When the economy slows, you can either be a victim or become victorious at your competitors’ expense. Now I know that the coming recession has been discussed for what seems like years.
And I don’t have a crystal ball, but I do know that slowing occurs periodically, and the economy goes up and goes down, so whether there is a true recession coming in 2024 or not, doesn’t matter. Smart leaders and sellers need to prepare for the inevitable slowdown.
When the economy turns downward, and demand slows a bit for your products or services, it becomes apparent if revenue growth has been reliant on repeat or addon business from long standing clients, and/or from incoming leads, rather than from new business from new customers through outbound prospecting efforts. It is obvious because the phone stops ringing, and sales fall off. We saw this in 2009 and 2010 when so many business leaders learned that their “highly successful” sales teams were not great at hunting for new business. They were really just great order takers. The business had grown previously through repeat orders from existing customers and from inbound requests. Sadly, we also learned that in some cases it was fruitless to try and turn individuals who are great at managing existing clients into Hunters of new clients. They wouldn’t do it. But even worse is that they couldn’t do it. I am in the training and development business, so I hate to use the words “couldn’t” or “can’t” because I believe in seeing the potential in people. But there are certain key elements that an individual needs to possess or have the willingness to learn to enable successful hunting in sales. They include prospecting consistently, prospecting via phone or walk in (not just email), maintaining full pipelines, and not caring what others think of them.
It is normal for salespeople to get complacent and selling becomes easier when dealing with longstanding customers that love you and love your product. It is also easier to close business when the business finds you. The hunting muscle becomes dormant.
Raising Prices Won’t Work
Hopefully you have raised prices during the last couple of years in response to your costs going up coupled with high demand and limited supply, and you have realized a profit benefit from doing so. However, increased prices can mask the effectiveness of salespeople. With increased prices you should have seen increased revenue. But one should not just rely on price increases to grow the business. It is a quick fix to the top line for sure, and I am a proponent of continuing to charge the price that reflects the value you deliver to the client, but raising prices in a recession is impractical. And won’t work to grow the business in a softening market.
Just remember the lessons of supply and demand from the recent supply chain issues and imagine the opposite during an economic downturn.
Unbridled Optimism is Dangerous
Salespeople and managers need to have a degree of optimism. No sane person would last very long in a sales position if they felt like the daily grind was worthless or that the next deal would never come along. Salespeople should have a positive outlook, but with that sunny disposition comes the potential for a lack of skepticism and sometimes a short memory. This can be a good thing in sales, unless one sticks their head in the sand and believes that demand will always be sky high and that the road ahead is paved with gold. Many in sales today were not even in sales during the Great Recession, and don’t realize that recessions are a normal part of the economy. Some may think that the pandemic was a onetime occurrence, and that stability and growth will be the norm. I certainly hope that is true, but those of us that have been around a while remember the impact that the dot com bust and that 9/11 had on the economy and demand for products and services. We don’t need to dwell on the uncertainties that lie ahead but we certainly should all learn from the past.
Salespeople can become complacent during a time of high demand and supply shortages, such as what we have experienced most recently. So, while prices may have been raised and passed on to the customers, the true growth of the business may be masked. The number of customers may not have expanded. Salespeople may have gotten fat and happy and leadership may not be paying close enough attention to the mix of customers and neither sellers nor managers may be adequately prepared to effectively weather an economic downturn.
You may have already noticed a softening in demand for your products and services, and you may be hoping it is just a passing blip. But are you ready to take advantage of soft market conditions? Rather than going with the flow, and accepting a softening as a downturn in sales growth, plan for it and be prepared to benefit at the expense of your competitors. Instead of falling victim to the belief that a soft economy will negatively impact sales, develop a victor mentality. There are a couple of things to prepare for now to position yourself for success.
Eat More Pie
To win during an economic slowdown, you must maintain the attitude that you are going to earn a bigger piece of the pie. If the pie gets smaller due to lack of demand, then you must figure out how to get a bigger share of it. You must have the mentality to win business from the competition. But when the economy takes a dive, it may be too late. You must prepare now to position yourself and your company to win more than your current market share. It takes a few things:
If you haven’t been hunting for new clients enough, then start now. Or if you are a sales leader and you have some on your team who are not hunting, then you need to determine if they should hunt or if they even can hunt. What I saw in the aftermath of the Great Recession was that there were so many “salespeople” who were asked to start hunting again, after years of being comfortable just managing their existing accounts that it was darn near impossible to change their behaviors. Most salespeople fall into one of two camps: They are either Hunters or they are Account Managers/ Farmers. There is a small percentage that is excellent at both and loves doing both, but they are the minority.
Battle Plan for Victory
For Salespeople:
- Exercise that muscle to prospect more, more consistently and better, NOW. If you are not accustomed to hunting for new business, then you will fall victim to a down economy. Don’t stick your head in the sand and hope that all will continue well. Plan and prepare. Practice your coldcalling language. Block time on your calendar to prospect every day. Rather than prospecting once a week, do it every single day. If you only prospect periodically, or when the pipeline is empty, you open yourself up to distractions and current client issues getting in the way, which prevent consistent prospecting. Plus, if done daily, you will get better at prospecting, you will enjoy it more, and you will have more success.
- Also be sure to complete your Math of Success to determine how many first meetings you need to generate enough new business based on your closing ratio. Now recalculate based on a decline in demand, and the likelihood that your closing ratio will suffer. Calculate how many more first meetings you need to generate enough business if your closing ratio declines by 10%, or 20%. Then, operate as if that is the current situation.
- Plan what activities you are going to engage in every day to generate enough first appointments. And set goals that you will measure for each to keep yourself on track. Some suggestions include:
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- Ask existing happy clients for referrals in a very precise manner describing the specific types of introductions you are seeking
- Maintain a target list of prospects you desire to earn business from and ask everyone you speak with if they know people at those organizations
- Reach out to individuals that have left your clients and are at other companies
- Directly prospect target companies using a well throughout prospecting plan including LinkedIn connections, phone calls, and emails, but not just cold marketing emails
For Sales Managers and Leaders:
- Now is also the time to analyze your sales organization structure. Does it make sense to separate Hunters from Farmers? Should you compensate them differently for the work they do? Of course, you should. They are both very valuable, but it is more difficult to hunt than it is to farm. If your team has become a collection of Farmers, then it may not be possible to get them to hunt like they used to. It may be too late. But if you have able bodied Hunters on your team but you have not been holding them accountable to daily prospecting activities then get on it. Do it NOW.
- Conduct a math of success exercise with each of your salespeople to determine how many first discovery meetings they need to generate enough business. Then consider what would happen if demand fell off by 10% or 20%. How many more first meetings would each team member need to grow the business? If the closing ratio drops, and there is not an opportunity to increase prices to fill the gap (as there will not be during a recession), how many more opportunities do your salespeople need to have in their pipeline?
- Determine your competitive differentiators as compared to the competitors. Ensure that the entire team understands and is prepared to sell against the competition and is focused on growing your market share, which will come at the expense of competitors. If the lurking competitor to winning business is that the prospect chooses to do nothing, then you must train your team to sell the value of your services and more importantly, the cost associated with the prospect doing nothing now.
Gretchen Gordon is the author of The Happy Sales Manager, a speaker on the topics of sales and sales leadership effectiveness, and she is the President of Braveheart Sales Performance, where she leads a team of dedicated consultants and coaches who cultivate sales organizations so sellers can sell and leaders can lead