Ever since my radio days I have not been a big fan of "consultants." A radio consultant was just a former Program Director who hadn't found a job. A lot of sales "consultants" are former salespeople who didn't make it. Obviously there are exceptions, but I always remember the quote someone said years ago, "A consultant is someone who will take your watch and tell you what time it is."
Which leads me to the recent demise of Circuit City. Circuit City was a fine electronics retailer whose fate was sealed in 2007 (long before any recession started) when the high priced MBA consultants persuaded management to whack their best sales people - http://2cents.dailyreckoning.com/viewtopic.php?t=42659
With no knowledgeable salespeople to create value for their products, Circuit City had to resort to price and the folks from Bentonville, Arkansas win that game every time. That decision has to rank up there with "New Coke" as one of the bone head business decisions of all time!
Comedian Brian Reagan has a funny bit on selling refrigerators - http://www.youtube.com/watch?v=Rmun8GK6o2c - he's making fun of salespeople but he also is making a case why Circuit City failed because of salespeople who were ineffective.
This was a no brainer! If you cut all the salespeople (or whack just the good ones) the revenue plummets and the company will fail. One of the principles of "The Job Nobody Dreams Of" is that salespeople don't get laid off. When I go into greater detail to explain this principle I admit that there are times that an underperforming salesperson could lose their job when things get tight but only because they aren't producing...Circuit City did the opposite! They fired the good salespeople and kept the bad ones!
The "consultants" looked like geniuses because they lowered employee costs (sales commissions). Here is the secret the MBAs evidently didn't know...for every dollar they paid a salesperson in commission...the company made 6 to 10 dollars (figuring a 15% to 10% commission structure in my example). Maybe they saved ten million in commissions but it cost them sixty million in sales. Nice job Masters of the Universe. Stick to what you know...Wall Street...wait...never mind!
Happy Selling!
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