Selling in a Downturn
Headwinds. That’s the term that the CEOs of Salesforce and HubSpot describe the macroeconomic conditions for the second half of 2022. I’m not a sailor, but in the words of Franklin D. Roosevelt, “Smooth seas do not make skillful sailors.” The headwinds these CEOs are alluding to mean softening demand and inflation. For sales organizations facing potential headwinds, a course correction on their sales strategy could be a prudent decision. In this article, we will explore sensible sales strategies and how companies can prepare their sales team for potential softer demand.
There’s a saying, “A rising tide lifts all ships.” When the economy is strong, all companies benefit. However, when the economy slows, some companies are impacted more than others. Similarly, some salespeople will feel the impact on their commissions more than others. This is not an article crying that the sky is falling. Instead, the focus will be on prudent sales strategy shifts based on my observations as a salesperson, sales leader, and business owner.
Caution Is the New Normal
It’s not a stretch to say that as consumers, we are all watching our budgets a little closer. CEOs and CFOs are not impervious, just more cautious. And like consumers, there are certain line items that companies view as discretionary spending while others are viewed as business-critical. For companies who have ingratiated their solution so well that their client views the solution as business critical, they are in a good position. For companies that view a provider’s solution as discretionary, now is a good time to prioritize which accounts would benefit from extra attention.
Sales reps may benefit from this strategy as well. There are likely a few key accounts in a sales rep’s book of business if they leave, cancel, or find an alternative source, which would have a devastating impact on revenue. To prevent surprise attrition and a drop in revenue, sales reps can ask discovery business questions. For example, “What are you seeing on your radar for the second half of 2022?” or “How do you see (inflation, interest rates, supply chain, fuel costs) impacting your business in the second half of 2022?”
Sales reps should view this call as a new discovery call. The goal is to uncover obvious or unrecognized problems that can be addressed to solidify the business. The worst mistake a sales rep can do is to avoid this conversation because they’re too afraid of upsetting their client.
Here is the big picture we want to accomplish: prioritize accounts; accurately access their current situation; and find new solutions to solidify the business. This goes back to being a trusted advisor rather than a sales rep. Advisors bring solutions that clients value. Reps sell products. Products are easier to replace. For sales leaders, this is an opportunity to coach and level up the sales team. Remember, smooth seas do not make skillful sailors.
Caution Creates Longer Sales Cycles
Caution creates resistance. What do we do when we see blinking yellow lights while driving? Pump the brakes. Our economy has blinking lights everywhere you look. CEOs and CFOs are paying close attention, and they will pump their brakes. This means deal cycles will be extended. There are companies experiencing this now. It’s not a time to panic. Quite the opposite. Let’s explore the cause and associated opportunities.
In a cautionary economic environment, spending slows but does not stop. A project that was anticipated to close this quarter might be pushed back to the next quarter. For sales leaders who are seeing this for the first time, it has less to do with pipeline, and more to do with market sentiment. Sales leaders can start analyzing the deals that are closing and compare those to the deals that are being delayed. Patterns to look for include closing rates, deal value, and lead source. Also review client-specific data like company size, industry, and the title of the decision maker. When the market shifts, sales leaders need to understand the impact of the buyer’s journey.
For sales reps, this means a deal you anticipated closing is now back under review. This is predictable. Before a company moves forward with a new initiative or project, they want to double-check things. This likely means more people will be brought into the decision-making process. Even for smaller projects, CEOs and CFOs are more likely to involve themselves, where in the past they would not.
Because we can anticipate that sales cycles will lengthen during economic uncertainty, sales reps and their organization must be proactive. First, involve senior decision-makers early, even if they typically are not involved. Second, get very clear on quantifying the revenue impact or cost savings of your solution. The faster your client perceives your solution as a cost saving measure, the faster your customer will adopt your solutions. The longer the time delay to impact, the less urgent the client will be to move forward. This may require a shift in your messaging.
Sensible Sales Strategy
Revenue and cost savings are impact areas that companies focus on during a market slowdown. This might require sales reps to change their messaging to highlight these areas. In general, sales reps are good at demonstrating long-term ROI. However, immediate impact cannot be ignored. This may mean that presentation decks need to be updated to show a clear path to impact. It is also an opportunity for marketing to review their messaging. Customers will be more interested in doing more with less.
In a slowdown, simple scales. Driving growth and cutting costs are the key drivers. In the past, sales reps might use talking points around, “We are the fastest, most intuitive, easy to use, solution.” Today, customers might prefer to hear, “consolidate your tech stack and do more with less.” We cannot change the economy, but we can change how we position ourselves when we’re in front of clients.
Caution Brings Clarity
For sales leaders, caution brings clarity. Gaining market share in a downturn is possible but requires a single-minded focus on execution. If demand softens, revenue can still be gained with upsells, cross-sells, and ensuring that your sales team’s messaging clearly conveys time to impact. In my experience, when demand slows, poor sales managers will demand more activity from their staff. If the sales rep counters, “It’s twice as hard to set an appointment compared to last year,” the sales manager will implore the sales rep to work twice as hard.
Likely, your team is working as hard as they can with the skills they have. Rarely can you improve sales performance by imploring the sales team to just work harder. On the other hand, sales reps tend to repeat the same “selling points.” When the economy shifts, they stick with what used to work. Sales leaders may need to re-tool the team, to ensure they have the skills to sell when demand softens. For some sales reps, the fear of losing a deal can drive counter-productive behaviors. Dropping prices and offering free trials is the path of least resistance. Sales leaders need to prepare their sales team to avoid this mistake.
In an economic downturn, the margin of error shrinks. Sales leaders have an obligation to remain vigilant and respond to sales challenges without hesitations. However, sales leaders do not have to face these challenges alone. Collaboration with marketing, product development, and customers can provide insights around critical needs. It is not uncommon for a new sales leader to weather the downturn alone, hoping the market improves, and never asking for help. Collaboration can be a force-multiplier, uncovering hidden opportunities, and creating new ways to create value.
Downturns are part of the business cycle. I’ve watched good companies become great because they outmaneuvered their competition. Sales leaders have two priorities they should hyper-focus on: their customers and their sales team. Step one for sales leaders should be to ensure that the sales message delivered is aligned with the client’s current needs. Demonstrating the time to impact for clients is step two. Next, sales leaders can coach the sales team to this new reality. It is critical to remember that no one is alone in the boat. Collaboration invites everyone into the boat, ensuring they are rowing in the same direction. To paraphrase the words of Captain Jack Sparrow, “If you are waiting for the opportune moment, this is it.”
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