#12 Dressing the bride
For confidentiality reason I can’t disclose the company’s name, but the story is great anyway. A major player in the semiconductor industry which was acquired by a private equite firm a few years ago is currently being dressed up for a public offering. In it’s attempt to make the bride look slim, they have embarked on a massive cost-cutting program. Sales staff are let go, cartridges for color printers are only refilled with b/w ink, printing of sales brochures has been stopped, traveling executives must stay in 3-star-hotels. The latter reminds me of an ad campaign a major hotel chain once ran. The slogan was something like “if you stay in a box, can you think outside the box?”. What is this semiconductor company trying to do with this exceptional exercise in greed? First loose all dedicated staff and then loose all customers?
January 13, 2009 @ 10:44 am
This is the perfect case showing that managers forget what a company is all about. A slim cost structure is of course necessary in order to stay profitable, since the income needs to be higher than the costs.
But they forget that you can have the slimmest cost structure in history and it still does not help, when there is no income.
How should this company ever attract customers, particularly in the B2B sector, when they just do not have the resources to do so? It is well known that personal contact is essential in this kind of business and contracts need to be negotiated. If all good sales staff leaves who should represent the company?
Sales executives and proper sales brochures are essential when attracting new customers. These things represent who you are and what you stand for as a company. Existing customer relationships also need proper treatment and care.
This company cut the costs at exactly the wrong part of the company and seems to forget that in order to make money you have to invest some first.
February 1, 2009 @ 12:08 am
In fact this is a case which I have to experience too. Ok- maybe not that radical that only b/w ink is in use or stop of printing sales brochures. But at the moment the financial crisis is being used as an excuse to get rid of old expensive habits like business class flying, 5. star hotels, posh meeting locations or luxury company cars.
To be a good example our managers and sales executives had to experience an interesting meeting location. To be honest- they are used to have all above mentioned conveniences.
They were sent to a hotel, where they got bed linen at the reception and had to put the clean sheets on their bed. Additionally they had to share rooms between 2-4 men in a room with bathroom sharing. The invitation letter to this meeting included, what they had to bring along. (towels, shower gel,….) Not necessary to say, that the meeting room was in the dining room where they had to clear up their tables. And guess which meeting this was – Sales Meeting.
As you can imagine the mood was very bad which resulted also in a bad meeting. In fact there was no real reason for such a cost cutting program. Fact is, that the motivation was really down, because the Sales staff achieved record turnover and didn’t expect such a “Non service location”.
My personnel view- don’t mess it up with Sales staff. At the very end they are the ones who brings the money in. As “Witt” said: Sales is the spearhead of Marketing.
March 19, 2009 @ 9:53 pm
I am not sure that I can completely understand your comments. Would you be so kind as to expand on your reasoning a little more before I comment.