Journal of Corporate Renewal

Nov/Dec

2013

Similarly, a company can retain its best manufacturing equipment and decommission older machines, while optimizing the layout of the plant floor. Finally, a reduction in volume provides an opportunity to reevaluate the business’ network of warehouses and distribution centers. Ambitious operators should jump at the opportunities for operational improvements that a reduction in volume can uncover.

Sales. The customer rationalization effort requires a commensurate rationalization of the sales force.

Management should not assume, however, that the sales people who oversee the accounts that are rationalized should be cut first. Rather, the entire sales force should be assessed, and only the best performers should be retained. After all, the new motto is “fewer but stronger.” Sales people, especially top performers, tend to be the first to jump ship when turbulence strikes a company.

Therefore, retention bonuses for the
best sales representatives and managers
should be put in place. Members
of the sales force who survive the
rationalization process have a great
responsibility. They must counter the
fear, uncertainty, and doubt (FUD) that
will likely be spread by competitors
to cast aspersions on the company’s
sustainability to remaining customers,
who are more important than ever in
the wake of rationalization efforts,.

The sales force also must play the role of distributor partner representative, encouraging rationalized customers to switch their business to one of the company’s distribution partners to satisfy any residual needs for the company’s products. Despite facing higher prices, a rationalized customer might develop a great relationship with one of the company’s distributors, resulting in retained business and a strengthened relationship due to volume referral. The sales force must view a rationalization effort as an opportunity to retain “fewer but stronger” customers.

Marketing/Communications.

A company’s marketing and
communications resources must
be hard at work during a customer
rationalization effort. A “fewer but
stronger” message must be crafted that
relays to the market, “We’re exiting some
relationships that we’ve found to be
unsustainable, but this effort will free
resources to better serve our customers
and channels that are most aligned with
the strategic direction of our enterprise.”
This message must be ingrained
in all outside-facing company
representatives, including the CEO,
CFO, head of human resources, legal
counsel, vice president of sales/
marketing, sales reps, etc. The message
should be delivered via websites,
blogs, social media, press releases,
and in person, especially to remaining
customers, who are key to the
ongoing economics of the business.

Additionally, to counteract internal consternation, town hall meetings should be held to address employee concerns in interactive forums. Finally, the sales force should receive guidance on referring rationalized customer to specific competitors. This is a unique opportunity to direct unprofitable business to a company’s most threatening competitors, which

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