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Business and Economics

When Sales Go Down


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When Sales Go Down

Any business which has been in existence for several years will likely have seen periods when sales did not go according to plan and decreased. I work with a lot of businesses and when things aren't going well, I usually find the managers very busy - working on his product. In response to the declining sales, the managers are doing what they like to do, what is easy to do and what they can do but not what needs to be done.

When a business has been operating for an extended period with increasing or substantial and steady sales, there is not usually a major problem with the product. The product can always be improved and it should be continuously, gradually and steadily improved in the normal course of business but this isn't going to generate the extra sales that are needed. The problem is not with the product - it is with the customers. There aren't enough of them. To solve the problem the focus has to be on the customers, not on the product.

When the focus is in the right place, a number of questions immediately present themselves:

  1. Who were the customers before the decrease in sales?
  2. Who are the customers now?
  3. What characteristics do the lost customers have in common?
  4. Why are those customers not buying now?

Asking these and similar questions will let the managers determine whether the drop in sales results from something within the control of the business or from external factors.

If the sales downturn is a result of something the business did - like raise prices, reduce advertising, change staff - then the solution is relatively easy. The business just has to go back to what it was doing before.

If the sales downturn is because of external factors - saturated market, increased competition, changing market characteristics - then the solution is more difficult and the approach for solving the problem must be completely different. A new business strategy is needed with new target markets and new sales and competition strategies. The key there is to study the customers that have stayed with the business and find out why they stayed. To bring sales back, more of this kind of customer is needed and if the managers can determine the key characteristics of those loyal customers, then they can find more like them.

In any case, fiddling with the product is not likely to help. Business managers often tend to identify closely with their products and tend to be focused on them when they should focus much more on the people paying the bills - the customers.