact us. You can do this by pressing the link below.
About the author:
Thomas Ananjevas is a supply chain professional with 15 years of experience purchasing and selling logistics services and building supply chains from scratch. He founded a consulting, training, and marketing company that works exclusively with the logistics industry. Thomas is helping logistics companies implement the necessary changes to ensure business g Save rowth and continuity. You can schedule a time to talk with Thomas about possible synergies by clicking here.
