How to sell in a soft economy
When the sky turns cloudy, a weather forecast can reliably predict the timing, duration and severity of a storm. But when economic conditions worsen, there’s no resource that can forecast what lies ahead—at least with any reasonable degree of certainty.
With multiple signs pointing to an economic slowdown or worse a potential recession, sales leaders need to be bracing themselves for what may be a difficult road ahead. I recommend preparing for the slowdown in the same way you’d prepare for a storm: watch for warning signs, develop a contingency plan and batten down the hatches when it hits. Here’s how.
1. Watch for warning signs
You can’t control fluctuations in the global economy. But you can stay ahead of the curve by watching for these telltale signs of a market slowdown.
- Your customers start behaving differently. Has your sales cycle length increased? Are scopes or opportunity size going down? Are negotiations dragging on, or decisions getting delayed? These are all signs that customers are feeling more cautious, becoming price sensitive and preparing for a slowdown.
- You experience blockages in the sales pipeline. Watch for declines in the total number of appointments, demonstrations, proposals or first-time calls. With closed deals, look for smaller-than-average deal sizes, weaker margin contributions and the addition of new conditions. Pay close attention to an increase in the number of “no decision” or the dreaded “not now” as customers begin to cycle back.
- Your competitors abruptly change their pricing or sales tactics. If your competitors suddenly change their pricing or adopt unusual sales techniques, it can indicate that they’re feeling financial stress. The same goes for companies that accelerate product releases or aggressively court your client base.
2. Develop a contingency plan
Once you know a storm is coming, develop a contingency plan that focuses on five areas.
- Expenses: Trim unnecessary travel and entertainment expenses. Replace national sales meetings with regional events. Handle client meetings virtually as long as it doesn’t impact performance. However, try not to cut training, marketing, headcount and travel for client relationship-building; these are critical investments for business growth.
- Expansion: Shift your strategy from extending into new territory to strengthening relationships with current clients. When it comes to hiring, focus on quality over quantity. This is also a good time to recruit strong sales people from underperforming companies.
- Initiatives: Reevaluate all new initiatives. Keep initiatives that can have an immediate impact on your business but postpone strategic or long-term initiatives.
- Territories: When times are good, having 100% territory occupancy is important. When times are bad, it is essential. Make your move before your competitors increase their pursuit of vulnerable accounts or new entrants try to attack adjacent markets.
- Marketing: Work with your marketing team early on to develop new sales materials. Create case studies for customers that focus on value, return on investment and expense reduction. Avoid messaging that talks about discounting.
3. Batten down the hatches
No two storms are the same, but they do tend to follow similar patterns. Here are five ways to ride it out.
- Revisit your sales process. A strong sales process is key to understanding the absolute state of sales opportunities. Reinforce your sales cycle definitions, opportunity grading, pipeline integrity and forecast accuracy to ensure that all winnable opportunities have appropriate resources.
- Get creative with compensation plans. Plans and quotas developed in more optimistic times may be unrealistic during a slowdown. To keep your sales reps motivated, introduce short-term, targeted rewards or performance bonuses. Only reduce quotas as a last-ditch effort.
- Invest in relationships. Remember that your clients are suffering through the same economic downturn as you are. Become their strategic partner by identifying opportunities for value-added services or complementary products that can fill revenue shortfalls. Also, consider proactively renegotiating contracts to promote longer-term relationships.
- Use resources wisely. Like you, your competitors are going to have less budget and resources to defend their business. Use a combination of pricing actions, sales incentives and targeted marketing messages to expose disenfranchised or vulnerable accounts.
- Prioritize quality over quantity. There are less deals to win in a downturn. To cope, encourage your sales teams to prioritize quality of wins over quantity of wins. This will help ensure that you have enough time, budget and resources to dedicate to the opportunities that you are most likely to win.
Like any storm, this economic slowdown will eventually pass. When that day comes, the companies left standing won’t just be the ones who saw a storm coming. They will be the ones that prepared for it.
Is your business ready for the next slowdown?